The following is a document written for the 20th Congress of the Party of Socialist Workers (PTS) in Argentina. The world situation has progressed from the original publication date (March 9, 2025), but the coordinates it tracks remain pivotal to this new stage.

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The beginning of Donald Trump’s second presidency is producing dizzying changes in international affairs, with important processes underway — such as the negotiations to put an end to the wars in Ukraine and the Middle East — whose long-term consequences are yet to be seen. In this context of unstable conjunctures, we present a few hypotheses on possible scenarios in light of the trends of this new stage. 

Returning to “Spheres of Influence” from the “Liberal Order” 

Donald Trump’s return to the White House is affecting the international situation like a hurricane, dominated by heightened geopolitical tensions and threats of trade wars. Trump uses chaos as a method. That includes always leaving open the question as to whether his most disruptive proposals — such as the ethnic cleansing of Gaza to make a private resort — are a bluff or a real threat. This method of chaos adds a good deal of political and economic uncertainty to the general confusion. In foreign policy, Trump seems to adhere to Richard Nixon’s famous “madman” theory, according to which appearing as an irrational and unpredictable leader, capable of anything, can give a negotiating advantage and deter enemies from provoking the United States. It is worth remembering that Nixon’s stratagem had a limit. The real balance of power prevailed, and the White House ended up negotiating a strategic agreement with China and withdrawing from Vietnam. Although the United States today is not in a crisis comparable to that of the Vietnam War, it is to be expected that in the post-crisis conditions of 2008, the bully pose may have some short term payoff, but it will hardly be enough for Trump to disguise (let alone reverse) the hegemonic decline of U.S. imperialism.

The liberal order imposed by Washington, including its neoliberal version, ruled for the last eight decades. But is now becoming exhausted. The Copernican turn of the United States under Trump’s direction, with respect to the war in Ukraine — moving from Zelenskyy’s ally to negotiating peace with Putin — has opened a sort of “strategic juncture.” The short term is linked to the structural determinations of this new stage. 

The capitalist crisis of 2008 marked the exhaustion of neoliberal hegemony. The outlines of the pre-2008 order can be summarized as a relationship between three things: the unipolarity of the United States, hyperglobalization (or the unchecked reign of the free market), and the promotion of liberal democracy. A new stage has now been opened, which is reactivating deep tendencies of the imperialist epoch of wars, crises, and confrontations between revolution and counterrevolution.

Donald Trump’s second term — and, more generally, the rise of various extreme right-wing variants — are not the causes but the “morbid symptoms” of this new situation.

The coordinates of this new stage are determined by the hegemonic decline of the United States and the emergence of China as a competing power. China is consolidating an alliance with Russia and has been joined by other countries in conflict with the West, such as Iran, North Korea, and Venezuela. Added to this situation is the emergence of intermediate powers such as Turkey, Indonesia, and other members of the Global South, which vary in their capacity to influence regional dynamics in service of their interests.

Biden’s presidency, far from a “return to normalcy” after Trump’s first presidency, failed in its attempt to restore the old liberal order and recompose U.S. leadership through commanding the Western system of Europe, NATO, and Asian allies.

Trump expresses another strategy to overcome this crisis of U.S. imperialism. With a Bonapartist turn in domestic policy based on the alliance with big billionaires like Elon Musk, and a “neorealist” reorientation of foreign policy, Trump is guided not by the strategy of leading a global order, but by the imperialist national interest. This increasingly is taking the form of the “spheres of influence” of classical imperialism.

The two key slogans of Trump’s campaign — MAGA (“Make America Great Again”) and “America First,” with the Reaganite variant, “peace through strength” — are taking concrete shape. This is not a turn to traditional isolationism, nor is it a settled protectionism that implies a retreat to national borders. Rather, the approach is not to involve U.S. imperialism in wars where its interests are not directly at stake. And to instead reassert U.S. dominance in the Americas as a sphere of influence and to concentrate resources — military, geopolitical, and economic — on containing China, which is the main strategic challenger to the waning leadership of the United States.

Within this reorientation, Trump has deployed aggressive imperialist rhetoric around appropriating Greenland, retaking the Panama Canal, and annexing Canada. These threats reference the Monroe Doctrine and the presidency of William McKinley, which were characterized by protectionism and the territorial expansion of the United States (into Puerto Rico, the Philippines, etc.). The big difference is that the imperialist expansion of McKinley (who, incidentally, was assassinated by an anarchist) coincided with the rise of American geopolitical power, while Trump’s threats reflect a certain recognition of the limits of American power and its geopolitical decline.

Judging by his first moves at the helm of the White House, Trump will continue to exercise so-called “mercantile diplomacy,” reinforced by the deterrent capacity of military power.

This means prioritizing bilateral agreements and using tariffs as tools to obtain concessions. First, by extracting concessions from allies, who are more exposed to American pressure because of their different degrees of dependence (i.e. Canada, Mexico, and Europe); and second, as a way of keeping both enemies and rivals at bay.

Furthermore, the policy is to redirect military spending towards the acquisition of more modern and more agile weaponry (in addition to upgrading nuclear weapons and military technology). This is to increase the Pentagon’s response capacity, which was overextended by the simultaneous assistance to Ukraine and Israel.

With this policy, Trump aspires to achieve partial agreements that resolve, or at least freeze, major conflicts, such as those in the Middle East and Ukraine. Such conflicts not only drain economic resources from U.S. coffers but could potentially escalate into wars between nuclear-armed powers. But if successful —- which remains to be seen — this new “architecture” of world power remains unstable and provisional.

As several analysts point out, “transactionalism” has a more precarious nature, in that agreements are made and broken. It does not reach the stature of a “grand strategy,” like the “containment” strategy against the Soviet Union in the Cold War. This restructuring of interstate relations is not based on any decisive event, like the Second World War or the end of the Cold War. It lacks the capacity to resolve the relationship of forces and the distribution of power for this historical period. Without the United States as the unquestioned organizing force of global relations, rivalries between powers and preparatory militarism increases. In this sense, we believe that although we are not at the beginning of a “third world war,” a dangerous interregnum period has opened up, with elements of a “pre-1914” situation. As historian Christopher Clark states, its main protagonists seem to advance like “sleepwalkers” towards a conflagration of global dimensions. When Trump accused Zelenskyy of “playing with World War III,” he was referring to the escalating dynamics of the Ukrainian war, with the increasingly direct involvement of NATO — and the United States — on the Ukrainian side.

The “peace dividend” dusted off by George H.W. Bush and Margaret Thatcher at the end of the Cold War has been exhausted. This does not mean that a straight path towards a new world war has begun, not least because the “degrees of somnambulism” vary, according to the more or less warlike orientations of the imperialist governments, particularly the United States. But the degradation of the liberal order and of the American capacity (and will) to act as the “world’s policeman” makes armed conflicts of various scales more likely. In the case of Ukraine or the Middle East, the conflicts could escalate and involve the great powers.

The elements that resemble the situation in a “pre-1914” constellation are the crisis of imperialist leadership, the emergence of competing powers (i.e., China), the return of rivalries between great powers, and the leap in militarism, notably the preparatory rearmament of the European powers. At the same time, there are elements that relativize these. One of these has to do with the increased internationalization and dependence of capital on global value chains, a structure established in the decades of hyperglobalization. Although globalization is in retreat and is being reconfigured in more regional terms (“nearshoring”) and geopolitical derisking (“friendshoring”) within the framework of protectionist tendencies, the situation is not similar to the global collapse in trade in 1929-1930. 

Another important element is that, unlike at the beginning of the 20th century, we are now dealing with nuclear powers which, even in conventional wars (such as the one in Ukraine), are playing with the danger of mutual destruction. Finally, there is the decisive factor of the class struggle, since as Trotsky pointed out in the 1930s as the Spanish Civil War raged, only the triumph of the workers’ revolution could halt the course of the new world war which stood on the brink.

The War in Ukraine, the Limits of the “Pax Trumpista”

The most important event of the first weeks of the Trump presidency was the radical change in the position of the United States toward the war in Ukraine. This war, the first major conflict in the heart of Europe since World War II, accelerated the formation of rival blocs of powers: on one side, the “West” or put better, NATO, under U.S. leadership, standing behind Ukraine and on the other, an alliance-under-construction between Russia and China. The latter bloc also serves as an alternative pole of attraction for isolated countries, such as Iran and North Korea.

The United States went from arming Ukraine and leading NATO allies in a proxy war to weaken Russia under Biden, to opening a bilateral ceasefire negotiation directly with Vladimir Putin, excluding from the talks its former allies, the European powers and Zelenskyy himself. Trump’s message was categorical and rather blackmail-like: either Zelenskyy (and his European allies) accept the terms negotiated with Putin for a cease-fire, or the United States withdraws from the process.

The negotiations are ongoing, and in fact, are in many ways just beginning. And although the details of the first meeting between Russia and the United States in Riyadh (which some rightly defined as a sort of “mini Yalta”) are not known, any “realistic” agreement assumes that Ukraine recognizes the defeat. This implies Ukraine at least accepting the loss of 20 percent of the territory now occupied by Russia (the four oblasts of the Donbas plus Crimea); and declaring itself neutral, that is, renouncing its demand to become a member of NATO (and of the EU). In addition, Putin has slipped in among his conditions that elections be held in Ukraine, i.e., that Zelenskyy be replaced by a Kremlin-friendly government.

In addition to this, Trump is demanding that Zelenskyy sign an agreement for the exploitation of resources, including rare earth minerals. The United States would keep half of those resources as compensation for the military aid received. It should be recalled that Zelenskyy himself first offered Trump this practically colonial transaction, hoping, in exchange, to obtain a security guarantee from the United States, which is clearly not going to happen.

Ukraine’s position worsened substantially after the failed meeting between Zelenskyy, Trump, and Vice President JD Vance at the end of February, which resulted in a televised imperialist bullying session in front of the whole world. Zelenskyy left the Oval Office humiliated and empty-handed. The United States carried out the threat to suspend military aid and intelligence collaboration with Kiev, leaving the Ukrainian front on the verge of collapse. But as it turned out later, with the start of negotiations between the U.S. and representatives of the Ukrainian government, this spectacle of imperialist thuggery was more a way to exert extreme pressure on the Ukrainian president (and also on Europe), rather than to create a definitive rupture between the two countries. Zelenskyy needed some U.S. military aid to flow, so as not to be left exposed to Russia while the cease-fire was being negotiated. To play the role of “peacemaker,” a role reserved exclusively for the leader of the strongest imperialist power, Trump needed Zelenskyy to capitulate, the sooner the better.

Although Russia is also suffering the wear and tear of three years of war, time is on Putin’s side. Before accepting a ceasefire, he will surely seek to consolidate and perhaps extend his gains on the battlefield, and secure some “red lines” for the Kremlin, among them: the neutrality of Ukraine, including the demilitarization of the Ukrainian state, a buffer zone, and the assurance of no NATO troops.

Trump’s trick is to detach himself from the Ukrainian defeat, and indirectly from NATO and the European powers. At worst, he seeks to make it go down in history as a defeat of the Biden administration and not of the United States. But facts trump rhetoric. The contradiction he faces is that in order to end the war, he must accept a large portion of Putin’s demands, but at the same time, he must prevent Russia from claiming a resounding victory, which would objectively strengthen the position of the antagonistic bloc, particularly China.

The ceasefire is still a work in progress. Its evolution will have an influence in the short and long term on the dynamics of the international situation, and as of now we can only speculate about the final outcome.

What is already a fact is that Ukraine’s fate is to be plundered. How is still disputed by the United States and Russia, with the European powers also claiming — for now unsuccessfully — their share of the spoils. For Zelenskyy and NATO, the catastrophe of the  prolonged war leaves the country in ruins and is likely to trigger political and military conflicts within Ukraine itself.

In the United States, although there is a realignment of the power brokers around Trump, the establishment remains divided. The “interventionist” (and more warlike) wing, in which liberal democrats and neoconservatives converge, denounces Trump for “betraying Ukraine.” They fear that the inevitable concessions to Putin will weaken the position of U.S. imperialism in Eurasia and, more generally, that this price of “peace” will be read as a failure by the enemies of the West, starting with China.

The “realist” sector argues that it is still possible to return to the strategy of Trump’s first term and use the negotiations with Putin to separate Russia from China, a sort of “reverse Nixon,” replacing China with Russia, which today is the weaker power. This would be a profound change. It would imply abandoning the policy of hostility towards Russia, which has been in place since Clinton’s first presidency, using NATO expansion as the main tool, as advised by the then National Security Advisor Brzezinski.

It is unclear whether there is a long-term strategic orientation behind Trump’s policy. If so, it is difficult to see how the cease-fire agreement with Putin will be enough to separate Russia from China. While it may lessen the intensity of their collaboration — especially since they have a history of mutual hostility — there are short- and long-term reasons that make this outcome unlikely. In the immediate term, if the Trump wing of the GOP is voted out of office in 2026 or 2028, there is no guarantee for Putin that American harassment targeting his zone of influence would not return. In the long term, objective trends work in favor of a convergence between these two Eurasian powers.

A Historic Leap in European Militarism

The Trumpist offensive to force Zelenskyy to capitulate to Putin laid bare the fracturing of the Western powers’ old alliances, but also, and above all, highlighted the impotence of the EU in crisis. The consequences of the war in Ukraine were ominous for the old continent, in particular for Germany, the leading imperialist of the European project. Germany had submitted to the leadership of the United States, sacrificing its own interests, namely cheap Russian energy, which was fundamental to its economic model. The humiliating attack on the Nord Stream II gas pipeline served as a graphic example of this catastrophic outcome.

Given their military dependence on the United States, the European powers do not have the capacity to implement a policy of their own to support Ukraine, nor to make Trump modify his policy of negotiating with Putin the details of a Ukrainian defeat, beyond the possibility of making minor concessions. Even less can Europe sustain the NATO structure on its own, in the unlikely event that Trump decides not only to slash U.S. funding but to withdraw from the Atlantic military alliance altogether.

The alternative plan that was brought to the U.S. President by Starmer of Great Britain and Macron of France has a high probability of failure, since it assumes that behind the “voluntary coalition” of European countries that would deploy troops on Ukrainian soil, the United States would remain the ultimate guarantor of Ukraine’s security in an eventual post-war scenario, something that for now is a red line for Trump.

The consequence of this crisis is a monumental leap in the militarism of the European imperialist governments. This leap had already begun with the Ukrainian war but is deepening on an unprecedented scale. With the justification of “sovereign autonomy” and the “defense of Ukraine,” as well as the fantasy of an invasion by “Russian imperialism” and “Putin’s Nazism,” the European powers are preparing to enter into imperialist rapine. They have the enthusiastic support of social democrats, conservatives, greens, “Atlanticists,” and right-wing sovereigntists.

The European Commission (with the exception of the Hungarian president, the “Trumpist” Victor Orbán) approved the “Rearm Europe” plan worth 800 billion euros, which exempted states’ military expenditures from the 3% of GDP deficit limit (the austerity commitment set out in the Stability and Growth Pact). The plan also provides for collective loans of up to 150 billion euros for member states’ military investment, opening up military financing to private investment, among other measures.

In Germany, the future coalition government between the Conservatives (CDU) and the Social Democrats (SPD), led by Merz, announced a monumental rearmament plan –- “defense at all costs” –- which would involve constitutional amendments to raise the debt ceiling and allocate around 900 billion euros for defense, subject to parliamentary approval.

But the unity shown by Europe is circumstantial, and sooner rather than later the fault lines that were expressed in the Ukrainian war itself will resurface. Today Great Britain — which, let us remember, separated from the European Union with Brexit — alongside France, are the two nuclear powers of the old continent. Germany, which together with France leads the European bloc, would have to place itself under the nuclear umbrella of these two powers.

According to early polls, public opinion is mostly supportive of rearmament, albeit with significant minorities opposing it. As presented by European leaders, and sold by the “left” propagandists of militarism, it looks more like an anti-Trumpist political position than a generalized warmongering. This historic leap in the arms race will be financed by attacks on social gains and liquidating what remains of the welfare state. It will also entail cuts in democratic rights and policies that are dear to the extreme right, such as reestablishing compulsory military service in certain countries. As a whole, this could reactivate struggles against cuts and attacks on living conditions, as well as anti-war movements.

Contradictions in the Plan for the Reactionary Stabilization of the Middle East

Along with the war in Ukraine, Trump’s other foreign policy priority is to end the war in Gaza and to soothe the regional tensions that have been escalating towards involving the U.S. in a possible conflict between Israel and Iran.

The U.S. president backed the January ceasefire deal with Hamas that took effect a day before his inauguration. The exchange of hostages for Palestinian prisoners has been working, despite some tensions, and the policy seems to be to move on to the second phase of the negotiation, which involves other issues of very difficult resolution, such as the future of Gaza.

Trump’s “madman” strategy has been most apparent in his policy toward Gaza. Just as he brokered the negotiations, Trump received Netanyahu at the White House and announced that his objective was the ethnic cleansing of Gaza in order to annex the territory and transform it into a lucrative real estate business, one that he dubbed a potential “Riviera of the Middle East.” And while threatening Hamas with “unleashing hell,” he has successfully negotiated the release of an American-Israeli hostage.

The threat of cleansing Palestinians from their land and resettling them in Egypt and Jordan, countries which are geographically convenient and politically susceptible to Western diplomatic pressure, has motivated Arab nations to conduct independent negotiations amongst themselves. This has led to a new proposal, drafted in large part by Egypt and Qatar, and approved by the Arab League, for financing the reconstruction of Gaza. 

The January ceasefire was a defeat for the war aims of Netanyahu, who had set out to “eliminate Hamas” and recover the hostages by military means. However, it is a fragile agreement, and in no way signifies the end of the war or the colonial oppression of the Palestinian people. The state of Israel did achieve certain tactical successes, like weakening Hamas and Hezbollah, and thereby also Iran. But as seen in the scenes of the hostage handovers, Hamas still retains a fighting force and some level of state organization. This is the bind that Netanyahu finds himself in; he cannot accept that Hamas continues to rule Gaza, but he is also paying a high political price internationally for re-launching the genocidal offensive in Gaza, which has now made certain the deaths of at least some Israeli hostages still held by Hamas. Despite the shift to the right in Israeli society, a majority is in favor of a ceasefire and negotiation for the release of all hostages.

Trump’s policy continues to be focused on expanding the Abraham Accords promoted during his first term in office, that is, the “normalization” of relations between Arab countries, in particular Saudi Arabia, with the State of Israel, in order to isolate Iran regionally. Trump’s interest is geopolitical, military, and also economic, given that cheap oil is one of the pillars of his plan to lower inflation in the United States.

In the original version of the Abraham Accords, the Palestinian question was completely left out of the “normalization.” The Hamas assault on October 7, 2023 and Netanyahu’s war-genocide in Gaza, with the complicity of the United States and the European imperialist powers, made it impossible for the Saudi monarchy to sign these agreements while ignoring the Palestinian question. That is why it has once again raised as a condition the incorporation, albeit degraded, of a “two-state” solution. In this difficult negotiation, the Arab governments play a central role, pressuring Hamas to yield or to conceal its future political role in Gaza. The outcomes remain uncertain. The extreme right flank of Netanyahu’s coalition are emboldened by Trump’s brutal rhetoric, and while perhaps a realistic objective of the White House is to achieve the most reactionary ceasefire possible, it cannot be ruled out that the war will resurge in Gaza or escalate in the West Bank. Meanwhile, the real program of the Netanyahu-led coalition, relentlessly agitating for the complete and permanent ethnic cleansing of the Palestinian territories, finds a friendly echo in Trump’s proposals.

Imperialist Pressure on Latin America

Trump’s policy of reasserting U.S. dominance in the Western Hemisphere implies an offensive on Latin America, where China has been positioning itself as the first or second trading partner of several of the region’s main countries.

While still erratic, the White House policy toward the region is in line with its more general approach of combining threats, sanctions, and tariffs to obtain concessions and better deals. An early example of this tactic was the Petro government in Colombia, which suffered the Trumpist onslaught when it resisted accepting deportees arriving on military aircraft. Mexico and Panama have been at the forefront of the Republican administration’s targets. The migration issue is one of the keys to Trump’s policy. Together with the renegotiation of the United States-Mexico-Canada Agreement (USMCA), this puts maximum tension on the link with Mexico, which is expected to play the role of a “stopper” to contain migratory waves to the United States, similar to the role played by Turkey for the EU. Another point of tension is Venezuela, where the Right wing had hoped to overthrow Maduro with the help of its allies in the White House, but that has yet to happen. Sanctions and threats come and go, but Trump seems unwilling to repeat the fiasco of the failed Guaidó coup pushed by Republican hawks during his first presidency. And Maduro has opted for a negotiating line, with oil licenses at the center.

Politically, Trump’s arrival emboldened the extreme Right in a region where, for the moment, Trump-friendly governments are in a minority and “center-left” or center-right (non-Trumpist) governments prevail, albeit in an unstable climate.

Of the three main countries in the region, only Argentina with Milei is in a position of unconditional alignment with Trump, while Brazil and Mexico oppose his agenda.

This explains the value for Trump of having a servant like Milei who acts as a beachhead in Latin America and is a favorite attendee in reactionary international forums. Milei’s policy is a reworked version of the “carnal relations” of Menemism, acting as a lackey to imperialist interests in unconditional alignment with the United States and Israel. That is why the U.S. President, besides boosting Milei’s ego with praise, pats, and selfies, is facilitating access to a new program with the IMF to help the government maintain its current economic scheme and try to win the October legislative elections. However, Milei’s political-ideological affinity and servility were not enough to prevent Argentina from falling victim to Trump’s protectionist policy, which imposed tariffs on aluminum and steel. Something similar happened to Macri, who got a millionaire loan managed by Trump to win the elections, but ended up suffering massive capital flight in 2018 and losing the presidency.

More generally, the U.S. protectionist policy, especially if it results in a strengthening of the U.S. dollar, will have a negative impact on emerging economies, particularly on those like Argentina, whose debt is largely in U.S. dollars.

Trade Wars and Economic Volatility

In addition to these geopolitical shocks, to both allies and enemies alike, Trump is implementing a series of punitive tariffs against imports. Both the USMCA bloc — Canada and Mexico –- and Europe and China are in the crosshairs, which has triggered those countries to impose tariffs on goods that they import from the United States.

The trade wars provoked by Trump, particularly with China, are still at controlled levels, and there is still some way to go. Faced with the increase in tariffs on Chinese goods, Xi Jinping’s government imposed moderate tariffs of 15% on agricultural imports from farmers, who are largely Trump’s electoral base. Some strategic companies are also included.

The European Union also entered into this spiral of punitive tariffs. To the tariffs imposed by Trump on steel, aluminum, and products that include them in their manufacture, the EU responded with tariffs of up to 50 percent on emblematic goods, such as Harley Davidson motorcycles and bourbon from Kentucky. The president upped the ante with a 200 percent tariff on European alcoholic beverages, especially wine and champagne.

The use of tariffs seems to have a dual purpose. At the domestic level, they support the protectionist and “reindustrialization” agenda that is part of the Trumpist program, and they compensate for the revenues lost by the Treasury due to lower taxes on the rich, in the more general context of growing public debt and deficits. In foreign policy, these restrictions on the U.S. market serve as a weapon of choice for “transactional diplomacy” and thus obtain trade and/or political concessions. That is why the tariffs do not distinguish between friend and foe and are subject to the president’s discretion. One day they can be directed at Mexico and Canada with the excuse of fentanyl trafficking and illegal immigration. The next day they can be lifted without solving any of those problems.

As in other areas, this dual purpose responds to the agendas and idiosyncrasies of the wings that coexist poorly within the Republican administration. For the protectionist faction — Peter Navarro and company — the key is “buy American,” while the transactionalists see it more as a negotiating tool. In the Trumpist discourse, they alternate according to the occasion, with more or less emphasis on the need to accept small sacrifices, such as a rise in inflation, in order to recover “American greatness.”

Although Trump twice backed away from 25 percent tariffs on goods from Mexico and Canada, delaying implementation by a month, some of the damage had already been done.

The first shots of the tariff war caused nervousness on Wall Street. The markets reacted with falls that were significant but not catastrophic, expressing uncertainty about the effects that these measures may have on international trade and the impact on the U.S. economy. The effects started with a rise in inflation and the disruption of supply chains (it is estimated that a car manufactured in the USMC zone crosses the U.S.-Mexico border nine times).

The stock market and crypto binge, triggered by expectations of deregulations and lower taxes, is giving way to a bear market. By early March, the stock indexes — Dow Jones, S&P, and Nasdaq — had lost everything they had accumulated since Trump’s win in November 2024. The president, who used to use the Wall Street boom as a measure of American success, has come to downplay the importance of the stock market’s rise and fall as a function of the supposedly greater goal of strengthening the national “real economy.”

The appearance of DeepSeek, the Chinese artificial intelligence firm, was a blow to the sector that drives North American growth, particularly for Nvidia, which lost $465 billion from its stock market valuation. DeepSeek’s presentation to society also showed that the trade war served to delay but not prevent the technological development of China, which, with less money, managed to achieve similar results. This “Sputnik moment” did not resolve the issue in China’s favor, but it was enough to strike a blow in a strategically competitive sector.

The concentration of the stock market value of the large companies behind the AI boom (the so-called Magnificent Seven) means that even small variations in their share price have a disproportionate impact, adding volatility to the markets.

Although the U.S. economy continues to be the one with the best prognosis among high- income countries, the indicators are not good: during the first month of the Trump administration, consumption contracted, consumer confidence fell to its lowest level since 2023, the inflation estimate increased, and the dollar weakened, something unusual in contexts of protectionist measures in which the currency appreciates. The dollar seems to have fallen in the turmoil generated by the erratic policies of the White House. It was devalued six percent in two months (between January and March) against a basket of other currencies, particularly against the euro, which was strengthened by expectations of increased defense spending.

Within the Trump administration there are two opposing lines on the dollar: the “strong dollar” line of Treasury Secretary Scott Bessent; and the Trump-Vance line, which sees the strong currency as hurting local industry. It is also true that the weak dollar and tariffs combo will be a blow to consumers’ pocketbooks and a trigger for inflation. The preference of this presidential pairing fuels speculation about a possible “Mar-a-Lago Accord,” in reference to the “Plaza Accords” of the 1980s which weakened the dollar to address the trade deficit. There is also the possibility that Trump will put pressure on the Fed to limit interest rate hikes.

Finally, the massive layoff of public employees and the deportation of immigrants, most of whom take jobs unwanted by Americans, add stress to the labor market and will undoubtedly negatively affect the prospects for economic growth.

According to the IMF, the outlook for the world economy is not very encouraging. It forecasts weak and uneven growth globally (3.5%), with modest growth for the United States (2.7%), meager growth for Europe (1%), and somewhat higher growth for China (between 4% and 5%).¹Translator’s Note: At the time of publication of the English edition, the IMF predicts the US to grow by 1.8 percent this year, and 1.7 percent next year. The other major factor in the IMF’s projections is the unsustainable weight of debt in emerging countries, which could be further aggravated in the event of a strengthening U.S. dollar and possible high interest rates in an inflationary context.

In addition to the impact of tariffs and protectionist tendencies, there are the geopolitical risks and, above all, a growing lumpenization of capitalism. This is especially pertinent in the United States, where there was a 180 day suspension of an anti-corruption law that prohibited American companies from paying bribes abroad. The Trump administration is liquidating virtually every regulation, from safety standards, environmental protection measures, labor conditions, and consumer defense provisions against potential scams, to (at this point already minimal) controls on financial speculation and risky assets such as crypto and meme coins. In fact, Trump and his wife have launched their own meme coin, and perhaps inspired Milei to promote the Libra scam. As correctly pointed out by Michael Roberts, regulations do not prevent capitalist crises, but absolute deregulations pave the way for catastrophic crises, like the Great Recession of 2008.

Organic Crises, Asymmetric Polarization, and Cessationism

 A crisis of hegemony has been developing among the traditional parties that for four decades have sustained the neoliberal consensus in America. The social democrats, the liberals, and the conservatives are all in crisis. Emerging from this virtual collapse of the “extreme center” (in the words of Tariq Ali) is a panorama of organic crises both in peripheral countries — which would not be a novelty — and in high income countries. The resolution of these crises, which remain more or less open, will come against the backdrop of the profound social polarization that is a legacy of the neoliberal offensive.

But this crisis of the bourgeois centrists (and the failure of their bourgeois center-left-populist variations, such as the “progressive governments” of Latin America) did not give rise to a consistent turn to the right. Instead it opened a panorama of “asymmetric” political polarization, in the sense that at the beginning of this new stage, the extreme Right has taken their radicalization much further than the expressions of the Left, which emerged from reformism.

In this more general framework of degradation of liberal democracies, which accompanied the neoliberal offensive like a shadow on the body, and of new political phenomena and class struggle, Bonapartist attempts arise to resolve the crisis from the right. The authoritarian governments of the extreme Right, such as Trump’s and that of the “paleolibertarian” Milei in Argentina, force the legality of liberal democracy to the limit. This tends to liquidate the division of powers and concentrate everything in the executive, making use of mainstream media, social networks, and state repression to drastically change the relationship of forces, as seen for example in the repressive offensive against the pro-Palestinian movement in the United States.

It is not surprising then that in the United States, references to the danger of a dictatorship have become commonplace. This warning is especially acute coming out of analyses of Project 2025, the plan for the transformation of the state bureaucracy to institutionalize Trumpism, published by the Heritage Foundation, a historic conservative and Reaganist think tank.

Trump’s alliance with Elon Musk, who amassed unprecedented economic and political power, and the alignment of big tycoons like Mark Zuckerberg and Jeff Bezos, gives the government elements of a plutocracy. The cabinet is mostly composed of mega-billionaire businessmen; the cabinet’s collective wealth is estimated to be close to $500 billion.

Trump must deal with the contradictions that risk the precarious unity of the different wings that make up his government, in a second term that has begun with mostly negative ratings. He is only showing wide approval in immigration policy. The unofficial role of Musk, who took on the task of shrinking the state as head of the Department of State Efficiency (DOGE), poses not only a conflict of interest with the state itself as it decides on areas from which it extracts enormous economic benefits — Musk received at least $38 billion in government subsidies, according to a Washington Post study — but also with other bourgeoisie and cabinet members, who are affected by the drastic cuts. As Slobodian explains, three strands converge in government, with conflicting interests and policies: the Wall Street-Silicon Valley nexus, anti-New Deal conservatives, and “anarcho-capitalists” and right-wing accelerationists. Some of this is expressed in the open war of Steve Bannon, the MAGA nativist ideologue, against the “globalist” Elon Musk.

By definition, unless they are based on major defeats, these Bonapartist, non-hegemonic governments, relying on their hard core and intense minorities, have an unstable base and a legitimacy reduced by political polarization, which they tend to deepen with actions that may go beyond the balance of power. This opens opportunities for class struggle and political radicalization. There are already some symptoms of this. Despite the demoralizing role of the Democratic Party, the first actions have been taken to confront immigrant deportations. The boycott of Tesla (Tesla Takedown) shows the hatred that the Musk-Trump tandem is generating, through both peaceful actions, like selling vehicles and protests, and violent attacks on dealerships. And on the margins, symptoms of radicalized actions have been developing, such as the organization of self-defense in Lincoln Heights, a small majority-Black city in Ohio, which set up its own vigilante defence force to ward off attacks by neo-Nazi militias.

Class Struggle and Revolutionary Perspectives

As we have been suggesting, we are not facing a univocal shift to the Right, but rather a scenario of social and political polarization, in which the extreme Right has become more radicalized. However, interesting responses from the Left are beginning to appear. Perhaps the most novel of these processes is the political awakening of the youth in Germany, who mobilized massively against the extreme Right, Alternative for Germany, and expressed their discontent with the massive vote for Die Linke.

Since the capitalist crisis of 2008, there have been at least three widespread waves of class struggle at the international level. The first, after the Great Recession, had its highest point in the Arab Spring, the general strikes in Greece, and the emergence of the “indignados” in Spain.²Translator’s Note: In the U.S., this first wave of class struggle since 2008 inspired and encompassed the Occupy movement. The second was dominated by revolts, such as the rebellion of the yellow vests in France, the uprisings in Chile and Ecuador, and the struggle against the coup d’état in Bolivia.³Translator’s Note: In the U.S., this second wave of class struggle since 2008 encompassed the George Floyd Uprising of the Black Lives Matter movement.

The third, which began with the war in Ukraine and the delayed effects of the pandemic, is still developing. It has brought a novel combination of trends, mainly in the peripheral countries, with greater emphasis on the centrality of the working class and youth leadership. Additionally, these demands go beyond simple economic issues, as shown by the movement in solidarity with Palestine and against the complicity of imperialist governments as they perpetrate genocide in Gaza.

On a larger scale is the recent news out of South Korea, where the central actors that stopped the attempted self-coup of the right-wing Yoon government were the student movement and the labor movement organized in the Korean Confederation of Trade Unions (KCTU).

As part of this trend is the struggle of the student movement in Serbia, which in the face of a social crime took to the streets en masse and developed a broad process of workers’ and popular mobilization that ended with the resignation of the Prime Minister. There have also been recurrent and massive general strikes in Belgium against attacks by the right-wing government. And more recently in Greece there was a general strike and mobilization on the anniversary of a railway catastrophe, which acted as a catalyst for the enormous discontent against the right-wing government that has been brewing during years of passivity after the defeat led by Syriza.

Because of the combination of bourgeois crises, militarism, and attacks, Europe is one of the epicenters of crisis. There our comrades of Permanent Revolution in France are launching a big campaign against Macron’s militaristic leap in and against anti-democratic attacks. Likewise, our comrades in the Revolutionary Internationalist Organization (RIO) are fighting against the rearmament in Germany.

The struggle in Argentina against the Milei government is considered a beacon of world reaction. For the PTS, this struggle necessarily has an internationalist character, and is part of these more general tendencies.

Demoralized sectors of the Left view a prolonged period of defeat opening up the doors to “fascism.” This view justifies their ‘lesser-evil’ alliances with sectors of the bourgeois order in the name of the ‘cordon sanitaire’ against the extreme Right. But our perspective is that, in this convulsive situation, the decisive battles are still ahead. We are preparing for a stage of more radical class confrontations, which will overflow the “normal” limits of bourgeois legality and open the road to the workers’ revolutionary struggle.

Translated from the original by Deepl and edited by Noah Kenner and Rita Singer