Danny Trejo says he was provoked into a brawling during the Fourth of July incident ... and insists race played a significant role in why he and his friend were targeted.

TMZ caught up with the actor and his banged-up buddy ... and Trejo's saying he believes they got targeted at the Sunland-Tujunga parade 'cause they're Mexican -- especially since no one else was singled out and hit by water balloons.

Previous video we shared of the brawl showed Danny throwing the first punch -- but the actor tells us he was just reacting to a guy who grabbed him first. Plus, he adds someone mentioned it was acid, not water thrown at him ... which made him jump out of the car fast.

His friend even shows us just how crazy things got -- giving us a close-up of his bruised eye and red, swollen arms, which he said had fingerprints from the other guys all over them.

Bottom line, Danny says it's pretty sad grown men would stoop low enough to attack an 80-year-old man ... only for him to still be talking and laughing after.

Law enforcement told TMZ a radio call came in about a big fight ... but by the time they arrived, the crowd had already dispersed, so no arrests were made.

But Danny spoke to us straight after the water balloon drama, slamming the people who threw it at him as "cowards" -- and looks like his tune hasn't changed much after sleeping on it.