In the cold trade war between the US and China, Donald Trump is not obviously leading the winning side. When he met with President Xi Jinping last week for a much-heralded summit, trade nerds were expecting more. The two sides shared promises to co-ordinate on tariffs and swap agricultural products, but overall there was an awful lot of pomp and not very much substance.
The summit underlined that although the US may have demands of China, the Chinese no longer feel the need to placate their American partners publicly. Gone are the days when a Trumpian tariff threat can unlock a signing ceremony celebrating massive Chinese purchases. Having spent years building a mighty manufacturing machine, the Chinese have economic weapons of their own. Hit them too hard, and they’ll kneecap your industry by cutting off supplies of the critical components you rely on them to provide.
That threat is echoing around the world. The Japanese and the Europeans have their own battle wounds inflicted by China. And if America seems cowed by China’s threats, what hope do the other, punier players have? For now, the situation seems stable — calm, even — as each player holds fire. But such is the latent danger that further from the front lines trade warriors are hard at work.