I was in Beijing when the news of the temporary tariff detente filtered through. The reaction from my interlocutors was one of calm anticipation.
No-one had any doubts as to how the stand-off would resolve.
China’s hand - so to speak - was premised on the fact that it makes the cards. It also demonstrated a capacity to act responsibly and reliably insofar as global trading partners is concerned. Importantly, its refusal to buckle in the face of America’s capricious and unilateral tariffs demonstrated to the world that American bullying has reached its limits.
The negotiations on the shores of Lake Geneva were conducted in good faith. That the U.S. folded is no surprise given their “hand” was entirely bluff. What was surprising was the speed of the capitulation. The prospects of empty shelves, rising prices and ongoing instability in the U.S. bonds market no doubt played on the minds of Bessent and co.
Not only did we learn of America’s capricious capacity to incur self-harm, we also learned of America’s limitations. The U.S. economy cannot decouple from China without significant pain. This adjustment cost was something Trump spoke about in ways that implied it was a price he was willing to pay. Actions in the end speak louder than words.
The rest of the world can see an America that is increasingly prone to unilateral actions. This is a risk that must be - and will be - factored into policy preparedness going forward.