Andres Garcia (I have lived and studied in several American countries) answered.
Yes. But before answering that question in detail, let’s be clear: this trade war has been a grave error from the very beginning. There are many reasons to say that, but the main one is a deep ignorance by the current U.S. administration of how the global economy actually works, which led to choices so absurd as the selection of tariffs as main “weapons.” In fact, though some of the U.S. demands are part of the normal differences that can be expected between trade partners, and therefore should be discussed in a professional and calm environment, most of the demands are literally impossible demands that cannot be solved by China, especially those related to the so called “trade deficit,” which is mostly due to U.S. domestic macroeconomic unbalances and the role of the U.S. dollar as international reserve currency for 75 years, by U.S. choice. So, even if it wanted, China cannot solve the U.S. trade deficit with the world. China is only the best provider the U.S. has found.
If the trade war was absurd, escalating is simply insane. For some prestigious economists, it is the economic equivalent of the path that lead to the Vietnam war. For other analysts, it reminds a more recent debacle. Patrick W. Watson describes this very vividly, while using the Pottery Barn rule (“You break it, you own it”,) in an article appropriately titled “Trump's Trade War Is Over And Nobody Won”.
“President Trump’s trade war looks more like the Iraq fiasco every day. Some of the China-related problems are real. The US is right to demand changes. But Trump’s tariff strategy is…
hurting American businesses, farmers, and consumers; not solving the China problems; and
possibly making them even worse.
When you can’t possibly win, the wisest choice is to disengage and try again later. Beijing appears to be doing exactly that.
Conversely, Trump is breaking valuable merchandise and still not achieving any of his trade goals.
That may be entertaining, but it’s not ‘winning.’”
For Watson, like it was also for me, the moment when the current U.S. administration lost this trade war (in the sense that they are not going to get what they want, even if the trade conflict is prolonged years, because China decided to resist no matter the cost) was the moment when China let the yuan slide four days after the U.S. president promised new tariffs on August 1. Watson says the following about this:
“China could have done this long ago, but Xi Jinping kept it as his ace card. It’s a risky move with enormous symbolic value.
Using the yuan in this way means (loosely translated from the original Mandarin): ‘We’re done, Trump. Call us when you want to actually negotiate.’
That won’t happen, of course, because Trump can’t admit failure or show weakness. He is more likely to crank up the pressure even more. Chinese leadership knows this and is ready for it.”
So, yes, the new tariffs were nothing short of a deep strategic mistake that cut any realistic path to get anything close to what the current U.S. president promised to his supporters. But that does not mean he is done with this trade war. He can still do much more damage to both countries and the global economy. However, China at least have a competent government that has also the tools to prevent and minimize a lot of that damage. It is a different case in the U.S.
Nothing good can come of escalating a conflict where you have no realistic path to victory. Right now, it is not possible to know what is the worst possible outcome for this trade war, while the best possible outcome for the U.S. is to have, while it still can, an exchange of minor concessions with China (not from China) that can be sold as a “cardboard victory” (of the “mission accomplished” type) to the president’s supporters. If there is a sensible adult in the current administration that still has enough power, which is doubtful, we might see that outcome in the next couple of months. But even if that “best” outcome is fulfilled, it will not solve the damage already done, or the damage that will come afterwards.
The last one is the most concerning for the U.S. So far the U.S. has occupied a privileged position in all global matters. But anyone older than a 3-years old kid knows that after most things break they will never be as good as the original, no matter how much glue you add. The world’s trust in the idea that the U.S. will have always a leadership that will be at least minimally competent has been broken permanently by this administration. So, the leading role of the U.S. in the international system, both politically and economically, is going to change faster than expected after this moment, and the photo at the end of this answer might become prophetic, because many things will need to change inside the U.S. itself before it can regain global trust regarding any issue important for the world itself. This time several Obamas (this is, several well-prepared and informed leaders that can differentiate between a fact, a wish and an opinion, no matter if one agrees with their policies or not) will be needed before the world can see the U.S. government again as a reliable partner for any ambitious plan, or any long term strategies and negotiations.