US mixed signals on China trade will cause private sector paralysis
By Leon Hadar 10/16/25
The Trump administration's recent attempts to de-escalate trade tensions with China reveal a complex balancing act between projecting strength and preventing economic damage. After announcing a dramatic 100 percent tariff on Chinese goods just days ago, Treasury Secretary Scott Bessent now claims the two nations have "substantially de-escalated," highlighting the administration's volatile approach to one of America's most consequential bilateral relationships.
The Pattern of Escalation and Retreat
The current situation follows a familiar pattern. On October 10, President Trump announced sweeping new tariffs—set to take effect November 1—following Chinese export restrictions that disrupted ongoing negotiations. Within days, however, his administration began signaling openness to dialogue. Secretary Bessent emphasized that "the 100 percent tariff does not have to happen," suggesting the threat itself was the policy tool rather than an inevitable outcome.
This whiplash approach raises fundamental questions about strategic coherence. Is the administration employing calculated brinkmanship to extract concessions, or does the rapid cycling between threats and reconciliation signal internal disagreement and market pressure forcing course corrections? The answer likely involves both elements, but the execution leaves allies, adversaries, and markets perpetually uncertain about American intentions.
Market Realities vs. Political Posturing
The administration's rhetoric acknowledges an uncomfortable truth: the current trajectory is economically unsustainable. With tariff levels reaching 120-145 percent on some goods, normal commercial relations have become impossible. China sells approximately five times more to the United States than it purchases from America, giving Beijing significant exposure but also making Chinese supply chains deeply embedded in American consumer markets.
Wall Street's visible anxiety has clearly influenced the administration's tone. When Bessent speaks of prioritizing "global market stability" and adopts a "more conciliatory tone," he's responding to investor concerns that a full-scale trade war could trigger broader economic disruption. The administration finds itself constrained by the very market forces it hoped to command through tariff threats.
The Pressure Point Problem
Bessent's repeated assertion that "it's up to China to de-escalate" reveals a strategic flaw. By publicly placing responsibility for resolution entirely on Beijing while simultaneously seeking to soothe markets through conciliatory signals, the administration undermines its own negotiating position. China has little incentive to make the first move toward compromise when American officials simultaneously claim de-escalation is already occurring and telegraph their eagerness to avoid implementing threatened tariffs.
Moreover, the administration's shifting justifications—ranging from trade imbalances to accusations that China is "financing war"—complicate coherent negotiation. When the rationale for confrontation keeps changing, what would constitute acceptable terms for resolution?
The Stakes of Sustained Uncertainty
Perhaps the most significant cost of this approach isn't any single tariff or trade restriction, but rather the perpetual uncertainty it creates. Businesses require predictable policy environments to make long-term investment decisions. Supply chain diversification away from China involves massive capital commitments that companies will only undertake if they believe tensions are permanent. Yet the administration's constant pivoting between confrontation and conciliation leaves the private sector paralyzed.
The planned Trump-Xi meeting, if it occurs, represents a potential circuit breaker for this cycle. However, summit diplomacy without groundwork often produces more photo opportunities than substantive agreements. Unless working-level officials have prepared specific frameworks for mutual concessions, a high-profile meeting risks becoming another symbolic gesture followed by renewed tensions.
A Path Forward?
Successful de-escalation requires the Trump administration to reconcile its competing impulses. If the goal is genuinely to reduce tensions, the United States must be prepared to offer tangible concessions—not simply demand Chinese capitulation while maintaining the threat of escalation. If the goal is to fundamentally restructure the economic relationship and decouple supply chains, the administration should acknowledge this openly rather than alternating between threat and retreat.
The current approach—maximum pressure punctuated by assurances that everything is fine—satisfies neither objective. It fails to extract concrete Chinese concessions while creating exactly the economic uncertainty the administration claims to want to avoid. Without greater strategic clarity and consistency, the pattern will likely continue: periodic escalation followed by partial retreat, leaving both economies diminished and the fundamental issues unresolved.
The question facing the Trump administration isn't whether to engage with China on trade, but whether it can develop a coherent strategy for doing so. Until that clarity emerges, markets, businesses, and international partners will continue to experience the economic equivalent of whiplash—and both American and Chinese workers will bear the costs.