because you have the WTO, the US can declare retaliatory tariffs within a generally accepted framework.
There's less debate and uncertainty about the legitimacy of the retaliation, and its better understood than the advanced kremlinology required to decipher some other things.
Not many things are panacea, but things like the WTO have been pretty useful at avoiding trade wars IMO.
Sure, ISDS can help a country build more trust, and lower the cost of foreign investments, but it's not a panacea.
Plus, countries would still play chicken with each other. If China decides to seize Apple's plants, what should the US do, declare war? Should France and EU terminate all foreign deals with Egypt due to it not wanting to pay for the Veolia ISDS decision?