I didn't said it would never happen, just that China has enough leverage to stand their ground. Which is exactly what happened. Indeed, reports from the end of January are that the U.S. is floating lifting all tariffs for the remainder of negotiations. Are we supposed to believe that such a move would be merciful? (Remember, my original point was that China has no reason to feel isolated or threatened.)

Most people assume that China needs the U.S. market more than the U.S. needs the Chinese market. But that thinking is about 15 years out of date. The reality is that exports as a percentage of GDP have plummeted in China from a high of 36% to about 18%:

  https://data.worldbank.org/indicator/NE.EXP.GNFS.ZS?locations=CN-US
  https://economic-research.bnpparibas.com/Views/DisplayPublication.aspx?type=document&IdPdf=30895

Whereas exports as a percentage of GDP in the U.S. have been steadily increasing and are at about 10% now. (Also, less than 1/5 of Chinese exports go to the U.S., so their exposure to U.S. import tariffs is <4% of their GDP.) The critical point is that the Chinese trajectory is down and they want a more consumer driven domestic economy. (People on HN in particular should appreciate why trajectory matters.) All of these things combined mean that China is negotiating with the U.S. from a position of strength. Not necessarily stronger than the U.S., but also not weaker. Our posturing and our aggressive negotiating tactics simply make us look naive.

Many of the concessions China has made and will make are changes that were inevitable. And this is why previous administrations, Republican and Democratic alike, avoided the populist politicking of the current administration--it would require expending considerable American good will for de minimis benefit. The China "problem" was already well on its way to fixing itself. The cold, hard truth, though is that there aren't any great ways to improve America's domestic low-skill manufacturing base without losing elsewhere (i.e. farming exports, high-margin service exports, or cheap imports that subsidize our standard of living). The China problem will simply become the Vietnam problem, the Myanmar problem, ad naseum, and as the U.S. economy continues to shrink relative to the global economy, we have less and less power to extract concessions that allow us to avoid coming to terms with our real domestic issues.

Another cold, hard truth is that our deficit spending is the flip side to our current account deficit. China comprehends that at least as well as we do, and apparently much better than advocates of the recent tax reform measure which exploded our deficits.[1] That provides yet more leverage for China. All the bluster in the world can't surmount economic fundamentals, as every populist demagogue (like Hugo Chavez) eventually discovers. But reality doesn't prevent demagogues from selling the public fantasies about geopolitical "wins" or from hiding behind manufactured excuses.

[1] And lest you think I'm partisan, I also think single-payer healthcare is fiscal suicide. If we can't make Obamacare work (politically, fiscally) then there's zero chance we can make single-payer work. (I do think Obamacare is salvageable if we tried, but in any event it's already at the outer edge of what's feasible as a practical matter.)