There is an argument that the longer the trade war continues the more resilient China will prove to its debilitating political and economic effects. It is a case no sensible person would want to see tested, not least because it is based on assumptions and, in the end, there are no winners from trade wars. But it is a question that has sparked some calculations since Donald Trump tweeted two weekends ago that he was steeply increasing punitive tariffs on US$200 billion of imports from China, and preparing to slap them on another US$300 billion worth. Beijing responded this week by raising tariffs on US$60 billion of imports from America from next month.

The tit-for-tat exchange follows a dispute over China’s rejection of US demands. As a result, the gap between the two sides is now as big as ever. Yet positives were to be found in the worst week of the trade war. Despite Trump’s provocative tweet, China still sent chief negotiator Liu He to Washington. Liu came away from talks saying the apparent breakdown was “quite the opposite” and the Chinese side was cautiously optimistic. And Trump has raised the prospect of a separate summit with President Xi Jinping during next month’s Group of 20 meeting in Japan. So long as the two sides keep talking there remains hope of a breakthrough that both sides can live with.

In the end, China could not give in to all the US demands out of concern for national dignity and matters of principle, such as core domestic political and economic factors that the leadership feels it cannot compromise. To have done otherwise would have risked the perception of a sell-out and a weakening of the Communist Party’s hold on power through state control of the economy that would have been problematic for Xi. With the economy showing resilience and Xi not facing any immediate threat from economic fundamentals, he is arguably in a stronger position than a US president facing a re-election bid next year in which he needs to hold states hurt by his tariffs. On paper, the big disparity between the respective total imposts of the American and Chinese tariffs appears to give the US the upper hand. But far from China’s export trade being 100 per cent local, much of it is assembled from parts made in Asian countries that will share the pain of tariffs and be driven to China’s side.

Strong economic growth, bullish markets until now and public sentiment are on Trump’s side. But unlike China, where the authorities exercise more control over the political and economic narrative, the American system is very sensitive to shifts in sentiment. After all, even Trump’s national economic adviser, Larry Kudlow, agrees that US tariffs hurt American businesses and consumers.