Poker players in this trading saloon

The poker game over trade between the US and China is becoming personal, with negotiators taking potshots at each other while the endgame is reserved for Trump and Xi. China doubled down on its rare earth stranglehold, which the US described as a power grab. A truce declared in summer is being frayed at the edges as its deadline approaches. But expectations are anchored around a Trump-Xi meeting before then. There is a chance the truce will be extended as negotiators work on a deal to avoid reciprocal tariffs that threaten to decouple the world's two biggest economies. The markets are getting a hang of how the negotiations are likely to progress. In anticipation, they are dialling down reaction to the high-stakes game.

Aside from the drama, the talks don't seem to be headed for a resolution in short order. That would explain the petulant export control threats over chips and magnets, some of which are fiendishly difficult to execute. Squabbling over port charges for ships would indicate the knottiness of the deal, which would ideally nudge American firms to produce more stuff and Chinese households to buy more stuff. The problem is both economies have grown to their current heft by not producing enough (US), and not consuming enough (China). It will take more than a bunch of bureaucrats in suits to arrive at a deal that steers their economies on new courses. Such outcomes typically involve the application of far more powerful political forces.

China can summon the political will to stick to its stand on overproduction. Despite all its bravado, the US does not have the luxury of time. Trump will be in a hurry to get the China trade deal done, which provides his Chinese counterpart a lever to restrain POTUS from his fantastical economic agenda. The world economy can't afford to decouple with either the US or China. So, as in any Spaghetti Western-Eastern martial arts movie, other countries will watch with eager anticipation as the high-stakes poker game unfolds. There is, lest one forgets, no winner-take-all hand at this table.