Investing.com -- The recent retreat from aggressive U.S.-China tariffs has left investors and policymakers questioning what, if anything, was achieved, according to analysts at Deutsche Bank.
The firm said in a note this week that the resolution may appear cosmetic, but “a lot has been learnt,” especially about global trade dynamics, geopolitical strategy, and economic resilience.
The bank said one key takeaway is that the U.S. has abandoned broad decoupling in favor of “sector-specific ‘strategic decoupling,’” reflecting its ongoing reliance on Chinese goods.
In the choice between “empty shelves in the U.S. and shallower pockets in China,” Deutsche Bank noted, the outcome has been clear: “stocking the shelves.”
Historical context also shapes today’s strategy, the analysts said. China’s memory of its “Century of Humiliation,” rooted in 19th-century conflicts like the Opium Wars, informs its “willingness to stand up to economic coercion,” Deutsche Bank wrote.
The bank highlighted that, unlike in the past, “China now has the world’s largest navy” and dominates industrial sectors from telecom to electric vehicles.
While tariffs may be rolling back, the core economic tensions persist. “The fundamental overproduction-overconsumption imbalance between China and the U.S. remains large, striking and unsustainable,” the note said.
U.S. manufacturing has declined to less than 10% of its workforce, compared to 22% in China.
Still, Deutsche Bank sees hope for “mutual rebalancing,” citing U.S. Treasury Secretary Bessent’s calls to narrow the U.S. fiscal deficit and China’s push to boost domestic consumption.
Finally, Deutsche Bank analysts believe the Global South is emerging as both “an arena and an agent” in this geopolitical contest.
“The geopolitical alignments and allegiances of the rest of the world will be of growing focus,” with key developments unfolding in Saudi Arabia, Latin America, and Southeast Asia.