Bullying Can Work, but It Has Its Limits

Commentary by William Alan Reinsch

Published November 3, 2025

Last week, we were treated to an impressive series of agreements on trade, investment, and technology transfer with a long list of Asian countries. First came Malaysia, Cambodia, Thailand, and Vietnam, the latter two "frameworks," which means something short of an agreement. Next came a minerals agreement with Japan, a technology cooperation agreement, a trade agreement with South Korea, and then the big one with China.

All but the last of these appeared intended to reinforce the United States as an economic force in Asia and counterweight to Chinese influence. Let's look at China first.

The China "agreement"-the two leaders do not appear to have actually signed anything-remains unclear. Every day seems to bring new details. It appears that China agreed to postpone implementing its tightened export controls on rare earths for one year, agreed to buy more soybeans and other agricultural products, postpone its retaliatory port fees, possibly buy more energy from Alaska, and perhaps drop its antitrust investigations of several U.S. companies. In return, the United States halved its fentanyl tariffs, postponed its rule expanding export controls over Chinese subsidiaries for one year, dropped its threat of 100 percent additional tariffs, and postponed its port fees.

In essence, the two sides dropped most of the leverage moves and countermoves they had taken since March. That is an improvement, but it was not progress. It was the predicted "small deal" that left all the serious issues in the relationship still outstanding and reminded everybody of the similar small deal in Trump's first term. Since the big issues are intractable, this "Groundhog Day" scenario may be the best we can do-a repetitive series of small deals, with the next one coming in April when Trump goes to China.

There are two lessons here for the United States. Trump's bullying approach, evident in the other Asia agreements, doesn't work with China, which knows it has leverage and has learned how to use it. To borrow a term from the experts, this latest agreement demonstrated that neither side has escalation dominance. That is related to the second lesson: China and the United States both appear to believe that the other needs them more than they need the other. This can lead to dangerous miscalculations. The truth is, they need each other, but making that work has proved very difficult. Mutual mistrust is getting worse, not better, and the sad thing about last week's agreement is that it does nothing to change that.

The agreements with Southeast Asian nations were mostly elaborations, additions, or clarifications of previous negotiations. The texts of the Malaysia and Cambodia agreements are more detailed than some of the others, though, as with those, several issues are left for later discussion. Big picture: The other countries agreed to reduce their tariffs on U.S. goods, remove many access barriers, conform some of their standards to those of the United States, and potentially adopt U.S. positions on export controls.

The focus on national security measures is new for trade agreements, but it will not be the last time we see them. The wording is a bit vague-the countries commit to taking actions if they are consistent with their national sovereignty, which potentially creates a large loophole. Through provisions in its agreements with Cambodia and Malaysia, it appears that the U.S. strategy is to restrict Chinese content from entering the United States, invoking rules of origin changes when "benefits of the Agreement are accruing substantially to third countries or third-country nationals." The Rhodium Group, in a private analysis, concluded: "The agreements go beyond national security alignment to include a range of provisions that, if implemented in full, would de facto create a U.S.-centered trade grouping with high trade and investment barriers on Chinese goods, firms, and technologies" (quoted with permission from a proprietary Rhodium Group document). That may be a worthy objective, but it is hard to see the Southeast Asian nations actually implementing it.

The sections on digital trade are noteworthy because they indicate the United States may be at least in part returning to its pre-Biden position supporting the free flow of data "across trusted borders," a new caveat. The countries also agreed not to impose digital services taxes and to support continuing the World Trade Organization moratorium on e-commerce taxation. The Vietnam framework was vaguer and did not contain the same commitments, leaving them for later negotiation.

These agreements are not without winners. U.S. soybean farmers, of course, and also Boeing, since several of the countries have committed to buying more airplanes. The Southeast Asia nations may also consider themselves at least partial winners since they avoided even worse outcomes, though that is not much of a victory.

Trump, of course, will say the agreements are good for the United States because they provide for more market access, more investment, and more tariff revenue. My prediction is they will do that, but at a much lower level than Trump expects. Countries will slow-roll their market access commitments, investors will not always follow through, and tariff revenue will be less than predicted because Trump has reduced the tariffs and added a lot of exceptions.

Finally, the worst thing about them is the damage they will do to the trading system because they are preferential rather than most-favored-nation agreements, and to the United States' global image. Bullies may succeed in the short term, but the animosity they create will come back to bite them or the leaders who come after them.

William A. Reinsch is senior adviser and Scholl Chair emeritus with the Economics Program and Scholl Chair at the Center for Strategic and International Studies in Washington, D.C.

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