It's hurting the bottom lines of companies on both sides; American and foreign companies. They'll eventually begin to put pressure on their respective governments to strike a deal.
There's too much money to be made to play the "eye for an eye" tariff game long term. It will work out sooner than later.
Capitalism will demand it.
I partially agree. I fully expect negotiations between the U.S. and our traditional allies(i.e. Europe) that will resolve issues, but I don't necessarily expect the same with China. (And in fairness, as someone who has spent extensive time on expat assignments in China, it is 100% accurate to state that Chinese IP theft is a very real problem for U.S. businesses that manufacture there - even if our current administration has no idea how concept of how to interact with Chinese culture).
Particularly with Europe, most of the trade talk is grandstanding, playing to the "base" - the tariffs would probably do at least as much harm as good to both parties. Thus, there's good reason to believe much of this is more smoke than fire and will be largely resolved within a reasonable time frame. China, not so much. Trump's approach to negotiating with China, North Korea, etc. makes it painfully obvious(at least to those of us that have lived/done business there) that he has no grasp of Chinese/Japanese/Korean cultures, and how business relationships are conducted there. There are a certain set of cultural norms you adhere to if you want to maintain a successful business relationship in China, Korea, etc, and there's a very real chance that we end up at an impasse because of the cultural ignorance of the current U.S. administration. I could easily see the egos involved preventing an effective resolution when it comes to U.S.-China trade over the next few years.
With all that said, if you look at the markets, U.S. stocks have been fairly ambivalent towards all the talk of trade wars. They don't love it(and some companies hate it), but one the whole, tariff talks have resulted in bounces rather than plunges and U.S. markets(tech excluded) have mostly gone sideways in recent months. International stocks, not so much: for the 2 1/2 years ending some time in May/June of 2018, major international indices tracked pretty well with the S&P 500. Since about late May(and particularly since mid-June, when China launched their retaliatory tariffs), international stocks have lost nearly 10% vs. the S&P.
(Full disclosure - I have more international equity exposure than the average investor, and it's definitely hurt my portfolio in recent months - so I'm not at all happy about any of this.)