[BUG] Claude Desktop 1.18286.0: tool-call cards render fully expanded and can no longer be collapsed (regression; bundled CC 2.1.197)

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

Since Claude Desktop auto-updated to 1.18286.0 on macOS, every tool-call card in the chat transcript (Bash IN/OUT blocks, Edit diffs, etc.) renders fully expanded inline, and the collapse control is gone:

• Tool cards no longer auto-collapse into a one-line summary chip.
• They can't be collapsed manually either — clicking the card header does nothing; there is no toggle to hide tool output.

On any multi-step session this becomes a long wall of expanded tool output where the actual assistant response text is hard to find. The previous desktop build auto-collapsed each tool card (expandable on click), so this is a regression, not a missing feature.

Scope: subagent delegation itself still works (subagents still spawn/run) — this is purely a transcript rendering / collapse-UI regression, not a behavior change. Nothing in my config changed; the only variable was the desktop auto-update.

What Should Happen?

Each tool-call card should auto-collapse to a one-line summary chip, expandable on click (the pre-1.18286.0 behavior), with a working manual collapse/expand toggle — so the assistant's actual response text stays the primary, immediately visible content in the transcript.

Error Messages/Logs

No error is thrown — it is a rendering regression. Evidence of the triggering update, from the desktop updater log (~/Library/Logs/Claude/main.log):

2026-07-03 15:40:55 [info] [CCD] Initialized with version 2.1.197
2026-07-03 15:40:56 [info] [updater] Previous update install succeeded (1.17377.2 -> 1.18286.0)

Every session started after this 15:40 launch shows the regression; sessions before it did not.

Steps to Reproduce

1. On Claude Desktop 1.18286.0 (macOS), start any session that runs several tool calls in a row (e.g. a few Bash commands and an Edit).
2. Observe the chat transcript.
3. Try to collapse a tool-call card by clicking its header.

Result: all tool cards are rendered fully expanded and cannot be collapsed — no auto-collapse into a summary chip, and no working manual collapse toggle. The assistant's response text ends up buried in a wall of expanded tool output.

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

Claude Desktop 1.17377.2 (immediately prior build)

Claude Code Version

Claude Code 2.1.197 (bundled in Claude Desktop app 1.18286.0)

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

• This is the Claude Desktop app (ToDesktop shell), not a terminal — the "Terminal/Shell" field doesn't strictly apply. Desktop shell 1.18286.0; bundled Claude Code 2.1.197.
• CLAUDE_CODE_EXPERIMENTAL_AGENT_TEAMS=1 is set (agent-teams / FleetView enabled), in case it is relevant to the transcript renderer.
• Checked /config, settings.json (global + project), and env vars — no verbose/compact/collapsed toggle controls this. Ctrl+O (verbose toggle) is CLI-only and has no effect on the desktop transcript.
• No supported downgrade path for the ToDesktop desktop app, so there is no user-side workaround within the desktop app (the Terminal CLI is unaffected).

Related issues:

• #65668 — the same desktop regression reported on an earlier build (1.11187.1), closed as "not planned" / "doesn't seem related to Claude Code." Re-filing because it is present again on the current 1.18286.0 build with no open tracking issue.
• #73000 — transcript-render regressions introduced in engine 2.1.196, worse in 2.1.197 (2.1.195 OK). This desktop build bundles 2.1.197, so the root cause may be engine-side rather than solely the ToDesktop shell.
• #73789, #73413, #67005 — open requests for a compact/collapsed-by-default mode. This report is narrower: restore the collapse behavior that regressed.