Analysing U.S. Tariffs Using Game Theory: Single-Run vs. Multiple-Run Dynamics Trump’s tariff strategy—highlighted by his April 2, 2025, “Liberation Day” reciprocal tariffs—can be analysed through these lenses: Single-Run Perspective Setup: The U.S. imposes tariffs (e.g., 20% on most countries, 60% on China) as a one-time move to force immediate compliance on issues like trade deficits, border security, or drug trafficking. Payoff: If other countries concede quickly (e.g., Canada and Mexico tightening borders), the U.S. wins short-term gains. If they retaliate (e.g., China’s counter-tariffs), both sides lose via higher costs and disrupted trade. Ambiguity’s Role: Trump’s vague goals—calling tariffs “beautiful” without clear endgames—create uncertainty. Other countries don’t know if the tariffs are permanent or a bluff, making it harder to calculate their best response. This could push them to overreact (retaliate) or underreact (concede prematurely). Multiple-Run Perspective Se...
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