Trump’s 90-Day Tariff Pause: Strategic Masterstroke or Calculated Bluff?

World domination: Countries will dance to my tune

 By J. André Faust (April 10, 2025)

Trump’s recent 90-day pause on most retaliatory tariffs isn't random—it’s a calculated maneuver in a multi-player strategic game.

In game theory terms, this looks like a deliberate pivot within a sequential game. Faced with simultaneous signals from over 75 countries, Trump appears to have shifted to a pause-and-observe strategy, maintaining flexibility while testing the responses of other players.

He didn’t pause everything. Tariffs on Chinese imports were hiked to 125%, which looks like asymmetric signaling—rewarding cooperative states with relief, while punishing non-compliance with intensified pressure. The outcome? A 9.5% surge in the S&P 500, one of the strongest market rebounds since WWII. If that’s not anticipation of payoff, I don’t know what is.

To me, it seems likely that Trump had already mapped out potential player responses, including how financial markets would react. This is not improvisation; it’s the behavior of a player operating several moves ahead, likely within a zero-sum frame, where one player's gain is another’s loss.

His reference to Mark Carney as the “Prime Minister of Canada” instead of “Governor” wasn’t a gaffe. In strategic communications, that’s a public signal meant to undermine Pierre Poilievre while elevating a preferred alternative. If we interpret this as a soft annexation narrative, it fits within a framing tactic: shifting perceived legitimacy from one actor to another.

Poilievre’s electoral strategy, on the other hand, has been highly predictable. He’s adapted rhetoric, not strategy. In the context of a repeated game, voters eventually see through surface-level repositioning when no deeper change occurs.

Now, what’s the biggest threat to Trump’s strategy? Coalition formation. If all 75 countries moved in unison against him, the payoff matrix would shift dramatically. But the global interdependence of economies makes such unity improbable—too many players have something to lose in a full-scale standoff.

Trump’s Tariff Pause: A Game Theory Perspective

Trump’s recent 90-day pause on most retaliatory tariffs isn't random—it’s a calculated maneuver in a multi-player strategic game.

In game theory terms, this looks like a deliberate pivot within a sequential game. Faced with simultaneous signals from over 75 countries, Trump appears to have shifted to a pause-and-observe strategy, maintaining flexibility while testing the responses of other players.

He didn’t pause everything. Tariffs on Chinese imports were hiked to 125%, which looks like asymmetric signaling—rewarding cooperative states with relief, while punishing non-compliance with intensified pressure. The outcome? A 9.5% surge in the S&P 500, one of the strongest market rebounds since WWII. If that’s not anticipation of payoff, I don’t know what is.

To me, it seems likely that Trump had already mapped out potential player responses, including how financial markets would react. This is not improvisation; it’s the behavior of a player operating several moves ahead, likely within a zero-sum frame, where one player's gain is another’s loss.

Here's a brief explanation of the payoff matrix: The assigned values mean that the higher the number, the better the outcome, and the lower the number, the worse the outcome.

• (Pause Tariffs, Cooperate) = (3, 3): Mutually beneficial outcome. Trump gets economic relief and positive optics, countries avoid economic retaliation.

• (Pause Tariffs, Retaliate) = (1, 2): Trump shows flexibility but gets undercut; countries benefit slightly from autonomy but at a minor economic cost.

• (Enforce Tariffs, Cooperate) = (4, 1): Trump gains dominance and appears strong; countries yield but suffer economically.

• (Enforce Tariffs, Retaliate) = (0, 0): Worst-case scenario. Trade war escalates, and both sides suffer
• If all 75 countries moved in unison against him, the payoff matrix would shift dramatically. But the global interdependence of economies makes such unity improbable—too many players have something to lose in a full-scale standoff.

Bottom line: this move isn't just about tariffs. It’s about shifting perception, testing loyalty, and managing risk while positioning for longer-term gains. The game is very much in motion—and Trump, for now, is dictating the tempo.

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The Tariff Standoff: Who Will Blink First in the U.S.– China Showdown?

By J. André Faust (April 08, 2025)

Asymmetric War of Attrition: US vs. China Trade War

Understanding the Game of Attrition

In game theory, a "war of attrition" is when two players compete not by direct confrontation, but by waiting each other out. Think of it like a staring contest—each side pays a cost for staying in, and the last one to quit takes the prize. It’s used to explain animal behavior, business strategy, and politics. In this case, we're applying it to the US-China trade war, where both nations are enduring economic strain hoping the other backs down first.

With Trump recently slapping a 104% tariff on Chinese EVs, the game has clearly entered a new phase. The stakes are high, and so are the risks. But is there really a winner in a game where the longer you stay, the less there is to win?

Fig. 1 – Asymmetric War of Attrition: US vs. China Trade War

This graph is generated from the Python code below and illustrates how both countries approach the trade war with different cost structures and reward decay rates:

import matplotlib.pyplot as plt
import numpy as np

# Simulation parameters
rounds = 20
initial_reward_us = 100
initial_reward_china = 100
reward_decay_us = 3
reward_decay_china = 2
cost_per_round_us = 4
cost_per_round_china = 2

# Arrays for plotting
x = np.arange(1, rounds + 1)
reward_us = np.maximum(initial_reward_us - reward_decay_us * (x - 1), 0)
reward_china = np.maximum(initial_reward_china - reward_decay_china * (x - 1), 0)
cumulative_cost_us = cost_per_round_us * x
cumulative_cost_china = cost_per_round_china * x
net_gain_us_if_china_concedes = reward_us - cumulative_cost_us
net_gain_china_if_us_concedes = reward_china - cumulative_cost_china

# Plotting
plt.figure(figsize=(12, 7))
plt.plot(x, reward_us, label='US: Remaining Reward ($)', linewidth=2)
plt.plot(x, reward_china, label='China: Remaining Reward ($)', linewidth=2)
plt.plot(x, cumulative_cost_us, label='US: Cumulative Cost ($)', linestyle='--', linewidth=2)
plt.plot(x, cumulative_cost_china, label='China: Cumulative Cost ($)', linestyle='--', linewidth=2)
plt.plot(x, net_gain_us_if_china_concedes, label='US: Net Gain if China Concedes ($)', linestyle=':', linewidth=2)
plt.plot(x, net_gain_china_if_us_concedes, label='China: Net Gain if US Concedes ($)', linestyle=':', linewidth=2)

plt.xlabel('Rounds of Trade War')
plt.ylabel('USD Value')
plt.title('Fig 1. Asymmetric War of Attrition: US vs. China Trade War')
plt.legend()
plt.grid(True)
plt.tight_layout()
plt.show()

Explanation: This figure shows how each side bears costs over time and how the potential reward they’re fighting for diminishes. The U.S. burns through more money per round, with rewards decaying faster, while China maintains a slower cost burn and a more gradual reward loss. This imbalance makes it an asymmetric war—each side is playing with different tools and different pain thresholds.

Fig. 2 – War of Attrition with Shrinking Reward

This second graph, generated by the code below, takes it a step further by showing what happens when the total reward shrinks over time—not just because of internal costs, but because of external factors like global economic downturns:

import matplotlib.pyplot as plt
import numpy as np

# Time axis
time = np.linspace(0, 10, 100)

# Reward decay function (e.g., exponential decay)
initial_reward = 10  # Starting reward value
decay_rate = 0.3
reward = initial_reward * np.exp(-decay_rate * time)

# Plotting
plt.figure(figsize=(10, 6))
plt.plot(time, reward, label="Shrinking Reward Over Time", linewidth=2)

# Labels and Title
plt.title("Fig 2. War of Attrition with Shrinking Reward", fontsize=14)
plt.xlabel("Time (Rounds of Trade War)", fontsize=12)
plt.ylabel("Reward Value (Billion $)", fontsize=12)
plt.grid(True)
plt.legend()
plt.tight_layout()
plt.show()

Explanation: Fig. 2 captures a bigger problem: what if the prize you’re fighting for is evaporating? Even if a country “wins” by outlasting its opponent, the final reward might be a fraction of what it once was. Global recessions, shifts in alliances, inflation—these can all chip away at the prize until there’s nothing left worth fighting for.

Closing Thoughts

Looking at Fig. 1, we see the broader picture: an asymmetric war of attrition between the U.S. and China. The U.S. enters the game with higher costs per round and a steeper reward decay, while China plays a more patient, lower-cost game. Each round that goes by chips away at the potential payoff. If either side drops out early, the other could win big—but if they both hold out too long, the prize may not be worth the fight.

Then there’s Fig. 2, where the game gets even trickier. Here, the reward itself shrinks over time, not just because of cost but due to external economic pressure—like global market contractions or public fatigue. It’s a warning: sometimes, there’s no glory in winning if the reward has already vanished.

Trump’s latest move—slapping a 104% tariff on Chinese EVs—might look tough on the surface. But from a game theory lens, it’s a signal. He’s testing China’s resolve, daring them to respond, all while trying to frame the narrative on his terms. The question isn’t just who wins—it’s when they decide the game isn’t worth playing anymore.

That’s the heart of a war of attrition. It’s not about who throws the biggest punch—it’s about who can outlast their opponent, and whether the prize is still worth it by the time someone gives in.

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Tariffs, Tension, and Trump: The Art of the Trade War

 

By J. André Faust (March 27, 2025)

The markets reacted today after Trump moved ahead with hefty tariffs on auto imports, prompting a noticeable dip across the major indices. The Dow and S&P both fell, and the Nasdaq took the hardest hit. What’s going on here isn’t just about economics — it’s about strategy.

From a game theory perspective, Trump appears to be operating from a zero-sum framework, where gains for others are seen as losses for the United States. This is a departure from cooperative trade models that have dominated global economics for decades.

But it doesn’t stop there. His latest comments — threatening even larger tariffs on Canada and the EU if they "do economic harm" to the U.S. — suggest a brinkmanship strategy. This kind of move involves pushing tension to the edge of collapse, creating uncertainty in order to force concessions. It's risky, and it depends heavily on whether the other players believe you're willing to go all the way.

Markets don’t like uncertainty. Investors know brinkmanship can spiral if miscalculated. We're no longer looking at a simple negotiation — this is a game where credibility, bluffing, and escalation are all on the table.

The question now is whether Canada and the EU will call the bluff, or fold under the pressure. Either way, we’re seeing the global chessboard shift.

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