The imposition of bargaining tariffs

The two concepts of Introductory game theory, the Cournot game and Nash equilibrium are used in the article to analyze the imposition of the bargaining tariffs. Cournot game refers to the duopoly model whereby two firms chooses the level of output to compete with each other. Nash equilibrium, on the other hand, means there would be no incremental benefits to an individual who change actions given players remain constant in their initial strategies(Rad 45).The concepts predict the behavior of the companies in response to the competitors’ prices. Hegemony refers to one group dominating the other(Schindler 24).

To start with, I think the authors are right not to agree with some of the people who think trade is a zero-sum game. “It is a misconception that International trade is a zero-sum game in which the losses in imports must be avoided and the profits to be made in exports”(Tandon 34). It is wrongbecause we engage in international trade to get things cheaper than we can produce them. Imports are the real benefit from trade and exports are the price we pay for them. Therefore, both sides benefit, meaning it trade is not zero-sum(Dickens 12). Tariffs benefits are uneven and, in most cases, it raises prices and reduces economic growth since they are like taxes. Trumps administration imposed them on other countries with different objectives they wanted to meet.Trump threatened to impose tariffs on Chinese imports; he argues she was responsible for stealing U.S. intellectual property. By doing this, he thought he would subdue the Chinese because they would incur losses; hence, the U.S. would get stronger and richer in turn(Staff 23). This only places the world at the centre of the trade war.

According to the U.S. secretary of Commerce, Ross, the U.S. is after the power-based system and not rule-based multilateral trading system. He talks of reciprocity in tariff levels rather than the negotiated tariffs. It is evident from him the U.S. wants to be hegemonic, control the rest of the world and not heed to the existing arrangements of trade negotiations.“The threat of bargaining tariffs is meant to prompt other countries to lower their tariffs so that the ground is level”(Tesla 45). Therefore, understanding that to negotiate further trade agreements is a zero-sum game and that bilateral trade deficits mean trading partners with whom U.S. tariffs pose the most severe threat level..

Trumps failure to support WTO is the beginning of U.S. fall in hegemonic status. This is because the weak countries can decide not to participate in the bargaining table when they feel sidelined and thus depriving the strong nations bargaining power(Lau 15). This is what can happen to the Trumps administration. The rule-based system ensures participation by all the nations in the global economy.Trump’s action is myopic because he thinks imposing tariffs on China would make the U.S. richer and stronger, not being careful about the repercussions of all that to the U.S. economy(Dickens 67).

Works Cited

Dickens, Kramer. United Nations Environment Programme (U.N. Environment). Chicago: UNEP, 2010.

Lau, Lawrence J. The China-U.S. Trade War and Future Economic Relations. The Chinese University Press, December.

Rad Webinar. Renewables Global Status Report. New York: Clean energy solutions, June 18 2019.

Schindler, Morgan. “Journal of Green Energy.” Developing Nations Green Energy (1961): 8-14.

Staff, The New York Times Editorial. Trade Wars: Tariffs in the 21st Century (Looking Forward). New York: New York Times Educational Publishing; 1 edition, (December 15, 2018).

Tandon, Yash. Trade is War. OR Books; First Edition edition, 2015.

Tesla, Nikola. The Problem of Increasing Human Energy, With Special References to the Harnessing of the Sun’s Energy. New York: Wilder Publications, 2008.