Question

The current debate about tariffs is certainly prompting a lively debate in the media and in analysts circles around the world. Please answer each of the components below which center on this issue. Where indicated provide a citation of sources for facts that you present.

a. Create a game theoretic approach type of analysis of the issue. The 2 players are the US and the EU. The strategies are US – no tariffs such as those recently enacted, US – tariffs such as those recently enacted. The strategies by the EU are to impose no new tariffs or trade barriers in response or for the EU to impose new tariffs or trade barriers in response. Do the analysis of the outcomes to see if each player has a “best strategy”. Explain.

Answer 1

Yes it is definitely true that tariffs and citation of resources is one of the most discussed topic in current media.
As per the question two players are there first one is US and second is EU. On the first side US is impossing new tarrifs and on the other side EU is impossing no new tarrifs/trade barriers.
A tariff imports on foreign goods would raise the price of imported goods and motivate US consumers and firms to buy domestically produced products/goods.
This will benefit industry and create jobs in the company and vice versa in case of EU