The U.S.-China trade war, according to game theory
May 30, 2025•28 min
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Summary
This episode explores the US-China trade war through the lens of game theory. Economists analyze different game models, like the ultimatum game, chicken, and war of attrition, to understand the strategies of both countries. They ultimately consider the prisoner's dilemma in repeated play as a model for potential cooperation and examine theories for why the conflict escalated despite the possibility of mutual benefit, suggesting the trade war may be part of a larger geopolitical "metagame."Episode description
Over the last few months U.S.-China trade relations have been pretty hard to make sense of – unless you look at what's happening through the lens of game theory. Game theory is all about how decisions are made, based not just on one side's options and payoffs, but on the choices and incentives of others.
So, are Donald Trump and Xi Jinping competing in a simple game of chicken? Or is the game more like the prisoner's dilemma? On today's show, we try to decide which of four possibilities might be the best model for this incredibly high-stakes game. And we take a look at who is playing well and who might need to adjust their strategy.
For more on the U.S.-China trade war:
- The 145% tariff already did its damage
- What happened to U.S. farmers during the last trade war
- What "Made in China" actually means
This show was hosted by Keith Romer and Amanda Aronczyk. It was produced by Sam Yellowhorse Kesler. It was edited by Jess Jiang, fact-checked by Sierra Juarez and engineered by Kwesi Lee with help from Robert Rodriguez and Cena Lofreddo. Additional production help from Sylvie Douglis. Alex Goldmark is Planet Money's executive producer.
Find more Planet Money: Facebook / Instagram / TikTok / Our weekly Newsletter.
Listen free at these links: Apple Podcasts, Spotify, the NPR app or anywhere you get podcasts.
Help support Planet Money and hear our bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.
See pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.
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So, are Donald Trump and Xi Jinping competing in a simple game of chicken? Or is the game more like the prisoner's dilemma? On today's show, we try to decide which of four possibilities might be the best model for this incredibly high-stakes game. And we take a look at who is playing well and who might need to adjust their strategy.
For more on the U.S.-China trade war:
- The 145% tariff already did its damage
- What happened to U.S. farmers during the last trade war
- What "Made in China" actually means
This show was hosted by Keith Romer and Amanda Aronczyk. It was produced by Sam Yellowhorse Kesler. It was edited by Jess Jiang, fact-checked by Sierra Juarez and engineered by Kwesi Lee with help from Robert Rodriguez and Cena Lofreddo. Additional production help from Sylvie Douglis. Alex Goldmark is Planet Money's executive producer.
Find more Planet Money: Facebook / Instagram / TikTok / Our weekly Newsletter.
Listen free at these links: Apple Podcasts, Spotify, the NPR app or anywhere you get podcasts.
Help support Planet Money and hear our bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.
See pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.
NPR Privacy Policy
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