The Indicator from Planet Money Trump threatens the grim trigger
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Feb 4, 2025 The discussion dives into Trump's strategic use of tariffs against Canada, Mexico, and China, revealing the complexities behind these economic moves. Game theory takes center stage as they explore tariff escalations and negotiation tactics, including the intriguing 'grim trigger' strategy. Insights on U.S.-Colombia relations shed light on how rapid policy changes can exacerbate trade tensions. Finally, the role of forgiveness and shared interests in international cooperation is explored, emphasizing the delicate balance needed for diplomatic success.
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Colombia Tariff Threat
- Trump threatened tariffs on Colombian goods after a dispute over deportation flights.
- Colombia relented, and the tariffs were not implemented.
Grim Trigger Strategy
- Trump's tariff strategy resembles a "grim trigger" from game theory.
- This involves severe punishment for non-cooperation.
Effective Trigger Strategy
- Trigger strategies require large threats to ensure cooperation.
- The threat must harm the other party enough to make cooperation worthwhile.