By comparing the game played by both the countries we can say the Nash equilibrium

By comparing the game played by both the countries we can say the Nash equilibrium, which suggests a trade war is the norm. As both countries imposing tariffs is the Nash equilibrium of the game. This mean the trade could be go on a while for a long time may be decade.

The US is considering 25% tariffs on an additional $100bn of Chinese goods, much higher than the 10% it previously indicated it might impose. It would risk further escalating tensions between the US and China which are already mired in a trade war. The US opened fire in a trade war tariffs on $34bn of Chinese goods, and China retaliated machinery, components and electronics.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

As china may take an action against US companies generate by selling goods domestically in China so they are a potential target. China may impose tariff on US companies which have significant sales and operations there. China could create difficult procedure and addition tax imposed for US companies by slowing down customs clearance for their imports to slow down a firm’s operations. China could focus on domestic growth, by making sure it has the tools to keep the economy growing during tougher times and by expanding its trade and investment relations with other countries.