No, not good for Canada. Free trade is optimal, even if its unilateral.

Canada should abolish their tariffs and let the clowns in the US do whatever they feel like.

Yanis Varoufakis - aside from being radically left and becoming the finance minister in Greece after their financial crisis hit - is a professor in game theory and economics.

He did a pretty good explanation of the difference between theory and practice in his Rest is Politics Leading podcast interview recently :).

Sticks in my mind and well worth listening.

I guess it has a little to do with your goals. Optimal trade economically or avoiding giving something that looks like a win to this type of politicians with the goal of avoiding re-electing trump. I don’t know what science say here.

Tarriffs will hurt your existing industries, they will lose sales/revenue.

Since you are getting hurt you play tit-for-tat to get the other to knock it off.

So you add export taxes to items they care about (oil/fertilizer/...) and compensate the losses incurred by existing industries.

You also add tarriffs on items that have alternatives, like alcohool.

Maybe add tarriffs on items with elastic prices, say 100% tarriff on digital services. Software services will have to adjust prices so they end up the same after tarriffs since few people will accept youtube or netflix doubling in price.

This hurts both countries but will get a result - either free trade or no trade.

In the meanwhile, Trump's entourage has derivative bets on this and take massive proffits shorting everyone. For them, this is all massively profitable.

it’s a repeating negotiation so that’s not always true, this tit for tat approach may work to make the US lower tariffs.

In a vacuum or thought experiment.

China put tariffs specifically on the sectors that voted for Trump and depended on sales to China.

When the other party is not playing the same game, or not playing in fairness, then the best game theoretical move is to cease cooperation and retaliate.

nah