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Mohamed A. El-Erian

What Game Theory Says About Trump’s Trade Strategy

Under one scenario, the tensions with China could lead to changes in the global economy that favor the U.S.

They can get along.

They can get along.

Photographer:  Qilai Shen/Bloomberg

Financial markets were of two minds last week about the impact of mounting trade tensions between China and the U.S.

On the one hand, the escalating tit-for-tat tariffs still affect only a relatively small part of the two countries’ economies. The consensus baseline remains that the measures should not have a significant and lasting downward impact on the economy and stocks and, ultimately, may help bring about trade that is still free but fairer.