Trump: the accidental Game Theorist and a Patriotic Boilerplate?

Game Theorists and I share some interests, to my slight chagrin. Both they and I are big fans of the nerdy, abstruse part of the internet filled with people who are sometimes called “Rationalists,” somewhere on the spectrum of “Rational Optimists”, though perhaps I would separate myself from them and put myself in the category of “Rational Pessimists.”

The following tends to err on the side of ‘a grab bag of talking points and thoughts,’ thrown together with little to no discernible structure. But a lot of the material is somewhat topical.

Game Theory, as a well-trodden road in decision-making roadmaps, aims to gain strategic advantage by utilizing mathematical and behavioral economic tools which [theoretically] lead to predictable outcomes. The objective is not to be the smartest person in the room, but instead to be the ‘least incorrect’ person with skin in the game.

Initially developed in the field of mathematical economics by John von Neumann and John Nash, its applicability has expanded to fields as diverse as international politics, evolutionary biology, psychology, and conflict theory. The true art of war is rooted in the outcomes derived from these mathematical models, which can track not only the results of any given decision but also predict them.

Much of the predictability of any given outcome(s) and best responses depend on the players within the game and what they rationally have to gain or lose. Inherently, though, human beings cannot be boiled down to mere mathematical modeling to predict reasonably foreseeable outcomes, by reason of human behavior being inherently unpredictable. Trump knows this. He plays on this, and he thrives on being the first shot taker in any game he partakes in.

Trump’s administration hoped to ‘bring back American jobs’ through a series of strategic trade policy decisions: withdrawal from the Trans-Pacific Partnership (TPP), renegotiation of the North American Free Trade Agreement (NAFTA), the implementation of tariffs on Chinese goods, and—if met with resistance—the “steering wheel out the window” scenario: total withdrawal from the World Trade Organization (WTO).

International politics rarely resemble a linear flow of rational decisions, but rather dynamic systems and strategic interactions. Tariff wars, technological confrontations, financial sanctions, and military coalitions are just some of the moves on a board where it matters not only what is done, but what is induced in the opponent—and the perceived reputational gain or loss as a side bet. Except, I argue that:

1. it is not normal behavior, and

   
   

2. it’s to push through a domestic-only agenda.

In order to predict, quantify, and qualify any best-case end result (in a one-shot game), a mathematician or Game Theorist would note that international trade wars are often not one-shot games, but instead sequential games—with credible threats and third-party new entrants at any moment.

The calculated outcomes in Trump’s case begin with contrived chaos (if we take a dull view), or intentional unpredictability (if we view these strategic decisions positively, since an element of randomness can be perceived as a dominant strategy)—though, perhaps with seemingly little thought or regard to retaliatory moves or those who have already anticipated/pre-empted trade issues… hence, the Rational Pessimist.

Another issue with Trump’s decision-making is that he plays a zero-sum game. Always. In everything he does. Either he wins absolutely (and his opponent gets nothing), or the opposite, as in an attacker-defender game model. In this game, either the attacker or the defender wins—but not both.

It does not account for pre-emption either. In 2025, Rivian Inc. (a relatively new entrant in the USA-based, vertically integrated EV space) clearly saw those trade-war risks and announced that it had stockpiled battery cells from Asia as soon as it looked likely that Trump was going to succeed Joe Biden as POTUS (kudos to CEO RJ Scaringe!)

Rivian confirmed during their Q1 earnings call that they had stockpiled to such an extent that they were now holding enough battery components to carry them through the entirety of their 2025 production cycles. A trade war, in their view, was a reasonably foreseeable event.

In doing this, it seems that a baked-in reputation for unpredictable promissory chaos was not as unpredictable as it was supposed to be in Trump’s eyes—a potentially critical flaw in Trump’s ‘randomness’ strategy. You see, he has become so prolific in his randomness, that he has become predictably unpredictable, or perhaps unpredictably predictable?

Unpredictability is key in driving forward desired results to fully realize the winners, and with that, there will be losers (the zero-sum game). With this not being a one-shot game, though, there is a reasonable long-term risk that sequential games will materialize as the world economy seeks to find alternative trade partners—the ultimate long-term winners of the game. It would be a reasonable assumption that we will see the “no man is an island” ethos emerge, and the reliability of the USA as a stable trading partner decline, leading to the reformation of alternative blocs.

A Madman at the Wheel:

Using an analogy to simplify what exactly the negotiation tactic is here, I would title it ‘Madman Chicken.’

A typical game of ‘Chicken’ sees two (or more) players engage in zero-sum bets with their opponents, where the stakes are ultimately at the highest level. The result: whomever flinches first avoids certain death; and if neither flinches, both stand to lose an inordinate amount of trade power, pride, or some other highly desirable outcome—and a new equilibrium will be found.

Applying the rules of the game to Trump’s strategy, we can see that the two players (Trump and China) are engaged in a car race where both vehicles are speeding toward each other at lethal speed, heading toward an inevitable head-on collision. Trump’s tactic to show his opponent that he isn’t going to be the one to flinch? He has metaphorically unbolted the steering wheel and ostentatiously waved it out of the car window for all to see—showing that the only possible course of action for China is to swerve first, to avoid certain [economic] destruction.

On one level, it’s limiting all other conceivable options, and so it naturally seems like a bad plan. But from your opponent’s point of view, it is a credible commitment that you are going to continue. If the opponent wants to avoid disaster, they have to swerve and lose the game… or face Mutually Assured Destruction.

Herman Kahn, Thomas Schelling, and John von Neumann were instrumental in developing the Mutually Assured Destruction doctrine—essentially, nuclear chicken. Ostentatiously commit to the idea that, in the face of any aggression, you will render much of the globe uninhabitable for millennia, and your opponent will not dare to be aggressive.

I don’t buy into the widely held (well… 51% with the House, Congress, the popular vote, and arguably, the Supreme Court) narrative that Trump is some sort of all-seeing genius—though, if this is really what he’s doing…

The only single scenario where ostentatiously yeeting the steering wheel out the window of a moving car would work is if both players are driving the same piece-of-shit Tesla Cybertruck toward each other, guaranteeing equal levels of destruction and damage. In fact, the only other time that has ever worked is during the Cold War, when the USA and USSR both had nuclear warheads so massive that the zero-sum game would have resulted in everyone being wiped off the face of the earth, simultaneously.

I won’t begin to model the Game Theory matrix of outcomes on this one—not least because China is a state that rules in a very different manner than the USA, and it isn’t a two-player game. It would be too time-consuming for me to model all the other countries that Trump simultaneously threatened with tariffs… and it wouldn’t be two Cybertrucks because they are banned in the UK, so it’s Musk’s Cybertruck against a 50-year-old Austin Mini… I digress!

It would hurt the UK a lot more than it would hurt the USA. China, on the other hand, will be sending their own fleet of BYD fast-charging, longer battery range EVs against the rusting Cybertruck—outweighed and outnumbered… Anyway, I may well be taking these interesting ideas from brilliant other people and completely taking the wrong message from them…

Rule one of any dispute is to only follow outcomes that actually exist. For example, you can litigate for specific performance, but you cannot pursue an outcome that simply does not exist and expect a favorable payoff.

Rule two is to only burn a relationship where the sum of all its value is exceeded by the value gained from that relationship no longer existing.

In my 14 years practicing in notoriously high-stakes, high-pressure negotiations, I’ve seen that principles can cost a lot of money—and it is certainly not the case that each player within the game will play to their best possible financial result. In fact, negotiations of this type tend to be much more valuable and nuanced than money alone (or in this case, trade deficits).

Applying this to Trump:China negotiations—or for that matter, any other nation—it would be almost inconceivable to suggest that there won’t be pushback against any rise in cross-border tariffs. Some may take the view that they are willing to sustain a considerable loss, if they can be sure that their opponent is also sustaining a proportionate loss.

Trump’s ‘strategic irrationality’ concentrated on short-term costs and apparent disorder but ultimately served a logic of power maximization, not aggregate welfare. It reflects a realist worldview where protectionist interest legitimizes the use of disruption as the only tool to recommence order after resetting the equilibrium. Unfortunately, both economic theory and history suggest some fundamental flaws in this logic.

A classical macroeconomic equation, where GDP = C + I + G + (X - M), [with (X - M) representing net exports]. With this, as imports rise, increased profits are sent overseas, resulting in a reduction in domestic GDP. Mathematically, then, it is rational for a country to look to balance this by imposing tariffs on foreign goods while also subsidizing its own goods.

Unfortunately, this incentive is shared by all nations, and so the trade interaction represents Nash’s often-cited Prisoner’s Dilemma—where each player’s best logical response is to employ the same proportion of tariffs (relative to GDP per capita), resulting in a sub-optimal outcome for all involved. A race to the bottom destroys market share and expected value for all players—particularly the weakest residents of each participating nation.

The most significant macroeconomic event in history that mirrors today’s trade tariff logic is the mass shift toward individual protectionism on a massive scale—which led to The Great Depression. Or Brexit, which ironically weakened GBP to such an extent that foreign investment rocketed… the exact opposite intended effect that Brexit initially sought (more on Brexit negotiations in a future article).

One thing is certain either way: insofar as front-facing media is concerned, they will not see Trump concede a reputational loss, even if a mathematical loss is plainly evident in the short or long term (see: 1930 Smoot-Hawley Tariff).

Further than that, it’s also about looking at your own thinking, seeing where you’re going wrong, and taking steps to make sure that you’re not going to accidentally blow everything up with your self-important ‘brilliant ideas.’

I worry that Trump is just not the smartest guy in any room he finds himself in—he just hires people to tell him he is. He most definitely does not appear to be playing some clever John von Neumannesque game, but instead driving his rusty Model 3 down the rails and expecting a train to swerve.