I see the world through a psychological lens. Politics, economics, and global trade are no exceptions. Over the past 43 days, I’ve been reflecting on the shifts unfolding on the world stage, trying to make sense of them. The best framework I’ve found is game theory—specifically, the Prisoner’s Dilemma. Globalization, at its core, has long been a delicate game of trust and cooperation, where nations weigh the risks of working together against the temptation to put their own interests first. But when one player defects, the entire system begins to unravel. And in my view, that’s exactly what we’re witnessing now.
The Prisoner’s dilemma explained
The Prisoner’s Dilemma, first developed in the 1950s, illustrates a fundamental challenge in cooperation. Two individuals, when acting in their own self-interest, often make decisions that leave both worse off. In its classic form, two prisoners are interrogated separately and must decide whether to betray the other or stay silent. If both cooperate, they receive a lighter sentence. But if the fear of betrayal pushes them toward defection—it results in an outcome that ultimately harms them both.
Globalization has functioned much like an iterated version of Prisoner’s Dilemma, where repeated interactions built trust and reinforced long-term cooperation. Countries engaged in trade agreements, built integrated supply chains, and relied on global institutions to ensure stability. Defection—through protectionism, tariffs, or isolationism—was costly and avoided at all costs because it would invite retaliation and economic instability.
The defection of Donald J. Trump
The current U.S. President Donald J. Trump disrupted that equilibrium by defecting from the globalization game. His administration withdrew from the Trans-Pacific Partnership (TPP) during his first term, imposed tariffs that set off trade wars, undermined trust in institutions like the WTO, and weakened alliances that underpinned global economic stability. It was a shift toward short-term, zero-sum thinking in a game where long-term mutual benefit had been the dominant strategy.
Now, we’re seeing an even more aggressive and dangerous iteration of this approach. Early this morning, March 4, 2025, the U.S. government implemented sweeping new tariffs—25% on imports from Canada and Mexico and an increased 20% tariff on Chinese goods—under the bizarre pretense of pressuring these countries to take a harder stance against fentanyl production which they had already done. The impact was immediate. Markets have reacted sharply—the S&P 500, the Dow, and the Nasdaq tumbled—while global partners moved swiftly to retaliate. Canada announced a counter-tariff of 25% on $30 billion worth of U.S. goods, with more to come, and Mexico is expected to announce its response soon too. China has imposed new tariffs of 10-15% on U.S. agricultural products, a move that will severely impact American farmers who are already struggling from Trump’s previous trade disruptions.
Many argue that the U.S. President should have learned from the Smoot-Hawley Tariff in 1930 and the economic devastation it caused, leading to a reduction of about 60% of world trade and a deepening of the Great Depression.
Economists from around the world have unanimously warned about the dangerous consequences of these actions and even Warren Buffett finally broke his silence to say that all of this will be disastrous for the U.S. because tariffs are a tax on goods which will raise the price for consumers. And to quote him, "The Tooth Fairy doesn’t pay ‘em!” And this isn’t all about country leaders taking action, the U.S. President’s belittling, name-calling, and insulting countries like Canada has had a direct effect on its citizens. I’ve written previously about the power that the individual has, especially when done at scale across a whole country. A boycott of American products within Canada and in fact around the world is having an impact beyond tariffs, and these actions will live on.
The lingering effects
In game theory, trust and stability are essential for cooperation. Once that trust is broken which has just happened, the game shifts from cooperation to retaliation. Countries are planning for a world where the U.S. is no longer a reliable partner. Global supply chains adopt new routes, new trade alliances are formed, and businesses and investors avoid the volatility by putting their money elsewhere. It’s important to note that these shifts don’t just happen overnight—they create long-term structural changes that make cooperation in the future harder, and even if a new administration tries to restore the cooperation.
What we’re witnessing right now isn’t just another round of tariffs or tough trade negotiations—it’s a fundamental breakdown of the rules that once governed global economic stability. While Trump’s approach may score short-term political points, it has thrown globalization into a game-theory spiral of defection and retaliation, with consequences that will outlast any one administration. The world is adapting to a new reality—one where globalization, as we knew it, may never fully be realized again. Unless, as we’re seeing happening now, that the rest of the world continues to cooperate and collaborate globally but explicitly excludes the U.S. The diversification of the world economy, especially with an unreliable actor like the U.S., is best for the countries of the world even it isn’t best for the U.S. itself, the country that started all of this.
the psychology of the perpetrator
So why is all this happening? And why now? To answer that question we need to look for a moment at the psychology of the perpetrator, Donald J. Trump. All the books written about him and everyone who has worked with him say that he is incapable of seeing any situation as other than a win-lose one. He has to win and someone else has to lose. And he even attempts to degrade the other party with childish name-calling, and even threatening them (as in taking over your country). He’s done that his entire life and it brought disaster to his business ventures (declaring bankruptcy six times!).
He also has to always be the smartest person in the room. This leads him to not read and not rely on or even consult experts. All branches of the U.S. government—the executive, legislative, and judicial—are seemingly powerless to stop him, thus giving him virtual dictatorial power. All of this spells disaster for the U.S. and the rest of the world.
final thoughts
I had thought, or perhaps wished, that the world would move toward being more cooperative and collaborative, something we badly need in order to tackle our actual existential challenges together like climate change, economic disparity, and geopolitical conflicts. I worry that the world is going in the opposite direction, all thanks to just one man and the people who voted for him, admittedly not knowing what they were actually voting for thanks to his lies, in my view. I truly hope that this can be turned around because if not, this is a sad day for the world.