A Game-Theoretic Analysis of India-U.S. Tariffs Under the Trump Regime

This paper investigates the evolution of India-U.S. trade relations in light of the Trump administration's reciprocal tariff strategy announced in 2025, along with the subsequently announced tariffs.Combining policy analysis with game theory modeling, the study traces a chronological narrative of tariff announcements, negotiations, and eventual de-escalation, with a focus on India's strategic response.Using a von Neumann-Morgenstern payoff matrix and incorporating trade volume data, sector-specific exposure, and geopolitical incentives, the paper constructs and normalizes payoffs to simulate rational choices by both states.It further evaluates the transition from unilateral threats to bilateral engagement, culminating in a 90-day tariff pause and the start of a phased trade agreement.The analysis reveals that India's choice of cooperation over retaliation yielded a higher long-term payoff, highlighting the value of game-theoretic reasoning in trade diplomacy.