A 'Prisoner’s Dilemma' is driving the trade war & the costs could be huge

Global trade is facing a difficult situation, known as a "Prisoner's Dilemma," where countries are tempted to protect their own markets, but this protection can ultimately lead to negative consequences for everyone involved. This dilemma is driving the ongoing trade war, as countries impose tariffs and restrict imports, leading to retaliation and a decline in trade. The costs of this situation could be significant, including higher prices and reduced economic growth for all sides involved.

Why it matters

The WTO's World Trade Report 2026 says global trade is caught in a 'Prisoner's Dilemma', where countries have an incentive to protect their own markets, but this could lead to huge costs. The report highlights the need for cooperation to avoid these costs.

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