America’s tariff strategy in the late 2010s illustrates a classic problem in game theory: over-bluffing. Repeated announcements of new duties, backed by hard deadlines, unsettled trading partners and jolted markets. Yet as deadlines were repeatedly extended, exemptions carved out, or last-minute deals struck, the shock value wore off. What once looked like leverage began to resemble theatre.
The problem is not unique to Washington. In negotiations of all kinds credibility is built on the careful use of uncertainty. A threat or promise must leave the other side unsure enough to adjust. Overuse erodes credibility while failure to vary tactics makes you predictable. Game theory helps clarify why.
As previously explored in The Bluff: An Important Strategy Tool, bluffing is not dishonesty. It is the disciplined use of randomness to keep opponents from exploiting predictability. The poker player who occasionally raises with a weak hand is not lying; they are preserving uncertainty. The executive who withholds their “final price” is not deceiving; they are protecting optionality. Bluffing becomes powerful only when calibrated.
Over-Bluffing: When the Threat Loses Force
In poker over-bluffing occurs when a player raises aggressively with weak hands too often. At first opponents may fold, wary of risk. However, once they recognise the pattern they start calling more frequently. The bluff, over-applied, becomes a liability.
U.S. tariff policy followed the same arc. The first wave of announcements carried real weight, extracting concessions from partners. The cycle of delay and dilution made the pattern obvious. Governments and businesses learned to discount the threats. Over-bluffing had drained credibility, leaving Washington with less room to manoeuvre in later rounds of negotiation.
The lesson: a bluff works because of uncertainty. Once it becomes predictable, it loses all force.