  We study a model of two-player bargaining game in the shadow of a preventive
trade war that examines why states deliberately maintain trade barriers in the
age of globalization. Globalization can induce substantial power shifts between
states, which makes the threat of a preventive trade war salient. In this
situation, there may exist "healthy" levels of trade barriers that dampen the
war incentives by reducing states' expected payoffs from such a war. Thus, we
demonstrate that trade barriers can sometimes serve as breaks and cushions
necessary to sustain inefficient yet peaceful economic cooperation between
states. We assess the theoretical implications by examining the US-China trade
relations since 1972.
