2. Trade agreements encourage countries to curtail tariffs (taxes on imports) so that goods may flow across international boundaries without restrictions. Consider the following trade situa- tion for the U.S. and China: o If both countries impose high tariffs, each gains $25 billion. e If both countries impose low tariffs, each gains $50 billion. e If one imposes high tariffs, while the other imposes low tariffs, the high tariff country gains $100 billion and the low tariff country gains $10 billion. (a) Construct a payoff matrix for U.S.-China trade. (b) What is the dominant strategy for each country? (c) What is the Nash equilibrium for both countries? (d) Suppose that the U.S. and China enter into a trade agreement that simultaneously lowers trade barriers in both countries. Is this agreement a good idea? Explain your response