Tariffs, retaliation, and policy

In a global economy where governments leverage tariffs as strategic tools, craft a detailed framework for a country to respond to tariff escalations. Your analysis should examine trade diversification, domestic adjustment, supply chain resilience, currency implications, and long-term competitiveness. Compare alternative policy mixes (retaliation, negotiation, soft sanctions, and non-tariff measures) and propose a defensible sequence for policy actions that minimizes disruption while protecting critical industries. Include a hypothetical but plausible scenario spanning multiple sectors (manufacturing, medicines, energy) and outline metrics to monitor progress over time.