["The Japanese Economic Review, EarlyView. ", "\nWe adopt the conjectural variations approach to explore the rationale for tariff escalation and de‐escalation. The main findings indicate that it is a welfare maximization choice for the importing country to adopt an escalated, unified and/or de‐escalated tariff scheme; nevertheless, the escalated tariff scheme is more likely to be chosen, while a unified tariff is the least likely to be adopted. Both potential market size and market structure in the importing country play essential roles for government to make choices.\n"]