This article demonstrates that foreign policies of reciprocity entail previously unrecognized tradeoffs. The conventional wisdom in international relations holds that reciprocating another state's cooperative and non-cooperative actions can simultaneously promote cooperation and allow states with compatible preferences to build trust. We present a model that synthesizes recent work on signaling and cooperation to identify a tension between the goals of building long-term trust and inducing short-term cooperation. Specifically, a receiver's highly reciprocal strategy generates strong incentives for hostile senders to behave cooperatively, which reduces the credibility of cooperation as a signal of benign intentions. Conversely, a less reciprocal strategy increases the credibility of senders’ cooperative signals, but forgoes the benefits of short-term cooperation with hostile states. Thus, uncertain receivers often face a tradeoff between inducing cooperation and eliciting credible signals. We illustrate these tradeoffs in pre-First World War British foreign policy, and highlight the article's policy implications for contemporary US–China relations.