Deep soil mixing (DSM) grids are widely used as effective countermeasures against liquefaction hazards. A simplified two-dimensional, nonlinear, finite element model involving DSM grid-improved ground is proposed to investigate the shear stress responses of the enclosed soil. A numerical model with several approximations of longitudinal walls was carefully validated by a centrifuge model test. The waist-shaped depth distribution of the horizontal cyclic shear stress acting on the enclosed soil (i.e., the “waist effect”) was revealed and well explained according to the characteristics of dynamic soil-grid interactions. Attention should be given to the increasing shear load sustained by the underlain layer, which may lead to an unexpected failure. A mathematical model for the shear stress reduction ratio was proposed based on a comprehensive numerical parametric analysis considering varying geometry and shear modulus of the DSM grid with a reasonable range. The proposed evaluation method, along with conventional liquefaction-triggering analysis, can be utilized for the seismic design of DSM grids in liquefaction mitigation. The previous design methods without considering the “waist effect” underestimate the overall horizontal cyclic shear stress acting on enclosed soil.