Nicholas takes the available Imperial Strategy Card.
Steve picks the Diplomacy Strategy Card. This is the lowest numbered Strategy Card available in the 2-player game, so it assures he will go first. When played it should also protect him from getting attacked by Nicholas.
This is not always true in a game, regardless of number of players. Even in 3+ player games where someone takes the Initiative Strategy Card (having the number 1), it's not an absolute rule that the player having the lowest card will always be first. There are Race Special Abilities that may overrride this condition.
Nicholas surprises Steve and plays his Public Disgrace Action Card. This card requires that Steve put the Diplomacy Strategy Card back. Steve must choose another card.
Steve takes the Trade Strategy and converts the 2 Bonus Tokens into Trade Goods.
To prevent Steve from picking the Diplomacy card for his second choice Nicholas must pick it himself. He converts the Bonus Token into a Command Counter and places it in his Command Pool.
Steve chooses Technology and converts the Bonus Token into a Trade Good.
The Political, Logistics and Warfare Strategy Cards were not chosen and each get 1 Bonus Token added to them.
- Player 1 (Steve) has Strategy Cards 5 and 7
- Player 2 (Nicholas) has Strategy Cards 2 and 8
- No one selected Strategy Cards 3, 4 and 6
The Strategy Phase is complete. Proceed to the Action Phase. Nicholas is first.