Opinion - 3 things Trump does well in tariff negotiations, and 3 things he doesn't get

Yahoo

11-04-2025

Thucydides' maxim from the 5th century B.C. — that 'the strong do what they can and the weak suffer what they must' — seems to be the core of President Trump's negotiating strategy. Herein lies the Greek tragedy. President Trump is miscalculating the odds of a win with this approach when applied to American trade policy in the 21st century.
Here are three things that Trump does well in terms of his negotiation calculations and three things that he does not understand at all.
First, Trump's recurring negotiation tactic is that if he inflicts economic harm on the trade partners, they have no choice but to negotiate. A 'win' in the trade negotiation depends on alternatives for each side. Negotiation theorists use of the term BATNA or 'Best Alternative to a Negotiated Agreement' refers to the alternatives available to negotiating parties. Trump calculates that America's 15.9 percent of total global imports, the biggest market in the world, forces countries to fall on their knees — in his own words, 'kissing my ass' — to negotiate with the U.S.
Second, the politics: Trump is right that America can get a better deal from bilateral than from multilateral negotiations involving three or more countries. In bilateral negotiations, the U.S. holds better cards, to use the metaphor that Trump deployed in his contentious Oval Office meeting with Ukrainian President Volodymyr Zelensky.
Third, the valid technical part of Trump's strategy is that he knows bilateral trade has multilateral ramifications. China is known to divert its trade through Mexico or to set up shops in Southeast Asia. Therefore, a 46 percent tariff punished Vietnam, although in such cases product-specific tariffs would be effective.
But here's what Trump does not understand.
First, markets: Many of the alternatives in a trade negotiation depend on market conditions. The U.S. may be able to force parties to come to the table, but they hold many market cards, most of all from the global economy in which the U.S. thrives (despite Trump's misgivings).
Look no further than the fact that worsening market conditions minimized any good cards that Trump held. Stocks slid. Treasury bonds lost their value. A financial and budgetary crisis seemed imminent. In an interconnected global economy, negotiation tools need fine-tuning, not grandiose, threatening measures. The markets increased the good alternatives for America's trade partners in the last week.
Second, politics: International diplomacy and negotiations, in Robert Putnam's metaphor of two-level games, are as focused on the 'domestic level' within countries as they are on the international level. Politicians often please domestic constituencies with the deals they strike. Clearly, Trump chose his hard-core MAGA supporters (roughly one quarter of the U.S. population) over the rest of the Republican Party or Americans as a whole. Data shows that such voters are overwhelmingly rural, white, male, Christian and ethnocentric. This constituency lost on Wednesday.
From billionaires Elon Musk and Bill Ackman to JPMorgan Chase CEO Jamie Dimon, and a few whisperers from the Senate, Trump received the message that MAGA does not represent American interests in trade. Trump's trade advisor Peter Navarro was marginalized along with others whose mercantilist economics resonates well with MAGA interests. Expect the MAGA movement to want blood, which could include Musk's departure from the White House or increased deportations from the U.S.
Third, the technicality of trade negotiations: Trump is an unusual head of state in leading trade negotiations himself. But he does not understand the economics of tariffs or value chains, which is why other heads of state often step aside in favor of their technical teams. Trade negotiations take place at product levels and involve a variety of trade policy instruments, only one of which is tariffs (others include non-tariff barriers, subsidies and regulatory measures).
Trump announced his tariffs with a list of grievances, which played well with his MAGA constituency. But the politics of retribution are different from the economics of negotiations. Several countries have the upper hand in products where they hold a monopoly or are main suppliers. The most sensible 'trade' deal to come out of this administration may be on minerals from the Democratic Republic of the Congo. To get that deal, the U.S. rightly sent a message to its ally Rwandan President Kagame that he needed to rein in his M23 fighters in the Congo.
Chief U.S. negotiators have learned their lesson from empty threats in the past. Henry Kissinger's warning to Saudi Arabia that the U.S. would bomb their oil fields did not stem oil production cutbacks or price increases in 1973. Markets and diplomacy did. America's one-sixth market share of global trade does not provide the U.S. with overwhelming bargaining alternatives to get 200 countries, including those solely inhabited by penguins, to lower their tariffs, even in several bilateral negotiations.
Thucydides' words reflected his admiration for Athenians who had to make the weak Melians succumb to them in the Peloponnesian War, lest they join hands with Sparta. Trump's tragedy is in calculating that Brazil, China, the European Union, India or Japan resembles the isolated and poor island of Melos.
Even the Melians didn't stand down, by the way. They were annihilated and are now remembered for their courage and diplomacy. In Trump's fantasy world, he hears the Melians saying, 'Please, please, sir, make a deal. I'll do anything, sir.'
J.P. Singh is Distinguished University Professor at George Mason University and Richard von Weizsäcker Fellow with the Robert Bosch Academy (Berlin). He is co-editor-in-chief of Global Perspectives.
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