The art of dealing with Trump the deal-maker

Perhaps no event in the last five years has been more significant than Donald Trump kissing death and roaring back into the White House as the 47th US president. As expected, his term so far has been marked by massive economic and geopolitical volatility, much of it originating from the White House, and more so than during his previous term. 

This has sent global leaders into a tizzy, trying to find an effective way to ‘deal’ with the mercurial American president. Trump: The Art of the Deal, the book that first made him famous (in the 1980s) offers instructional insights on how Trump likes to ‘deal,’ effective strategies to ‘deal’ with him, how countries are applying them and lessons for India.

Also Read: No end to wars: Trump, Pakistan and the art of self-congratulation

Maximalist anchoring: This is the cornerstone of Trump’s negotiating strategy. He starts with an outrageous demand and slowly negotiates downwards till he reaches a point of maximum extraction from an exhausted opponent. China (with tariffs), Canada (51st state rhetoric), Greenland, Mexico, the EU and many other countries have been at the receiving end of this tactic. 

Of these countries, China has displayed the most finesse in countering it. After being targeted by a volley of intemperate remarks and steep tariffs, China kept its public statements polite, yet countered the US with 145% tariffs on American goods and refused to negotiate till the White House softened its rhetoric. This ‘door in the face’ strategy by China made Trump blink and led to trade talks followed by a tariff pause. Similarly, by using retaliatory tariffs, Canada and Mexico were able to extricate a large chunk of their exports from US tariffs.

Leverage: “Leverage, don’t make deals without it.”  This quote from the book sums up the second dictum of Trump’s negotiating strategy. Not only does he wield leverage to extract maximum concessions, he also appears to recognize the leverage that opponents have on him and yields ground when he has no counter force. China’s use of its vice-like grip on rare-earth supply chains to force a reset of trade negotiations and Japan’s hints at weaponizing its hoard of US Treasury bonds are classic examples of countries employing leverage to counter Trump’s tactics.

Also Read: Trump’s trade agenda: About US jobs or global supremacy?

Instinct: “The worst thing you can do in a deal is seem desperate to make it. That makes the other guys smell blood, and then you are dead.”  In a picture that defined the US presidential election, Trump was photographed with a raised fist seconds after an assassination attempt. 

This captures his approach to deal-making. He seems able to ‘smell’ weakness in an opponent and press it to his advantage, like he did with UK Prime Minister Keir Starmer when he pried open the UK agri market for US exports in the US-UK trade deal with little offered in return. He also displays respect for opponents who fight back and show strength. An example of this is his relationship with Russia’s Vladimir Putin, whose intransigence in peace talks with Ukraine Trump seems to have accepted.

Also Read: Ajit Ranade: Decode Trump’s trade strategy for India’s own game plan

Publicity: “Good publicity is preferable to bad, but sometimes, from a bottom-line perspective bad publicity is better than none at all.” Trump survives and thrives on publicity and media attention. 

This could be a chink in the armour of his approach to negotiations, as  it may make it likely for him to compromise on major issues in return for minor concessions that he can spin as major victories for domestic publicity. High Street fashion brands like Gucci realized this when negotiating for retail space in a newly constructed Trump Tower. So overpowering was Trump’s apparent need for publicity from having a high-profile tenant that he conceded several major points to such fashion brands. 

This need also means that he is often narrowly focused on instant gratification through attention-attracting announcements, ignoring details and the long-term minutiae of execution. This can be exploited. 

Consider the recently concluded acquisition of US Steel by Japan’s Nippon Steel. This acquisition had been vetoed by the Biden administration and Trump was initially adamant on blocking it. But Nippon Steel was apparently able to bring him around by promising no layoffs and major investment in plants. Neither of these promises is set in stone or enforceable via watertight contracts. Yet, Trump made a media event of the announcement and spun it as a big win for US manufacturing.

Also Read: Dani Rodrik: Mercantilism isn’t always bad but Trump’s trade policy is

Good cop, bad cop, same cop: Trump is seen to use a random sequence of intimidation, aggression, conciliation and flattery to keep the other side off-balance during negotiations and exhaust the latter’s patience into making a mistake or granting a concession. 

As a deal-maker, he seems to use unpredictability and shifts in position to disguise his true intent and weak points. Japan and Vietnam offer examples of this strategy having been employed by Trump but countered effectively; both countries have faced Trump’s histrionics with composure while making substantive proposals in private and holding firm on their core interests.

Trump uses several other negotiating ploys to swing deals his way. The concluding part of this article will highlight some more insights drawn from his book and also analyse India’s response so far.

The author is a director at Arrjavv and a ‘probabilist’ who researches and writes on behavioural finance and economics. Her X handle is @DivaJain2