How Not To Bargain

The Trump Administration's first hundred days has been a masterclass at how to piss away every bargaining advantage possible.

Photo by Abhinav Bhardwaj on Unsplash

Back in 2022 Amrita Narlikar and I edited a special issue of International Affairs entitled “International relations: the ‘how not to’ guide.” The goal, as we stated in our opening essay, was, “a variation of the Sherlock Holmes method: ‘Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.’ Perhaps once we have eliminated the extremely wrong ways of doing things in international affairs, we might arrive at a right way.”

The hard-working staff here at Drezner’s World believes that a similar approach should be used to analyze the first hundred days of Donald Trump’s second term — because whatever he’s doing ain’t working. Trump is now underperforming his polling during his first term. In other words, after his first hundred days he is more unpopular than any other president in the history of public opinion polling.

Why? Well, it’s entirely self-inflicted. Despite inheriting a pretty solid economy on January 20th, Trump is overseeing a faltering economy in which future expectations are at their lowest point in more than a decade. Amazon is poised to post information about how tariffs will affect prices on their site. The White House did not take this news well:

Almost all of the economic carnage is due to Donald Trump’s massive injection of uncertainty into the global economy. And a large fraction of that uncertainty has been due to Trump’s trade wars. So it worth comparing and contrasting Lessons from Coercive Bargaining 101 with what Trump has actually done.

LESSON #1: Hurt the target more than one’s self. The U.S. economy is much bigger than most other economies in the world, so the administration clearly believed that it had leverage over everyone else. And, to be fair, that is likely still true of a lot of smaller countries. The administration may well succeed in wringing concessions from India or South Korea.

It is far from obvious that this is true of China or the European Union however. Trump’s desperate attempts to signal to China that he wants to negotiate also does not seem to be working. And I can’t get this passage from the Washington Post’s David Lynch and Jeff Stein out of my head:

“They never wanted tariffs that high on China,” said one person briefed on the White House’s thinking, who, like some others quoted in this article, spoke on the condition of anonymity to discuss private deliberations. “Trump just went tit-for-tat with him. That’s him as a person — he wants to treat them as they treat us.”

Even if Trump eventually does roll back duties on Chinese-made goods to 60 percent, the overall U.S. average tariff rate would sit at 16 percent — a sharp rise from the pre-trade war figure of around 2.2 percent, according to a JPMorganChase analysis.

That increase would be more than 10 times what the U.S. experienced during Trump’s first term and would represent a tax hike of nearly $500 billion on American importers, according to the investment bank.

This kind of poor impulse control guarantees taking coercive actions that hurt the coercer more than the target. And with jittery financial markets and an impatient American public, the longer these tariffs are imposed the costlier they will be for the United States.

LESSON #2: Clearly articulate one’s demands. This ain’t rocket science! For a deal to be struck, the target needs to know what concessions would satisfy the coercer! Instead, there are widespread reports that even loyal allies don’t know what the Trump administration wants. Treasury Secretary Scott Bessent is even trying to claim that this is a purposeful strategy!

This. Is. Not. How. Bargaining. Works. If the target does not know what the other side’s asks are, then there is no point to bargaining because nothing will stop the coercion.

LESSON #3: Minimize expectations of future conflict. All else equal, when the target anticipates more frequent coercion attempts in the future, they will be less willing to acquiesce in the present. And if Trump has succeeded in one thing, it is in making the rest of the world believe he will coerce anyone and everyone again and again and again and again. For fuck’s sake, some of his first targets during his second term were signatories to a trade deal he negotiated during his first term!

Everyone expects Trump to break deals in the future — which disincentivizes negotiating any concessions in the present.

LESSON #4: Build a multilateral coalition. Multilateral economic sanctions tend to work better than unilateral sanctions. An institutionalized coalition of sanctioners can give a target pause in a way that unilateral action might not. And, of course, Donald Trump did the exact opposite of this. Only too late did they realize that maybe coordinated approach towards China could be a good idea. Instead, now it’s China going around talking to other countries about how crazy the United States is behaving.

As Noah Shachtman pointed out in the New York Times, “Provoking your enemies, alienating your friends and actively sabotaging your own defenses are no one’s idea of a sound national security plan. And yet this is the playbook that President Trump has apparently followed over the first 100 days of his second term.”

There are other lessons to draw, but you get the idea. The Trump administration’s bargaining strategy is being managed by an impulsive, short-tempered, ill-informed leader who faces zero pushback within his team. The result is that the country is likely to be in even worse shape a hundred days from now than it is in the present. Trump has provided a textbook case of how not to bargain.