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President Trump and the Madman's Advantage in Trade Wars

Crazy like a...nope, he's just really crazy.

Donald Trump see himself as the redeemer of a great, bygone America, but when it comes to his communication style, he is quintessentially postmodern, and not just because he prefers Twitter to interviews with journalists. According to his most dedicated and high-profile supporters, like Dilbert creator Scott Adams, the president is a great communicator because of a sophisticated understanding of human psychology and his use of proven tactics for manipulating human behavior.


Exhibit one in Adams’ case is the ongoing negotiations between the U.S. and it’s trade partners over announced steel and aluminum tariffs that have been enacted or threatened. The slapdash nature of the tariffs’ unveiling, and leaks about internal disagreement over Trump trade policy, are all aimed at creating the perception that Trump is an irrational actor. “The most effective negotiator in a situation like this is irrational,” says Adams, “and he will take a larger hit than you think a normal person would.”

In other words, if the Europeans, the Chinese, and the rest of the world see Trump as unhinged, they are more likely to give into his demands. This is not a radical view, and Adams rightly asserts that there are many outside experts in negotiations who agree with this approach. Dr. Alan Schoonmaker, for instance, has argued for decades that there is a “Madman’s advantage” in negotiations that accrues to the person who convinces his interlocutor that he will not stop pushing for his or her position whatever the cost.

Meanwhile, the president and his trade negotiators have won concessions. The South Koreans, for example, have agreed to cap their exports of steel to the U.S. in favor for an exemption from new steel duties, and reports indicate that Argentina, Brazil, and Australia are close to agreeing to similar deals. But so far there have been no significant agreements of any kind with countries that are the major sources of the U.S. trade deficit, like China, Europe, and Japan. So far, the Trump trade team is keeping the ball in the air, granting one-month extensions to partners in Europe and North America in hopes of winning significant concessions in return. If the president does fail to win further concessions on the topic of steel exports, or fails to achieve his overarching goal of radically shrinking the trade deficit, it may be for the simple reason that Trump was misapplying a tried-and-true boardroom tactic to international relations.

When Donald Trump negotiated as the sole owner of his many businesses, any understanding his negotiating counterparts had that Trump was irrational carried great weight in their thinking. After all, Donald Trump was the sole owner of his businesses, and if he was willing to let his irrational behavior to impose steep costs of those businesses, there was nobody to stop him.

That is simply not the case with the American government. The White House has wide powers to conduct a short-term trade war without consulting Congress, but the clock is ticking. The Chinese and Europeans know that there are powerful, organized factions in the government and among the public that despise President Trump’s trade policies. They also know that the president has deeply alienated more than half the public and therefore the chances of his reelection are lower than most first-term presidents. And they know that the greater the pain they inflict on America’s economy, the greater the chances are that President Trump will lose his position as America’s trade negotiator.

The madman’s advantage disappears when those negotiating with the madman know that he’s not their only option as a counterpart, and there’s also evidence from history that presidents who try to communicate the madman image don’t effectively get their point across anyway. That’s what happened to President Nixon when he tried to convince the Communist Bloc that he was crazy and would resort to nuclear war in order to end North Vietnam’s invasion of the South.

And even if President' could effectively present himself as a madman, should we ever hope he tries? Do we really want to live in a world where foreign leaders actually believe that the president is nuts, and that neither American institutions nor voters would do anything about it? To effectively create this perception, America would have to flirt dangerously close to the real thing, and that’s not a price we should be willing to pay for a simple advantage in trade negotiations.

Christopher Matthews is a writer who splits his time between New York City and Accra, Ghana, with an interest in the intersection of markets, the economy, and public policy. He previously held staff positions at Axios, Fortune Magazine, and Time Magazine, and has been published in Forbes and Debtwire.



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