I’ve been working up a brilliant moneymaking scheme. My plan is to throw a bunch of wild accusations at my neighbors. I’ll comb city regulations to find rules they’re breaking, and if I can’t come up with anything, I’ll just make stuff up. After I’ve bombarded them with accusations of unfair treatment, I can threaten them with lawsuits. Eventually they’ll give me some money, maybe a few hundred dollars, to drop the matter.
The plan I’m describing would probably work. But as you’re probably intuiting, it’s an extremely stupid plan. It only seems like a way to extract concessions. In reality, I’d be paying a heavy cost. The goodwill of my neighbors is a valuable long-term asset. It’s pleasant to get along with them, but also practical. We rely on each other for all sorts of arrangements, from borrowing that ingredient you suddenly realize you’re missing in the middle of cooking dinner to calling 911 if there’s an emergency. Whatever payoff I could jack out of them with crazy threats would simply be a short-term monetization with long-term costs.
Donald Trump’s negotiating style as president is basically the plan I just described writ large. Of course, it also borrows heavily from the negotiating style Trump used in his business career. Sometimes — as with Friday’s immigration deal with Mexico, which merely reiterated promises Mexico made months ago — his threats fail to win any substantive concessions. Other times his counterparties are willing to throw him a bone or two for the sake of appeasement. (The renegotiated/rebranded NAFTA deal does have slightly more favorable terms for the United States, though hardly different enough to justify Trump’s hyperbolic attacks on the old version.)
Much of the analysis of Trump’s deals is devoted to figuring out which ones contain actual wins as opposed to face-saving retreats. Sometimes his methods draw grudging praise for their seemingly acceptable outcomes. Jonathan Swan described Trump’s tactics as, “Threaten the outrageous, ratchet up the tension, amplify it with tweets and taunts, and then compromise on fairly conventional middle ground.” David Graham conceded, “This turns out to be an effective tool, because not many people have Trump’s appetite for awkwardness. But if it doesn’t work, the president has few other tools at his disposal, and tends to back down.”
But the distinction between the deals where Trump manages to extract some value and the deals where he backs down and gets nothing misses the broader point: Properly accounted for, all the deals are losses. Even when Trump “wins,” he is ignoring the invisible costs on the opposing side of the ledger. The goodwill of American allies is an extremely valuable asset, built up over generations, that Trump is drawing down.
Trump’s method of irrational threats and bad-faith negotiating did work, to an extent, in private business. Stiffing contractors and lenders was one of Trump’s signature business maneuvers. It worked because he could always find more people to do business with, and the fame he cultivated through his manipulation of the media — also a legitimate Trump business skill — helped draw in a never-ending supply of suckers.
The problem is that the supply of foreign countries is finite. The bad will Trump engenders with his irrational charges and crazy threats alienates partners he will need to deal with again. (How can Mexico or anybody make a trade deal with a man who is willing to unilaterally impose tariffs over completely unrelated policy disagreements?)
And some of those reputational costs linger after Trump has left the scene. Americans may think of Trump as a one-off phenomenon, but people around the world tend to associate the actions of a leader with the nation as a whole. At least some of the resentment and distrust Trump generates will cling to future American presidents and citizens.
Of course, Trump doesn’t care in the slightest what happens to future generations of Americans. Trump’s deals are designed with the purpose of creating “wins” that he can tout as evidence of his negotiating prowess. His goal is to extract value for Donald Trump, and he is counting on the fact that nobody will think very hard about who will pay the bill.