The Four Principles of Effective Negotiation

Finding Method in the Madness of Trade Wars

Earlier this month, in my first post of a four part series dedicated to finding meaning in the chaos that is Trump's trade policy, I covered the idea that a negotiator should always be considering if there is a better deal out there, how tariffs have been used to force nations to the negotiating table, and introduced the concept of a BATNA (Best Alternative To a Negotiated Agreement). In this post, I want to continue to examine the trade policy headlines while diving deeper into the negotiation framework developed by Roger Fisher and William Ury in their groundbreaking book "Getting to Yes".

Their approach centers on four fundamental principles that create the foundation for what they call "principled negotiation." No joke -- I'm going to somehow explain the President's strategy in the context of something that's "principled". I think these principles provide a great framework for anyone getting into an important, and high stakes negotation. They certainly apply to international trade deals. I'll let you decide if actually you see anything that looks like these principles in the current headlines.

1. Separate the People from the Problem

This first principle recognizes that emotions and personal dynamics can often derail productive negotiations. By focusing on the substantive issues rather than personalities, negotiators can avoid getting caught in cycles of blame and defensiveness. If the negotiator allows their focus to go here, they lose out on opportunities to improve their outcome.

At first glance, this principle seems notably absent from Trump's trade negotiations, if not completely rejected. The President frequently personalizes negotiations, criticizing foreign leaders and creating narratives of winners and losers. This intensely personal approach creates a tense negotiating environment, distracts from actual problem solving and reduces the motivation to collaborate. Does he want this? The research behind the these principles applies to the strategy of the negotiator - not his constituents or counterparties. Once asked by presidential photographer, Platon, "I'd like to know how you weather the storm around you", Trump calmly responded with "I am the Storm". While this approach conflicts with Fisher and Ury's recommendation, one should be careful to assume it's a lack of control.

With Trump, does all this derision and name calling serve a strategic purpose, or is he really as emotional and erractic as his behavior suggests? Playing headgames, getting your opponent to misjudge you, creating unpredictability can open up new avenues in a negotiation.

I once worked with the Chief Purchasing Officer at a tech firm who was brilliant and had a long track record of success in the industry. He was also African American, and raised in the south, and somehow still underestimated at every opportunity. We were starting a new sourcing approach for their billions of dollars in spend we called it "clean-sheeting". It's where the buyer of the product does an analysis of what it would cost to make the part they are buying, and then adds a small markup for profitability to keep the supplier in business. The hard part is to get the buyer to agree with the analysis.

In our negotiations, every supplier felt like they could handle him, especially as he slipped into a southern drawl, and started asking remedial questions about their manufacturing processes. He goaded them into bragging about how efficient they had become, and where they had cut out costs. They lost sight of the problem, and had no idea they were giving away their bottom line pricing. Needless to say, it worked fantastically when we launched the effort. It took years before all of the suppliers recognized the need to be guarded about their performance.

So is Trump playing the rope-a-dope, tiring out his opponents with chaos and verbal abuse to gain concessions in the end? Only time will tell if the long-term strategy shifts outweigh any short-term tactical advantages.

2. Focus on Interests, Not Positions

This is perhaps the most powerful concept in the entire negotiation framework. Positions are what people say they want; interests are why they want it. By exploring underlying interests, negotiators can often find creative solutions even when positions seem incompatible.

Trump has declared his interest in evening out trade deficits and bringing manufacturing back to the US. This represents a significant shift from previous administrations' stated interests, which typically emphasized free trade, global economic growth, and geopolitical stability. Foreign counterparties now face the challenge of determining how committed he is to this vision and adjusting their approaches accordingly.

What makes this particularly interesting is that economic experts widely disagree about whether reducing trade deficits should be a primary goal of US trade policy. Many economists would argue that trade deficits aren't inherently problematic, particularly for a country with the US's unique economic advantages. The question becomes: is Trump's stated interest in trade deficits his actual interest, or is it a position he's taking to achieve other unstated interests? His negotiating partners must make this determination, which significantly affects their strategic calculus.

3. Invent Options for Mutual Gain

Before dividing the pie, skilled negotiators look for ways to expand it. By generating multiple possibilities and exploring creative options, negotiators can often find solutions that benefit all parties involved.

One potential example of this in the current international context would be forming coalition approaches toward China. Many US trading partners share concerns about China's trade practices, intellectual property protections, and industrial policies. By framing trade discussions around mutual interests in addressing these shared challenges, the US could potentially create win-win scenarios with partners like the EU, Japan, and others.

However, Trump's unilateral declaration against the world and his focus on bilateral rather than multilateral negotiations seems to limit opportunities for this kind of creative coalition-building. The emphasis on extracting concessions from individual partners, rather than collaboratively solving common problems, may leave mutual gains unexplored.

An interesting case study is the US-Japan trade negotiations. Japan shares many of America's concerns about Chinese trade practices but faces its own pressures from the US on auto exports and agricultural imports. A more collaborative approach might have leveraged the shared China concerns to build a stronger partnership, while still addressing bilateral issues. Instead, the bilateral focus may have missed opportunities to create a larger "pie" of mutual gains.

4. Insist on Using Objective Criteria

This principle suggests that agreements should be based on fair standards independent of either party's will. By agreeing on objective benchmarks or procedures, negotiators can reach solutions that are both legitimate and politically sustainable.

In the trade context, objective criteria might include standards like most-favored-nation status, historical tariff levels, or recognized international trade rules. Trump's approach, however, often seems more focused on numerical targets (like trade deficit reduction) without clear grounding in established economic criteria about what constitutes fair or balanced trade.

The challenge with objective criteria in international trade is that there's significant disagreement about what "fair" actually means in this context. Is it fair that some countries have lower labor costs due to different stages of economic development? Is it fair that some countries provide significant subsidies to strategic industries? These questions don't have universally agreed-upon answers, making it difficult to establish truly objective criteria.

When Trump demands more "fair" trade deals, he's implicitly rejecting the criteria that previous administrations used to evaluate trade fairness. This creates uncertainty in negotiations, as counterparties struggle to understand what standards will be used to evaluate potential agreements.

Contrasting Approaches: Traditional Diplomacy vs. Trump's Dealmaking

Traditional diplomatic trade negotiation has typically embraced many of Fisher and Ury's principles. Career diplomats are trained to focus on the substantive issues rather than personalities, to look for underlying interests, to develop creative options, and to base agreements on established international standards.

Trump's approach attempts to pull the rug out from under the rest of his counterparties. His background in real estate brings a different perspective to the negotiating table - one that's more transactional, more focused on immediate outcomes, and less concerned with precedent or long-term relationship management.

Questions to Consider

• Is Trump right, that the traditional diplomatic approach is too constrained by its own norms and procedures? Creating chaos takes a lot of energy - will negotiators across the table be disciplined, take their time and just let Trump tire himself out?
• Historically we looked at GDP growth and maybe unemployment, generally ignoring debt growth and wage disparity. What do you think the underlying interests for America really should be?
• Beyond reducing trade deficits, what might Trump's unstated interests be?
• What would constitute objective criteria for evaluating the "fairness" of trade deals, and how might those criteria differ between countries at different stages of economic development?
• Do you think there are any opportunities for mutual gain at this stage? What opportunities might exist with our strongest trade partners?
• Are these going to being missed by declaring a trade war on the entire world all at once, or is there a scenario in the current approach where mutual gain is possible?

In my next post, the third in my series, I'll examine whether its conviction, insanity or maybe a little of both. We'll cover a high-stakes company sale where I saw conviction of one guy completely change the negotiation dynamics, despite seemingly impossible odds. You can make your guesses on if our Negotiator in Chief is visionary or crazy - but you can't be sure until you get to the end of the story.

If you're fascinated by the psychology of negotiation or just trying to make sense of the headlines, understanding these principles gives you a new way to look at what's happening on the global stage. Stay tuned!