The Power of Conviction

How Belief Changes Negotiation Outcomes

If you've been following international trade news on different media, you've noticed the wildly divergent portrayals of Trump's negotiation style. Some media outlets paint him as a strategic genius playing 4D chess while others describe him as dangerously unhinged, making impulsive decisions that threaten global economic stability.

Conventional diplomatic and economic people find his rationale unreasonable, especially compared to established standards. Trade experts routinely express alarm at his rejection of multilateral frameworks and apparent misunderstanding of trade deficits. Even insiders on his team will send a different message on occasion. Yet despite predictions of immediate disaster, he keeps pushing forward with unwavering certainty.

It begs the question: Is Trump's approach strategic conviction or simple irrationality? And does the distinction even matter if his conviction itself becomes a negotiating asset?

In previous posts, I've explored the concept of BATNA (Best Alternative To a Negotiated Agreement) and Fisher and Ury's four principles of effective negotiation. Today, I want to shift gears and share a experience of mine that illustrates perhaps the most powerful, yet least discussed, element in high-stakes negotiations: conviction.

When the stakes are highest, and everyone at the table is well-prepared and skilled, your outcome often depends on the strength of your conviction -- your unwavering belief that there's a better deal to be had, and your ability to bring everyone else around to that belief.

In his book "The Power of a Positive No," William Ury discusses how saying "no" effectively in a negotiation comes from your deeper "yes" -- your core interests and values. When you have absolute clarity about what matters most to you, your conviction becomes visible to the other party and strengthens your position considerably.

A Story of Impossible Odds

I was once supporting the sale of a company that was on the brink of insolvency. Working on behalf of the owner, I also needed to bring along the main creditor. For both the creditor and the owner, the alternative to a sale was insolvency. But this BATNA meant different things to each party.

In this insolvency, the owner would lose the business to the creditor and might even be on the hook for shut-down expenses. The creditor, on the other hand, would inherit a business needing cash injections. If they couldn't provide more money, they might not recover what they were owed when it shuts down.

Needless to say, I had motivated sellers. I did the prep work and rocked my four principles to the best of my ability. There was a multimillion-dollar BATNA for the creditor, but a zero, or even negative one for the owner. The principal leading the negotiations was quite aware of the same numbers, but never once admitted he didn't have the right cards in his hand.

Instead, on every call, every email, and every off-hand comment, he boldly talked about how there's only a certain size deal he'd accept and how whoever was able to get this company at that price would be lucky to get it.

We had interested parties -- and they were smart enough to understand the situation. There was a deal to be had for them, and the sellers had no better options. I was frustrated by how the person I was trying to support was so stubborn, and how he kept telling me and others that anything less than tens of millions was unacceptable. We lost interest from most of the potential buyers who felt the business was only worth it if they were getting a steal.

One potential buyer, however, didn't want to miss out on what they felt was going to be a great deal for them anyway. Confident in their understanding of the alternatives for the owner and creditor, they ignored our price targets and sent in a bid that gave nothing to the owner and just enough to be better than a shutdown for the creditor.

The owner was indignant. He told everyone around him that this bidder was unserious and cut off negotiations. He even refused to take calls. All this while no one else had even sent in a bid. I had to work pretty hard to get others back to the table, eventually one that said they might consider a bid, I had an opportunity to nudge the original buyer to come up with something better.

The clock was ticking on this insolvent company. A bid, any bid, was needed to get the creditor paid something, and the owner should be happier with a check for zero than the headache of shutting down the company. Yet, when the updated bid came back to the seller with more for the creditor, and nothing for the seller, it was rejected again. He told this bidder, "Never mind -- we're going with the other guy."

I knew, and the owner knew, that "the other guy" still hadn't put an offer on the table yet, let alone decide that they'd offer more than the best deal we'd seen. With only days to go before our deadlines, I was convinced that the owner was delusional. He'd said no twice to the only offers that made any sense -- clearly he was ready to let the company go under.

But this is where conviction comes in -- the creditor, my team, and the bidders all believed that he believed. That was enough for us to keep playing along, and it worked. The one and only serious buyer came back to us on the deadline and asked, "What do I have to do?" We got the deal done -- not for twenty million, but a lot better than I had expected, and the rest of us just had to hang on for the ride.

To this day, I can't be sure if he truly believed a better deal was possible or if he just masterfully stayed in character throughout the process. What matters is that his unwavering conviction changed the outcome in ways that none of the "reasonable" people in the room thought possible.

The Power of a Positive No

Like "The Power of a Positive No" -- the seller wasn't just saying no to be difficult; he was saying no because he was committed to a better outcome, even when the odds seemed against him. His conviction ultimately changed the dynamics of the negotiation.

In high-stakes negotiations, conviction often manifests as an unwillingness to accept what seems inevitable to everyone else. It's a refusal to acknowledge the apparent limitations of your situation, combined with an unshakable belief that a better outcome is possible.

Trump and Conviction in Trade Negotiations

There are parallels to Trump's approach here. Trump talks about how he wants to even out the trade deficit, making sure other countries buy as much US goods as they sell to the US. Most economists will tell you that this isn't important and probably doesn't matter much to the growth and health of the US economy. If there was an issue at all, it would be the government deficit and increasing debt load that threaten future economic growth.

This vision of a major manufacturing revolution doesn't make a lot of sense to many economic experts... Trump's got smart people around him -- so why is he talking about an America where we're all back in factories putting stuff together?

Now, we're going to hear a lot about how Trump doesn't understand or is irrational. This might be right, but just remember that part of getting to a better deal is believing there is a better deal out there. If an exclusive restaurant says there's nothing available and won't let me in -- it's not unreasonable to think I still could bribe my way past the maître d'. Our trading partners know they need access to the US market, but Trump says he wants the US protected and making all their own goods. What's going to give -- the more our trading partners believe he's committed to this idea of barriers, the more concessions they might give to get past them.

Strategic Ambiguity and Conviction

In the experience I shared, the owner created strategic ambiguity about his willingness to walk away from a non-zero offer. While everyone knew the company was nearly insolvent, his behavior suggested he had other options or was willing to accept worse outcomes than the current offers. This created doubt in the minds of the buyers, who ultimately improved their offer rather than risk losing the deal.

Similarly, Trump creates strategic ambiguity about his willingness to damage the US economy in pursuit of his trade goals. While most economists believe tariffs harm both sides, Trump's conviction that they're beneficial (or at least an acceptable cost) creates uncertainty for trading partners. They must ask themselves: Is he really willing to maintain these tariffs indefinitely? Does he have information or a perspective we're missing? The strength of this conviction, whether based in economic reality or not, becomes a negotiating asset.

The Limits of Conviction

Of course, conviction alone isn't enough. In my company sale example, the owner had prepared thoroughly and understood the buyer's interests and constraints. His strategic rejection of offers wasn't just bluster -- it was calculated based on his understanding of the other party's position.

Similarly, effective negotiation at the international level requires more than just conviction. It demands understanding counterparties' interests, domestic constraints, and political realities. Conviction without this foundation risks becoming mere stubbornness that leads to lose-lose outcomes.

The challenge for observers of international trade negotiations is distinguishing between strategic conviction (which creates leverage) and simple intransigence (which creates impasses). The difference often lies in whether the negotiator has a clear vision of the path to agreement, even if that path isn't visible to outside observers.

Questions to Consider

• How much of Trump's position on trade is genuine belief versus strategic posturing? Does it matter, as long as trading partners perceive it as genuine?
• Where is the line between beneficial conviction that creates leverage and harmful intransigence that destroys value? How can negotiators find that balance?
• In your own negotiations, how can you harness the power of conviction without becoming unrealistic or inflexible?

In the next and final post of this series, I'll examine the critical difference between one-time and multi-round negotiations. Unlike buying a souvenir in a street market, international trade relationships involve repeated interactions over many years. This creates both challenges and opportunities that change the calculus of aggressive negotiating tactics.

I'll explore how the approaches we've discussed -- from understanding BATNA to applying Fisher and Ury's principles to harnessing the power of conviction -- need to be adjusted in the context of ongoing relationships. Stay tuned for the conclusion of our series on negotiation in the context of international trade!