"Liberation Week": What the fuck just happened?
Here's what I think...
When I was a young man, I walked onto a used car lot with the idea that I needed a car right now. For a few years, I’d been reliant on my bike, but circumstances suggested that I needed a vehicle to haul shit around, so there I was, a rube standing on a lot about to be conned into buying a shitty car by a very slick salesman. I made it known that I was there to buy, that I valued honesty, and hoped we could make a deal without a hard sell or any shenanigans.
The salesman smile and led me to a generic looking sedan. He told me that at $3,000 it was the best deal on the lot. Then he confidently handed me the keys for a test drive. I took the thing out on the road and it drove okay. The interior was near shabby, kind of like a rental that is just about to be put out of service. And there was an odd smell, which I was told would go away. But it got from A to Z, and that was good enough for me.
Back on the lot, knowing nothing about the car other than what I learned in the test drive. I countered at $2,000, thinking that if I could get it for $2,500, I’d get the better end of the deal. The salesman accepted my offer, pleased that he got me where he wanted me without much work and knowing that I had the glow of someone who thought they’d won a negotiation. I signed some paperwork, wrote a check, and drove the car off the lot.
I got home and immediately regretted it. The car drove okay but it was ugly and smelly and had no charm. It was not the kind of vehicle you gave a nickname, though I did call it “Stinky,” a comment on the odd smell that wasn’t going away. After a week, I knew I hated the damn thing, but was ignorant of California’s lemon law, which would have allowed me to return it.
A month passed and I was using my bike far more than Stinky the car, a good thing but partially prompted by my loathing for my crummy machine. At that point, the lemon law no longer applied and I was stuck with the beast. I looked to resell it but found out I overpaid for the thing by a thousand bucks. I was bummed…and then a miracle happened.
Late one night, a drunk careened into my car while it was parked in front of my apartment. The driver took out two more cars before face-planting their vehicles into a lamppost. They escaped the car and ran, but the license plate was enough to identify the driver, who an uninsured, serial drunk driver.
The next morning my insurance claim adjuster dropped by, totaled the car, and told me that my uninsured driver coverage would put $2,500 in my pocked. Fortune bailed me out on that one and the experience got me to learn how to negotiate.
Through reading some very good books (start with Getting to Yes by Roger Fisher and William Ury, don’t bother with The Art of the Deal), talking to a few people who negotiated as part of their job, and paying close attention to my lawyer working a dispute I had with someone who owed me money, I learned quite a few things about the art of negotiation.
The first thing I learned is that negotiation is all about leverage and how much leverage you have is determined by these things:
- Need/want/desire: Do you truly need something or is what you want a desire? If you do need something, how great is the need? If you desire something, can you curb your desire. The less desperate you are the more leverage you have.
- Time: When a foreign businessman would visit Japan to make a deal, their host would note how long the businessman would be in town, and then burn up most of his time with visits to restaurants, bars, geisha houses, sumo matches, etc., and then start negotiations when the sap had only a day to close the deal (and his hosts had all the time they needed).
- Resources: Which side has enough resources to wait things out? Of course, resources are stuff, but also things like the patience of the people supporting and/or relying on each side. Information is also a resource. Do your homework and you might have an edge.
- Vulnerability: Vulnerability is both a culmination of the three things above and what’s on your face. You can need something bad, lack time, and have scant resources, while hiding your vulnerability with a “poker face.” You can also have everything you need for leverage but are so full of jitters and lack of confidence that you ooze vulnerability.
- Trust: I walked onto that car lot willing to put trust in an untrustworthy person and I got screwed. I could have protected myself by simply making the salesman earn my trust or by doing a bit of research to establish that he was a scumbag. No matter how trustworthy my adversary is, knowing their level of honesty gives me an advantage, or at least doesn’t put me at a disadvantage.
Now, let’s look at Trump’s ongoing tariffs’ fiasco:
- Need/want/desire: Trump campaigned on tariffs and broadcast that he was eager for a trade war. His need to follow through on his campaign promise (for his supporters and his ego) is high. His desire for a trade war is high. Thus, his need to make deals coming out of a trade war was very, very high, and, worse, he telegraphed his need. Disadvantage: Trump.
- Time: Trump makes hasty decisions and seems to have attention problems. He also is extremely impatient. Trump has a habit of putting a clock on negotiations, shrinking the amount of time he needs for his desires to come to fruition, even when when his adversaries obviously have all the time they want.
- Resources: Trump has gotten through life picking fights with people far less resources than he has. It is fairly easy to stiff a small contractor and make suing too expensive to pursue. It is not easy to bulldoze an adversary when they have at least as much resources as you have, and have options to fortify their resources elsewhere. Europe and China can wait us out. Zimbabwe can’t. Economically Europe and China mean a hell of a lot to us. Zimbabwe, not so much. Further, Trump is the aggressor here so he is under pressure to win quickly in order to maintain support. Europe and China can turn to their people and say, “Hey, we didn’t pick this fight and we aren’t going to cave, because if we do it will be bad for all of us,” and most Europeans and Chinese will reply, “Go for it! Fight back! Fuck that guy!” The Euros and Chinese have the resource of public support; Trump does not.
- Vulnerability: When you attack nearly every one of your trading partners, you alienate nearly every one of your trading partners, which closes a lot of markets to you, making you way more vulnerable than the people you alienated, who now have common cause and a reason to do more business with each other and less business with you. Internally, Trump’s idiotic trade war has crashed the stock market and started to impact the bond market. Trump can put on the best poker face in the world, but the economic impact of his trade war is far more obvious and persuasive than whatever is on his leathery, orange face. The US is far more vulnerable than the major powers Trump picked a fight with than are China, Japan, Australia, Canada, Mexico, Brazil, India, and Europe.
- Trust: No one trust Trump on his word. As important, no one trusts that he knows what he is doing, that he will stay on message, that he will follow through on his threats, that he has a grand plan, that he’s thinking about what comes next, that he will negotiate in good faith, that any agreement with Trump will last a day before he breaks it, or that he won’t start this shit again for no damn reason other than he woke up thinking “Tariffs” or one of the crackpots around him told him that the world thinks he is weak. With trust, Trump could easily enter negotiations and find a good deal. Without trust, countries are reluctant to deal with him on anything, and when they do, they will not make it easy.
Trump fails each one of these points because, living his life as a spoiled bully, he’s never had to learn how to negotiate. He sees forcing people to his side as deal making. He views coercion as negotiation. He is so narcissistic that when it comes to power balance, he sees most situations as an imbalance favoring him. When reality comes crashing into his fantasy world, he is incapable of recalibrating, so he doubles down, lashes back, and eventually folds. That is what happened this week.
Trump’s trade war sent the stock market into its worse fall since 2020 during the COVID crisis. COVID was a pandemic that would have stressed the economy no matter how well it was handled. Trump’s trade war is his creation. It not only didn’t have to happen, but Trump is the only person who could stop it (and no one trusts him). So when the markets crashed, all blame went to Trump, and then things got worse. Consumer confidence crashed. Consumer spending started to fall. And, worst of all, the US bond market started to slide, a sign that confidence in the stability of the American economy is on the skids, a signal for people and countries not to invest in the US. The public got more nervous and became motivated to stand up to Trump. Investors got really pissed off and started to speak up. Even some of Trump’s allies slapped back at Trump’s tariffs.
Add up all of the above and now you know why Trump blinked and put most of the tariffs “on pause.” Trump and his supporters say that the pause is because “75 countries” came “running” to the table, but that is bullshit. Foreign trade missions kept in contact with the US government because that is what they do. Foreign ministers checked in because that is their job. No country aside from a few smaller ones came to DC to make a deal. Most counties either cracked back or played “wait and see.”
Yes, Trump hit China hard and then, announcing the pause, even harder. This is pure show biz. China does sell a lot of stuff to the US. In fact, we are China’s best customer when talking country by country buyers (we buy 14.7% of its exports). However, regionally, North America is third (18.5%) next to Europe (20.7%) and Asia (48.2%). Eighteen percent is a hit to China but they’re dealing is so worldwide they can adjust.
Know who can’t adjust to the tariffs on China? American businesses big and small. Apple and other companies that manufacture stuff in China (and elsewhere) spent much of March rushing product to the US to escape tariffs. Small sellers on Amazon, ebay, and other outlets and who deal with Chinese made goods (dog poop bags, toys, t-shirts, etc.) are in a freeze or shutting down their businesses. The pain Americans feel over tariffs on China is far greater than what China will feel.
Of course, Trump looked at his cave in as an opportunity to make a bit more cash for himself, his family, and friends…and wasn’t very sly about it. Hours before announcing the tariff suspension, Trump used social media to tell people to buy stocks. I have no proof but little doubt that he tipped his family and friends to what he was going to do before he did it. Whether Trump was giving investment advice in public or in private, knowing what he knew and telling others while urging them to play the market, well, that is insider trading. And, yes, the billionaires made a mint.
Was this planned, the end game of a scam that crashed the markets so the rich guys could gobble up everything and make a killing? I doubt it. Trump has no strategy and plans nothing. He has his instincts and habits, so reading Trump is fairly easy, even when he flits from this to that to here to there. Trump also has a keen sense of opportunity.
Remember, this is a man with a colossal ego and much insecurity. His primary goal with the trade war is to not only win, but to dominate. That is what he wants most. He is also a predator and intensely greedy. He looks for opportunities, and has been great at finding opportunity in his own failure. So, yeah, he wants to dominate everyone with so much winning, but if the winning turns to losing he is the first to capitalize on his loss and frame it all as a win.
So, what happens next? Fuck if I know. This is Donald Trump we are talking about. Laura Loomer could raise herself from his crotch to tell him that he needs to hit Europe hard and he will do it. Peter Navarro (or Ron Vara) could call Donald Trump (or John Barron) and convince him to lay off on China and he will do it. Or Trump could run away from the mess he created and order the bombing of Greenland. But I am pretty damn certain that he won’t win this one and that we – not he – will feel the loss.