Another Deal to be Made: Trump’s Strategy in East Asia

by Bowen Gissendaner

Inside the Art of the Deal

When attempting to analyze any actions taken by President Trump, one would be remiss not to consider the field in which he has been most successful, business. Before all else, Trump is a businessman, whose shrewd tactics allowed him to become one of the richest men in New York. Thus, when looking at his political endeavors in East Asia one must do so not with the mind of a politician, but with that of a businessperson. Trump’s trade and military negotiations with China, Japan, and South Korea have all closely mirrored the tactics he uses in negotiations with businesses and corporations. Understanding these tactics, laid out in detail in his book The Art of the Deal, is useful in beginning to understand his policies in East Asia. The book provides an insight into the President’s mentality regarding his role in organizations, namely his businesses, and how he tends to view the world.

In one of the most illuminating chapters of the book, Trump Cards: The Elements of the Deal, Trump lays out many of his strategies for dealing with business competitors and partners. These strategies break down into three key elements: ambitious goals, conservative expectations, and strong leverage. Each of these elements is important for understanding Trump’s thinking on all levels. For him, politics and business are sides of the same coin with each meeting with international leaders is just another deal to be made. The implications of each of these strategy elements on his East Asian projects will be discussed later.

Firstly, regarding ambition Trump describes his style thus, “I aim very high, and then I just keep pushing, and pushing and pushing to get what I’m after” (Trump, Schwartz 1987; 45). Whether in business or politics, Trump seeks lofty, and sometimes ultimately unattainable, goals with the expectation that great effort and cunning will be enough to achieve them. Ambition is the key to Trump’s business model, and given his success in this field, he has taken this same element and applied it to his politics.

Secondly, when entering into a negotiation or deal, Trump always proceeds with conservative expectations. He writes, “If you plan for the worst- if you can live with the worst- the good will always take care of itself” (Trump, Schwartz 1987, 48). A conservative, or perhaps even pessimistic, outlook on the possibilities of the coming negotiations allows one to remain somewhat less exposed should negotiations fail. This minimization of exposure to negative outcomes has allowed Trump to protect himself from the fallout of bad business deals or failed negotiations. If one becomes too heavily invested by being overly optimistic, they leave themselves open to failure.

Finally, Trump’s strategy necessitates negotiating from a position of strong leverage. He writes, “The best thing you can do is a deal from strength, and leverage is the biggest strength you can have. Leverage is having something the other guy wants. Or better yet, needs” (Trump, Schwartz 1987; 53). Having a dominant negotiating position is key to one’s success in a deal, according to Trump. Possessing a key resource, service, or product allows one to gain the upper hand and achieve a better deal. This concept will be especially important when looking at his endeavors in East Asia, as America possesses key markets, technologies, and military assets needed by the states of East Asia.

For Trump, the line between business and politics is almost non-existent. The strategies he crafted over years of business dealings have become the strategies Trump has instituted in his dealings with foreign nations. Ambition drives Trump to pursue ever more difficult goals, no matter how far-fetched they may seem. However, he tempers this ambition by controlling his expectations of situations and allowing himself to consider the implications of failure. Ultimately, as with all business deals, Trump relies heavily on positions of leverage to achieve his lofty goals.

Case Study 1: US-China Trade War

Over the course of the last few months, the Trump and Xi administrations have been engaged in an ever-deepening trade war over the US-China trade deficit. With the threat of billions of dollars in tariffs on Chinese goods entering the United States, the need for reconciliation has become paramount for both countries. Though the exact effect of these tariffs on the American and Chinese economies is not fully known, the likelihood of serious economic harm is undoubtable. However, this negotiation for reconciliation will be subject to Trump’s business strategies.

The three elements of Trump’s strategy have become ever more apparent by statements from both himself and members of his administration. In a meeting in September 2017 with Chinese officials, Secretary of Commerce Wilbur Ross stated the administration’s goals for trade negotiations with China. The goals focused on an end to the American trade deficit to China and an end to restrictive Chinese trade barriers (Sec. Ross, U.S. Dept. of Commerce 2017). Each of these aspects has been a staple of US-Chinese trade relations for decades. The trade deficit, which has topped $340 billion, has been a major point of contention between the United States and China for years, yet there has been no real movement toward equity (US Census Bureau 2018). Furthermore, the tariffs put on imported American goods is a key part of the central Chinese economy to protect their domestic producers, a symptom of the Chinese socialist system. Thus, for the Trump administration to set about ending these two aspects of American-Chinese trade is, in a word, ambitious. By setting their sights on two enduring characteristics of the US-China trade relationship, the Trump administration has certainly aimed high.

Furthermore, Trump has made clear that a worst-case scenario, namely a prolonged trade war with China, would still be agreeable with him. He said to a group of reporters two days before the 2018 G20 summit regarding the China trade war, “I will tell you that I think China wants to make a deal, I’m hoping to make it a deal but, frankly, I like the deal we have right now” (Trump via CNBC 2018). The deal to which he refers is the “billions and billions of dollars” entering the US coffers through tariffs and taxes on goods imported from China (Trump via CNBC 2018). For Trump, the situation looks like a win-win scenario. Though this statement could simply be posturing in order to intimidate the Chinese trade negotiators, if interpreted from the point of view given in The Art of the Deal, one can see that Trump is likely being truthful. As stated previously, Trump maintains conservative expectations of deal outcomes with the expectation that something better will happen. In this case, preparation for a failure to reach a new deal with China by March allows Trump to focus on the potential beneficial implications. These implications being agreeable to him gives him a superior bargaining position at the G20 summit.

Finally, the most important factor in Trump’s dealings with Chinese trade lays in his possession of strong leverage. By virtue of his position at the head of one of the world’s largest economies and his ability to affect its economic policies, Trump commands an incredible amount of power in negotiations. More importantly the unique trade relationship between the United States with China means Trump has even more leverage. Though the Chinese economy has had unprecedented growth since the 1980s, it still has yet to develop a large enough domestic economy in which they can sell their domestically made goods. Without a sufficiently large middle class, Chinese manufacturers rely on foreign markets, namely the United States, to sell their products. The Chinese dependence on American markets, gives Trump a significant amount of leverage over the Chinese delegations in negotiating trade going forward.

The coming months will tell how effective Trump’s strategies have been in the US-China trade war. The Chinese and American trade delegations have until 1 March 2019 to make a new trade deal at which time tariffs will increase from 10% to 25% (Sanders, White House Press Secretary, 2018). The success of these negotiations will be an important indicator of Trump’s efficacy as an international leader. A success here could lend credibility to Trump’s often unpredictable style and businesslike strategy. However, a failure would mean continued strain with China and an increase in tariffs hitherto unseen.

Overall, the efficacy of Trump’s business strategies in politics remains to be seen. Though a profoundly successful businessman, Trump has much to prove as a politician. The outcomes of the trade war with China could help or harm the president’s legitimacy on the international stage. These outcomes, unfortunately, will not be fully realized for years after Trump is out of office. However, the strategies he’s using in these issues are clearly visible; ambitious goals, conservative expectations, and strong leverage. These three aspects of his strategy are consistent in Trump’s dealings in the East Asian region, regardless of country or issue area.