Trump's Negotiation Skills - Good or Bad?

January 30, 2017

President Donald Trump considers himself an expert negotiator. Is he? And if so, does his business negotiation experience necessarily translate to being a great negotiator as president, either with Congress and/or with our international allies and adversaries?

Let me give a great legal answer to both questions – it depends. I recently re-read his book “The Art of the Deal” and have followed Pres. Trump for years. And he has certainly completed a lot of business deals and profited substantially from many of them.

But just getting a deal done – and even profiting greatly from it - doesn’t mean you negotiated a super deal. Nor does it mean you’re an effective negotiator. You might have substantially overpaid for some commercial real estate in 2002, paying well over market value, and still have profited from the strong real estate market going forward.

Likewise, you might negotiate a fantastic partnership deal only to see it fail due to unrelated business issues.

So how can we evaluate Pres. Trump’s negotiation abilities as president on NAFTA, the Iran Nuclear Deal, the Middle East Peace Negotiations, an Obamacare Repeal/Replacement Plan, and the list goes on?

Watch and track these factors, which also apply to how we should evaluate and learn from our own negotiation successes and failures.

1. To what extent did he satisfy his goals and interests?

We have a documented record of Pres. Trump’s promises. Of course, these were campaign promises, so perhaps they included a lot of hyperbole.

Even so, they provide data points on our ability to evaluate his negotiation skills and success.

For example, how much will the Trump healthcare proposal – once unveiled – achieve his stated goals of lower costs and better healthcare while ensuring no one loses insurance? How much of his plan will Congress pass relative to the original core components of his proposal?

What about his plan to negotiate with Mexico to pay $10-$20 billion for a new wall?

Great negotiators also recognize, explore and creatively satisfy parties’ mutual interests, which may be neither stated nor obvious. Super aggressive negotiators often ignore these “win-win” elements.

Of course, we can’t rely on partisan self-reporting for these answers. There is too much political self-interest involved. But non-partisan expert organizations track these quantifiable facts and interests.

2. How much better is the deal than his alternative/Plan B?

Leverage is largely based on how well your deal (Plan A) stacks up to your best alternative, or Plan B. The better your Plan B, the stronger your leverage. And vice versa.

One mark of expert negotiators is how much better their negotiated deal is than their Plan B. Let’s say Company A’s first offer to buy my company is $25 million and Company B’s several offers have culminated in a “best and final offer” of $26 million.

A good negotiator can get Company A to offer over $26 million. A great negotiator will get Company A to offer substantially over $26 million. The more over $26 million, the better the negotiator. The bigger the difference between your Plan A and B, the stronger your negotiation abilities.

Another mark of an expert negotiator is the ability to impact your counterpart’s perception of your Plan B (or their Plan B, an equally powerful element of leverage), without losing credibility that can affect your future negotiations.

A great negotiator can sell an average product for a lot to someone who’s not very interested in it.

What should we track here? Will Pres. Trump’s new NAFTA (or elimination of NAFTA) or other trade negotiations, like his recent withdrawal from the Trans-Pacific Partnership deal, provide better economic and employment results than the status quo going forward?

The status quo going forward is our Plan B – and his deals will be Plan A. These deals can and should be measured, again, based on objective data and facts from non-partisan expert organizations.

3. How do his results measure up to objective benchmarks?

Market value. Precedent. Tradition. Experts’ opinions. Cost and profit margins. Professional standards. These independent objective standards should be used to evaluate Pres. Trump’s deals.

How much below the current market can the Trump Administration drive the drug prices Medicare pays pharmaceutical companies by empowering the U.S. to negotiate them (assuming he can negotiate successfully with the Republicans in Congress, who have opposed this for years)?

Pres. Trump has called the Iran Nuclear Deal a horrible deal and says he wants to renegotiate it. One reason he calls it horrible is that it might allow Iran to restart its nuclear weapons program in 10 years. How far can Pres. Trump extend that moratorium, based on this precedent?

What do Bureau of Labor Statistics experts conclude about the number of manufacturing and other jobs created due to his negotiations with corporate titans and threats of tariffs and public shaming?

And how do independent academic negotiation experts evaluate his skills and results? There has been a lot of negotiation research in the last forty years on what works and what doesn’t. Is Pres. Trump employing proven strategies, or not?

Of course, we may not know the answers to these questions for some time. History may be the ultimate judge.

Latz’s Lesson: Stay tuned – we can all learn from Pres. Trump’s negotiations. They may even determine his success or failure as President.