Among the many diplomacy and negotiation skills required in international negotiation, business negotiators need to be able to size each other up accurately, taking into account cultural, organizational, and other differences. To capitalize on the benefits of diplomacy, they also need to be able to present a united front. Those diplomacy and negotiation skills came to the forefront in the early stages of the U.S.-China trade negotiations, which eventually escalated into a trade war.
During the 2016 presidential campaign, Donald Trump asserted that, if elected, eliminating the U.S. trade deficit with China would be a top priority. But after he won, the Chinese government calculated that Trump was a pragmatic, transactional businessman, someone with whom they could negotiate. “His family-run business empire looked familiar in a region where family conglomerates were common,” the Wall Street Journal reported in November 2018.
That assessment was too simplistic and optimistic, China learned over the next two years, as Trump has been swayed by opposing factions in his administration: pro-business moderates and America-first trade hawks. The resulting cross-cultural negotiation case study, summarized in the Journal, suggests negotiation tools and techniques for all types of diplomatic negotiations and international business negotiations.
A Changing of the Guard
At the new president’s Mar-a-Lago resort in Florida in April 2017, Trump and China’s president, Xi Jinping, agreed on a 100-day plan to reduce economic tensions. In the negotiations that followed between Wang Yang, one of China’s four vice premiers, and U.S. commerce secretary Wilbur Ross, China promised to work harder to reduce its steel production to allow American steel to rebound. But when Ross presented the draft deal at the White House, Trump said it hadn’t gone far enough, according to the Journal.
For November 2017 trade talks in Beijing, Trump replaced Ross with U.S. trade representative Robert Lighthizer, more of a hard-liner on trade. Lighthizer persuaded Trump to reject a new concession from China—greater access to the nation’s financial sectors for foreign firms—as too little, too late. “They’re playing you,” Lighthizer told the president, sources told the Journal.
Carrots and Sticks
After Trump began threatening to levy major tariffs on China, U.S. treasury secretary Steven Mnuchin set trade talks in Beijing for May 2018, despite objections from Lighthizer. Trump appointed Mnuchin to head the delegation but put Lighthizer on the team.
Lighthizer reportedly viewed tariffs as a useful stick for motivating change. Mnuchin, meanwhile, preferred to use negotiation as a carrot to spur concessions. At different times, both approaches appealed to Trump, but Lighthizer’s views repeatedly won out, the Journal reports.
In Beijing, Lighthizer presented tough new U.S. demands, including calling on China to reduce its $375 billion trade surplus with the United States by $200 billion within two years, according to the Journal. But when the Chinese asked Lighthizer for his input, he reportedly often replied, “I have nothing to say.” Both Chinese and American representatives concluded he had been sent to the talks to police Mnuchin.
The Return of Tariff Man
Before the G20 meetings in Buenos Aires, Argentina, in late 2018, Trump “veered from optimism to wariness about a deal, sometimes in the course of a single statement,” according to the New York Times. Mnuchin continued to promote compromise, while hawks such as Navarro urged Trump to “double down” on tariffs, the Times reports.
Over dinner in Buenos Aires on December 1, Trump and Chinese president Xi Jinping reached a deal to freeze tariffs and agreed to another round of talks to resolve their differences. That night, the business moderates won. Three days later, Trump tweeted: “President Xi and I want this deal to happen, and it probably will. But if not remember, I am a Tariff Man.” Stocks plunged in response.
Leading Complex Negotiations
The early stages of the U.S.-China trade dispute would have benefitted from the following diplomacy and negotiation skills:
- Seek diverse opinions—and then draw your own conclusions. When setting strategy for an important negotiation or conflict-resolution effort, it can be valuable to seek a variety of viewpoints. At a certain point, however, you’ll need to sift through the facts and opinions, and craft a unified approach.
- Promote team cohesion. If the other team detects chaos and conflict within your ranks, they are liable to take advantage. To get your team on the same page, spend ample preparation time negotiating key roles, discussing substance, and confronting any rivalries or differences of opinion head-on.
- Size up the other side. Don’t take the other team’s apparent chain of command at face Research individual negotiators’ areas of expertise, perspectives, and influence. Rather than treating surprising behavior as an anomaly, continually update your assessments and work on managing cultural differences. Strive to make inroads with those who appear to have the most sway with top leaders.
What other diplomacy and negotiation skills have you found useful in international negotiation?