A lot of people are on edge as trade talks with China have failed and retaliatory tariffs are the new norm. Farmers, manufacturers, Wall Street and retailers like Nike are all assessing what the damage of this disruption of the normal flow of goods to and from China means to them.
As a professional negotiator in the entertainment industry for 40 years, I may be able to shed some light on how the negotiations for the trade deal play out.
But first, a few insights into negotiations in general. Behind negotiators Trump, Lighthizer, Navarro, Xi and Liu are two constituencies: the American and Chinese people. They have different expectations, yet similar needs.
Each side needs to believe that they’ve won the trade war. The Americans need to believe that President Donald Trump delivered something because tariffs have been disruptive, and he has said we are in a losing war with China. He also promised to bring manufacturing jobs back. Trump measures everything by the 2018 trade deficit, which stands at $420 billion.
The Chinese, on the other hand, have been fed several years of President Xi Jinping’s nationalistic propaganda. He has assured them that they are the rising nation. Xi’s “Chinese Dream” is a promise of increased affluence and international prominence. China has become the world’s second largest economy in a historical eye blink, largely via exports.
Any negotiation that ends quickly, quietly and without the drama of threats and counter-threats runs the risk of leaving the negotiators’ constituencies disappointed.
When I was negotiating for writers and producers against networks and studios, I was aware that each side needed to feel they “won.” If, during a period of weeks, talks were cordial and respectful, this was very often interpreted as a sign of weakness or that “money was being left on the table.” My clients wanted every last penny they felt they deserved. The only way they knew they were getting everything possible was if I told them, “the studio is passing, they are moving on, this is their final offer.” On the other side, I was often authorized to tell the network: “My client has rejected your offer, they thank you, but will be taking another opportunity.” That gave the network negotiator the ability to improve their last offer, knowing that if they did not, they would lose the deal.
I suspect the same thing is going on with these Chinese trade talks. We were all told that the Chinese renegotiated and changed some agreed-upon language in the final drafts of the agreement. That may be true or it may just be the “hook” that Trump needed to create the drama he is an expert at creating. It certainly has been working. Headlines are breathless with the latest inside analysis on what is taking place. Speculation is rampant: The talks are over, the tariffs permanent.
On the other hand, we are told, the Chinese do not want to cave to foreigners, and Xi miscalculated on Trump’s desire for a deal. We are told the Chinese may cut off their nose to spite their face and may cripple Apple’s cell phone circuit board manufacturing.
Why? Because when a deal is reached and a compromise position on intellectual property theft, forced technology transfers and open markets is reached, both sides can posture that they did “the best they could.”
Trump, who is notorious for claiming victory in just about everything, is sure to praise the other side, as he has in the past, but declare victory nonetheless. By then, negotiation fatigue will have probably consumed America’s short attention span, and everyone will be ready to move on to the next headline-generating issue. The spin will be positive for sure.
Xi will have an even easier time spinning his tale. With a lockdown on reality in the Chinese media, he can portray the deal any way he wants. To contradict him could mean imprisonment. The Chinese will be spoon-fed a story and told how to react. One can bet it will not be a story of compromise or failure.
Bottom line: While Kabuki theater is Japanese, not Chinese, that art form may aptly apply to these trade negotiations. Both sides need to posture and pose as tough guys ready to blow up each other’s economies. We will never know the truth about what is going on because each side wants to keep the truth from everyone but themselves.
Sometimes that is the only way to get a deal done. When my clients felt that they “won,” and the network or studio “lost” they were happy and went to work with a smile on their faces—which is exactly what the network or studio wanted in the first place.