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Trade wars – why negotiation is the only solution to turbulent deal making

With the US threatening trade tariffs, the globe sits and waits for what could be the start of a new trade war amongst super powers worldwide. It has certainly left people feeling unnerved – but what are the real consequences here?  And what lessons can companies involved in their own turbulent deal making take from this.

Huthwaite's Neil Clothier has been commenting for the Daily Express.

"From a tactical perspective, Trump is implementing, what Huthwaite’s research identifies as Power Play – a technique likely to elicit retaliation from those in the firing line. Whilst many implement Power Play as a level or bargaining chip for future deals, it often has an adverse effect and can in fact damage future relations. Relationships take a lifetime to build, but seconds to destroy. Once the toothpaste is out of the tube, it’s difficult to put it back.

Instead, Trump and the other powers involved should only apply as much power as their objectives allows. It’s important that leaders have several fall-backs left when negotiating. If you don’t have an alternative option, then you sacrifice the power you may have had. In this case, the questions that need to be asked should be around requirements and capability. Can the US satisfy home demand for all its steel and aluminium requirements? Will the USA have enough to export in future and is that resource so scarce they can demand a fair price? Alienating all options in this way could be dangerous in the future.

If Trump needs a relationship, then he needs to work at ‘tending’ that relationship. Failing to do so shows clear disregard for any relationships, other than inside the US. As Churchill said, it has to be ‘jaw jaw not war war’. Communication and negotiation aimed at preserving the relationship is always the best route rather than a win/lose scenario if the relationship is important.

The only time to use win/lose is when the continuation of the relationship is unimportant and that applies whether the negotiating partners are small businesses, corporates or global powers.

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