United States, explained.
US President Donald Trump delivers remarks on reciprocal tariffs at the White House in Washington, DC, on 2 April 2025 (Brendan Smialowski/AFP via Getty Images)
After Liberation Day, evidence is mounting that many US trade negotiations are far from good faith.
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Trump and the art of the (bad faith) dealTrump and the art of the (bad faith) deal
In the period between Trump’s thumping election win and his inauguration, I was asked to compile a set of short-term scenarios for a multinational company that was highly exposed to US policy risk. Rather than delving into policy uncertainty (given the agenda was there in the public domain for all to see), I chose instead to focus on the different forms of conduct that the administration would exhibit in pursuing its stated policy aims. As part of this exercise, one scenario felt both incredibly dangerous and highly compelling. It consisted of a baseline assumption that the administration would pursue its wide-ranging goals with brute force, as an expression of raw power, with nothing ceded and everything demanded. More practically, if this were to be true, the inference was that the United States would be likely to engage in bad faith negotiations with friend and rival alike. And indeed, the conduct of the United States to date has borne many of the hallmarks of a stereotypical bad faith negotiator – a type that is studied in schools of law, business and diplomacy the world over.
In contrast to their unwillingness to make the first move, bad faith negotiators have been shown to escalate their demands when time is running short.
A recent Harvard study offers some fascinating insights into the type. A bad faith negotiator is one who: adopts false positions; responds more slowly than their counterpart to each proposal; and refrains from putting an initial offer on the table (“offer” here being defined in the positive sense), instead waiting for their counterpart to make the running. In addition, false negotiators tend to obfuscate, make irrelevant interjections and drift off topic. They are also more likely to mention constraints to a deal being reached, with phrases such as “it’s not my call”. All the while, they attempt to mask their bad faith by working in (hollow) statements of their desire to cooperate.
In contrast to their unwillingness to make the first move, bad faith negotiators have been shown to escalate their demands when time is running short. They also often physically remove themselves from discussions and delegate to others when an exchange is mature, but the delegate they supposedly empower may not have true authority to conclude the negotiations.
Consider the accumulating evidence regarding US conduct. The 2 April tariffs are fundamentally a “false position”, based as they were on theory-free back of the envelope arithmetic. (Not to mention that the general proposition that bilateral trade balances are principally driven by unilateral cheating by US trade partners is not anchored in reality). On specific negotiating conduct, there are three key signposts here: one from Japan; one from Australia; and one from the United Kingdom.
US Commerce Secretary Howard Lutnick (centre) speaks as British Ambassador to the US Peter Mandelson (left) listens during an announcement on a trade deal with the United Kingdom at the White House on 8 May 2025 (Ricky Carioti/The Washington Post via Getty Images)
Number one. The Japanese were quick out of the blocks in terms of seeking a deal, but their delegation came out of their first round with a statement to the effect that “we asked them [the United States] what they wanted, and they said they didn’t know”.
Number two. The Australian delegation that attempted to negotiate an exemption to the steel and aluminium tariffs was reportedly given a list of demands, but when they were met, the United States backtracked and conceded nothing. The US response went something along the lines of “you should be doing that anyway”.
Number three. As for the United Kingdom example, US Commerce Secretary Howard Lutnick was described in the media as “gloating” that “we went in with 10% tariffs and we came out with 10%”. US cabinet members also frequently reference the fact that tariffs are the “President’s call” while referencing the “President’s tariffs” in traditional and social media messages.
Each of the above examples covers one or more of the key tenets of the bad faith playbook. The unavoidable inference is that the United States is acting as a particular kind of bad faith negotiator – one who is principally looking to extract information via the negotiation process to sharpen their own demands, is not reciprocating when the other side makes a positive movement towards compromise, all while establishing a skewed incentive set with extravagant opening gambits. It is essentially an approach underpinned by the desire to extract without conceding. That is a raw expression of power, not of good faith.
What are the best options for dealing with a bad faith negotiator? The number one piece of advice is to refrain from tabling anything of true value.
How does the Chinese example fit the template? China’s willingness to retaliate and escalate without dialogue, rather than seeking to negotiate first (in contrast to the tactics pursued by US allies Japan, Australia and the United Kingdom, among others), altered the dynamic. This stratagem snookered the bad faith negotiation approach, and with the help of US financial markets and (arguably) some reality checks from the real economy, dragged the United States into a more conciliatory approach that culminated in de-escalation.
What are the best options for dealing with a bad faith negotiator if you do seek to enter negotiation regardless of that diagnosis? The number one piece of advice is to refrain from tabling anything of true value, which is a normal act in a good faith negotiation. Know that the bad faith negotiator is waiting for you to show some or all of your cards, while not reciprocating. Deny them information asymmetry by being comfortable with awkward silence.
US Treasury Secretary Scott Bessent recently expressed frustration at the lack of progress on deals, warning nations that do not negotiate in “good faith” with the United States will see their Liberation Day tariffs reinstated at the end of the 90-day pause. This indicates two things. One, many nations have deduced that the United States itself is not a good faith negotiator and are thus choosing to wait them out. Two, the United States may be getting worried that it has been outed – it is very difficult to exercise the bad faith playbook effectively when your counterparts have diagnosed your position correctly. The use of the term “good faith” here may have been a Freudian slip.
How the United States responds to this silent reprimand will have much to say about how asset prices and the global economy finish the year.
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