President Ronald Reagan in 1981 threatened 12,000 striking air-traffic controllers with the loss of their jobs if they did not report back to work “within 48 hours” of his statement. 11,359 did not comply. He fired them.
According to former Northwestern Professors Adam D. Galinsky and Katie A. Liljenquist in Harvard’s Negotiation newsletter “Putting on the Pressure: How to Make Threats in Negotiations,” “[m]any view Reagan’s controversial threat and follow-through as a pivotal moment in his presidency and the foundation for future political victories.”
By contrast, President Barack Obama threatened Syria with severe consequences if it crossed a “red line” by using chemical weapons. Yet what did he do after the world saw unmistakable evidence it had crossed his red line? He said he didn’t have congressional authority to engage militarily and negotiated a deal to stop it from happening again.
Did this prevent Syria from doing it again? No. Did Obama and the United States lose credibility relating to its future promises and threats with Syria and the rest of the world? Yes.
Today, millions of people around the world wonder if President Donald Trump’s threats relating to tariffs and U.S. military action in Gaza, Greenland and Panama are credible and effective.
How can we evaluate if he will follow through like Reagan or lose credibility like Obama? What about others who make negotiation threats? Several factors should be considered (I address one here and the rest in Part Two next week).
1. Research if they have followed through in the past
Most negotiators are creatures of habit and use the same strategies and tactics again and again, especially if they consider them to be effective. So do your research and due diligence. Talk with people who have negotiated with your counterpart in the past.
Find out their reputation and whether they: a) consistently made threats, and b) followed through on them. This will give you great insight into their credibility and their current posturing.
What is President Trump’s reputation relating to threats? I extensively analyzed his 40-plus years of business negotiating in my 2018 book The Real Trump Deal: An Eye-Opening Look at How He Really Negotiates and evaluated a significant number of his business threats.
I concluded my chapter “Threats and Leverage: Real or Fake?” by noting:
Trump effectively delivered on some threats and not others . . . [but he gained] a public reputation as someone who consistently makes business-related threats, many of which have limited credibility. . . .
This lack of credibility and follow-through on threats is toxic to the impact of future Trump threats. If I’m negotiating with Trump and conclude after due diligence that he often makes empty threats, I will assess a Trump threat differently.
I will either a) decide not to deal with Trump, given his reputation; or, if I have a really bad Plan B [weak leverage] and must deal with him, I might b) ignore his threat, figuring it’s just another empty Trump threat.
One thing I would not do is react as if he will likely follow through-the optimal reaction that would result from a truly effective threat.
“Hold on,” Trump might respond. “These reactions ignore the fact that I follow through on many of my threats. The unpredictability of whether I follow through is an effective negotiation strategy. My counterparts thus ignore my threats at their peril.”
Trump’s unpredictability does lead to a greater assessment of the risk involved. He might follow through. This must be evaluated.
But Trump’s credibility related to his threats causes significant negotiation problems, especially if the deal involves a future relationship between the parties and not just a one-shot transaction.
Trump’s unpredictability also poses similar challenges, as effective threats should be predictable and credible. Trump’s unpredictability thus undermines his threat’s effectiveness, not the other way around.
How did this just play out for Mexico and Canada given Trump’s tariff threats?
Stay tuned for an analysis of this and more next week in Part Two.
Latz’s Lesson: Trump’s reputation for often making empty threats weakens his negotiation credibility and effectiveness.
* Marty Latz is the founder of Latz Negotiation, a national negotiation training and consulting company that helps individuals and organizations achieve better results with best practices based on the experts’ research. He can be reached at 480.951.3222 or Marty@LatzNegotiation.com.