NPR reports President Donald Trump’s habit of blasting tariffs up to a level that upsets the economy and terrifies business-owners may be a classic Trump tactic of recontextualizing numbers negotiations, something called the ‘anchor effect.’
"In many negotiations, you open high in order to anchor the party on your end of the range — or open low, depending on whether you're buying or selling," said Richard Shell, a professor at the Wharton School of business at the University of Pennsylvania.
"Then when you come in with a more reasonable offer, that's still very favorable to you, there's a psychological relief that sets in."
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Trump could be using this ploy on American business owners who did not expect to find themselves on the bad end of a billionaire’s negotiation maneuver, however. NPR interviewed Brooklyn kitchenware retailer Yair Reiner, who sells “Frywall”-brand stovetop splatter guards.
"When the tariffs were at 145 percent, it felt like someone had their boot on the neck of my business, and I couldn't really get any oxygen," said Reiner, who gets his product from China. "I didn't know what my next move was going to be."
But when Trump about-faced and lowered the 145 percent tariffs to 30 percent Reiner said he felt some relief even through his costs were not fully back to a pre-Trump baseline of 3 percent to 4 percent.
“The boot's still there," said Reiner.
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Shell said Trump’s tariff rollercoaster looks like a familiar tactic, but he could not confirm Trump’s intent.
"It's not clear whether the president is doing this on purpose or whether he is doing it because he throws his fishing rod out there, his fishing line, and then he sees whether or not it causes the trouble and if it causes enough trouble, he pulls it back in again," Shell said.
Read the full NPR report here.