From zero-sum thinking to loss aversion, the U.S. president’s trade moves follow a psychological playbook
Much has been written, spoken and thought about U.S. President Donald Trump’s approach to trade with our country—specifically, what the hell to make of it. Prime Minister Mark Carney may look cool and collected, but more and more I wouldn’t want to be drywall near his fist.
Guesswork galore about trade discussions is the best any of us can do as the Aug. 1 deadline nears—if indeed any deal itself will be reached by that deadline.
But Trump’s tactics are hardly novel. They are slices of well-trodden psychological warfare that just so happen to be how he’s pursuing economic policy. Far from chaotic improvisation, the elements are rooted in classical negotiation theory, behavioural economics, social identity theory, and the psychology of authoritarian leadership.
More than any U.S. president he has applied the language of business to the language of statecraft. In his hands, tariffs aren’t actually instruments to balance economies as much as they are ripped from the psychology playbook aimed at dominance, disruption and loyalty.
Peering into his mind might be beyond the pale, but he is using three psychological frameworks: a personal negotiating style, a populist political script, and behavioural biases he exploits or embodies.Carney, one would hope, has appreciated and adjusted to these as he defines the country’s economic destiny; if not, we’re in more trouble than we think.
For instance, it is well known that Trump’s worldview is deeply transactional. Every relationship—whether with an individual, company or nation—is a deal to be won or lost. Tariffs, in this framework, are not complex means of global economic calibration but blunt-force bargaining chips. He calls them “a beautiful thing,” probably because they are simple, unilateral and easily understood by supporters. They convey strength and decisiveness.
He possesses what is known academically as a zero-sum worldview—for one party to win, another must lose, so there is never a win-win. Social research has shown that inexperienced or competitive negotiators default to this model, leading to suboptimal outcomes. Trump’s obsession with bilateral trade deficits—even if economists overwhelmingly view them as incomplete measures of national economic health—fit perfectly within this. A trade deficit is a sign the U.S. was being “ripped off,” so tariffs are the retaliation, along with a pretension that we in Canada—and not American importers and consumers—ultimately pay for them.
This deal psychology also reflects how Trump sees himself as a self-made, self-branded businessman. To walk away from a deal or punish a trading partner isn’t a technical adjustment—it is an assertion of personal dominance. In this view, America isn’t merely a country; it is a brand under his stewardship.
Tariffs serve as a powerful tool of political psychology in offering Trump a tangible, easily communicable way to demonstrate he is fighting for the American worker and to maintain support in swing states like Michigan, Ohio and Pennsylvania among disaffected, working-class voters.
They function as symbolic aggression. Even when they wreak economic disruption or spur retaliatory measures from trading partners, they communicate toughness to his base. Trump repeatedly casts global trade as an arena of exploitation, in which elite technocrats and multilateral institutions sell out U.S. interests. In this narrative, he alone had the courage to stand up to foreign cheaters, particularly China—and countries like us that he considers unfair allies taking advantage of his country and people.
Forget any nuanced discussion of supply chains or long-term inflationary effects. Instead, tariffs offer a binary moral logic: good because they punished bad actors and helped “our” side. The psychological resonance of this narrative reinforces in-group versus out-group dynamics, status resentment, collective esteem, and the desire for retribution. Look it up: this social identity theory was first defined by Henri Tajfel and John Turner (not the former prime minister) in the 1970s, and by what sociologists Theodor Adorno, Bob Altemeyer, and others have termed the authoritarian personality.
Trump’s use of tariffs also mirrors the psychology of a high-stakes gambler. His approach echoed game theory’s “madman strategy,” in which an actor (former U.S. president Richard Nixon was notoriously one) behaves unpredictably to create leverage. Trump announces sudden tariff hikes on social media or as an aside to reporters, destabilizing markets and throwing trade partners off-balance. This unpredictability made it difficult for allies and rivals alike to negotiate in good faith or to forecast American trade policy.
This element either reflected a misunderstanding of basic economics or a calculated decision to exploit cognitive biases like the “money illusion,” where people focus on nominal changes rather than real costs. The psychological appeal of tariffs is their simplicity: they give the impression of action and control, even if the underlying effects are diffuse or negative.
Psychologists Daniel Kahneman and Amos Tversky pioneered key concepts in behavioural economics that explain these dynamics. Tariff threats by Trump activate what they termed loss aversion, framing global trade as a series of losses America has suffered—jobs lost, factories closed, dignity eroded. Tariffs are positioned as a way to stop the bleeding, even when economists argue they could cause further harm. Behavioural economists have shown that what they term cognitive fluency—how easily something is understood—increases its believability. Trump excels at using this to his advantage.
This behaviour overall reflects elements of what researchers term “trait narcissism and impulsivity,” hardly new among presidents. The mention of tariffs gives Trump immediate feedback—stock market reactions, media coverage, applause at rallies—which feed a cycle of risk-taking and media gratification. This is less about long-term planning than about asserting will in the moment, often over the objections of advisers and experts.
The unpredictability can serve a strategic function. By keeping opponents guessing and freaking, Trump hopes to extract better terms.
In the end, Donald Trump’s approach is less about trade than about narrative, identity and domination. They are expressions of strength, loyalty tests for allies and tools for signalling resolve. Economists may doubt their efficacy, but their psychological utility—as mechanisms for rallying support, asserting identity and disrupting norms—is undeniable. Immediate optics of dominance outweigh long-term strategic coherence.
And it is nothing new, sad to say.
Kirk LaPointe is a Lodestar Media columnist with an extensive background in journalism. He is vice president in the office of the chair at Fulmer & Company.