Understanding BATNA Lessons from the United States of America & China

Before you read –

As a Procurement Negotiator I look at events dispassionately. Hence this article is to be read with that in perspective. It’s not about who is right or wrong. It’s about learning from observing while appreciating the limitations of one’s own sphere of information.

BATNA – The core of negotiation

Procurement Negotiators need BATNA (Best Alternative to a Negotiated Agreement). What is BATNA? Not all deals go the way you wanted them to. So you have alternates to be planned & leveraged. Practice of BATNA focuses on strengthening one’s own BATNA while attempting to weaken other parties BATNA

This article focuses on appreciating the practice of BATNA from a Procurement Negotiations perspective.

Newly elected US President assumed office in Jan 2025. As every Negotiator, the newly elected President, also has objectives.

Key objectives of the Negotiator

Objective 1 - Address higher current account deficit as a % to GDP.

Objective 2 - Improve the country’s global competitiveness.

To achieve the objective, the negotiator takes 2 actions,

a. Levies reciprocal tariffs

b. Incentivizes investments in his own country

Strengthening & Weakening BATNA

Negotiator hopes to have a stronger BATNA than the other party. Overestimating own BATNA & underestimating the other parties BATNA can be a mistake.

China has a stronger BATNA. Hence it doesn’t budge. It matches USA’s tariffs with its own tariffs. Many other countries don’t have that BATNA.

USA sets a deadline of 90 days for all its partners to either negotiate a deal or face much higher tariffs.

A strong BATNA helps you negotiate better. China is an example. USA has to exempt China from its 90 days’ deadline. Further it has to keep extending the deadline. Also its sends its negotiators to keep negotiating with Chinese negotiators.

Strengthening one’s own BATNA while Weakening the other parties BATNA

USA has to work on strengthening its BATNA while also weakening China’s BATNA.

It has 2 major things to consider,

a. Where is non USD trade taking place of the other party? (read differently – Sanctioned country)

b. Which major commodity does the other party have external sources of supply?

Actions taken by USA,

A. Venezuela is sanctioned. Most of its oil is bought by China. It is a non USD trade. So take control of its Oil assets. With USAs own Oil plus now Venezuela its control over global oil is substantial

B. Very large portion of Iran’s oil production goes to China. It again is a non USD trade. Rattle Iran. Hence global oil markets.

Indirect BATNA benefits of the actions,

a. GCC (Gulf Cooperation Council) or in general Middle East countries have relationship with USA.

b. GCC countries dependence on Oil in their GDP is high. While lower Oil prices help consuming countries, producing nations GDPs don’t grow. War will send the Oil prices up.

c. Producing nations would like Oil to go up sufficient to but not too much. Too high oil prices & the world will get into a recession which will lower Oil demand. This in turn will hurt the GDP of producing nations.

With actions one can thinking that one has strengthened BATNA. Now go and negotiate. (As of now, US President is visiting China from 31st March 2026 to meet the President of China)

What does the other party do to Strengthen its BATNA (under new circumstances)?

a. Take a stance. [China has openly stated its support to Iran.]

b. Rate of consumption of warfare material is much faster than the rate of production of the warfare material.  China holds the key to supply critical material for defense production.  If the wars prolong, China strengthens its BATNA.