How Trump Uses Uncertainty as a Weapon
How Trump Uses Uncertainty as a Weapon
Ambiguity and uncertainty play with the human mind. You must be aware of these games because ignorance of them can harm your investment performance, not to mention your physical and mental health.
Worse, this ignorance may also disrupt your ability to master the world.
From punitive tariffs to threats of territorial annexation, President Donald Trump has unleashed a massive wave of uncertainty.
Opinions differ on why he does this. Wang Yi, the Chinese foreign minister, believes Trump is simply a bully playing with the world.
But I suspect he has a more cunning plan: using ambiguity and uncertainty to weaken his opponents before starting negotiations for a grand deal.
But if that’s the case, does he really know how to control this powerful weapon? Unfortunately, there is no manual for using uncertainty as a tool of policymaking.
Instead, what we have are fascinating studies in neuroscience and lessons from historical figures who have mastered this skill.
Let’s take a brief look at this subject.
How Uncertainty Plays with the Human Mind
The first thing you need to know is that uncertainty can soften you and make you more risk-averse.
It does this by triggering a powerful reaction known as the stress response.
Stress is usually considered a psychological state that worries you due to an unpleasant event.
But the stress response is actually physical, preparing the body for imminent action.
When you’re waiting for a tennis serve, the stress response activates. Your muscles need fuel, so stress hormones like adrenaline and cortisol release glucose and fatty acids from the liver, muscles, and fat cells.
Your heart beats faster to pump this fuel throughout your body, and your breathing speeds up to provide the oxygen needed to burn this fuel.
This is the stress response. Usually, you’re not even aware of it; these physical changes are happening unconsciously.
And even when you are aware of it, it’s often pleasurable, like when you play tennis or watch a movie like John Wick.
Most importantly, the stress response is not just reactive; it’s predictive.
To speed up your reaction to new events, your brain continuously runs unconscious simulations of what might happen and then physically prepares you.
This is where uncertainty comes in. When the range of possible futures expands, your engine stays on for longer and at higher revs.
I experienced these physical changes when I was managing a trading desk on Wall Street and documented them scientifically after retraining in neuroscience.
In studies conducted in hedge funds, my colleagues and I found that stress hormones in traders almost synchronized with market volatility.
Trump’s Use of Uncertainty as a Negotiation Tool
Trump tries to pressure other countries into gaining more benefits for the United States by creating uncertainty in economic and trade policies.
This strategy may be effective in the short term but can lead to distrust and weakened international relations in the long term.
This is the stress response, and it’s not a bad thing at all. Usually, you don’t even notice it because these physical changes are happening unconsciously.
Even when you notice them, they are often pleasurable—just like when you play tennis or watch a movie like John Wick.
But the important point is that the stress response is not just reactive but also predictive.
To make your reaction to new events faster, your brain continuously runs unconscious simulations of what might happen and physically prepares you.
It’s like warming up the engine so that when one of these possible events actually occurs, you can immediately release the clutch and move.
This is where uncertainty enters the game. When the range of possible futures widens, you keep your body’s engine running for longer and at higher revs.
I personally experienced these physical changes when I managed a trading desk on Wall Street and scientifically documented them after retraining in neuroscience.
In studies conducted in hedge funds, my colleagues and I found that stress hormone levels in traders changed almost as precisely as market volatility, almost tick for tick. If stress is natural, why can it be so distressing? Why might it lead to cardiovascular diseases, weakened immune systems, and susceptibility to stomach ulcers?
The answer is that the impact of uncertainty and stress depends on its duration.
Acute or short-term stress, which lasts about a few hours to at most a week, is natural and usually healthy.
But chronic uncertainty, meaning a situation that lasts more than a week, can turn the body’s stress response from a healthy state to an unpleasant and even deadly one, like Dr. Jekyll and Mr. Hyde.
This change from acute to chronic stress can be explained with a simple but complexly named graph, known as the inverted U-shaped dose-response curve.
The dose-response curve shows how the body reacts to increasing doses of a chemical substance, such as cortisol.
The shape tells us that increasing the level of a drug or hormone has beneficial effects up to a certain point, but further increases can have harmful effects.
For example, think about coffee. In the morning when you arrive at the office, you’re sleepy and sluggish.
The first cup of coffee wakes you up, the second gets you alert, and the third gives you a nice feeling of high energy and focus.
But the fourth cup makes your hands shake, and the fifth makes it difficult to concentrate. Now you’ve crossed the curve. If a doctor were to prescribe coffee, the prescription would probably be three cups a day.
This curve can also describe the effects of physical exercise, and a sports physiologist might refer to this curve when determining the appropriate amount of running.
Both professions try to keep patients or athletes at the peak of this performance curve.
But what happens if you cross the cortisol curve? Then you start to change. The effects of cortisol follow the same pattern. At low levels, your performance in most mental and physical tasks is not optimal.
In fact, very low levels of cortisol can be debilitating, causing low blood sugar and blood pressure, lethargy, and confusion.
We can observe this and simultaneously see how biology can affect geopolitics, for example, by examining President John F. Kennedy’s health status during key events of the Cold War. He suffered from Addison’s disease, which is when the adrenal glands cannot produce enough cortisol.
This disease is usually treated today with synthetic cortisol injections, but in the 1960s, this treatment was still in its early stages, and determining the appropriate dose was challenging.
As a result, Kennedy fainted twice due to his illness, once during an election campaign and another time during a congressional trip to Britain. Kennedy’s medical records were later reviewed by Lord David Owen, a neurologist and politician.
He concluded that Kennedy’s illness caused instability in his endocrine system, which played a role in his confusion and mood swings during the failed U.S. invasion of the Bay of Pigs in Cuba in 1961.
Kennedy’s illness likely also played a role in his poor performance during a meeting with Nikita Khrushchev in Vienna a few weeks after that incident.
The Soviet leader put him under intense pressure and probably showered him with all sorts of colorful Marxist insults, including the lackey of imperialism.
When it was Kennedy’s turn to respond, he just slumped in his chair and could barely utter a few words. He later admitted that this meeting was the toughest experience he had endured up to that point.
Khrushchev probably saw Kennedy as a rich, timid boy after that meeting.
He might have even concluded that if he stationed nuclear missiles in Cuba, he would not receive a reaction from the U.S.
But Khrushchev’s misfortune was that between the Vienna meeting and the Cuban Missile Crisis the following year, Kennedy reorganized his medical team.
He came under the direct supervision of Dr. Hans Kraus, an orthopedic surgeon and former Austrian Olympic coach, who urged him to exercise regularly. He was also under the care of Eugene Cohen, an endocrinologist who managed to adjust the appropriate doses of cortisol and testosterone for him.
So when Khrushchev faced Kennedy again, he encountered a man who now resembled more a testosterone-filled warrior than a frail politician.
Kennedy had risen from the lowest point of his dose curve to its peak. But what happens if you cross the cortisol curve?
Then your body and mind start to change. In our studies, we found that constant market fluctuations lead to chronic cortisol increases, making traders significantly more risk-averse.
Masters of the universe turned into cautious individuals—people who might easily be sidelined in negotiations over rewards or tariffs.
Here too, we can see a biological mechanism driving macro events. In a bear market, high volatility leads to increased risk aversion, which in turn leads to more selling, more volatility, and even more risk aversion—a runaway chain reaction that ultimately ends in a market crash.
Uncertainty has such power that not knowing when an unpleasant event might occur can be more stressful than the event itself.
Experiments have proven this.
Imagine you’re exposed to something unpleasant but mild, like short bursts of white noise, but these bursts occur at regular intervals, say every two minutes.
In this case, you have time to relax between each burst and don’t need to be on constant alert. In such conditions, your stress hormone levels probably only rise slightly.
Now imagine these intervals become irregular. Predicting the moment of the burst becomes harder, and you remain on alert for longer. Now your stress hormone levels start to rise. If these intervals become completely random and unpredictable, cortisol levels reach their peak.
In both cases, you’re exposed to the same amount of noise, but your cortisol levels rise due to uncertainty about the timing.
Trump’s continuous use of uncertainty might be so bothersome that his targets, as Canada recently demonstrated, prefer to go to war instead of remaining in this state of anticipation.
My colleagues and I observed this effect among traders as well. Their cortisol levels aligned not with profits and losses but with fluctuations in returns.
The same effect was seen during World War II. German soldiers on the front lines of the Battle of Stalingrad faced constant attacks, but soldiers in the rear supply lines, facing less but unpredictable danger, were more prone to stomach ulcers.
Therefore, not knowing the exact timing of an unpleasant event—like losing money or suddenly ripping off a bandage—can be more stressful than the event itself. It’s this not knowing that keeps us on alert, keeping our body’s engine running at high revs.
In fact, we hate being in a state of uncertainty. In the 1970s, terrifying experiments showed that animals—and likely humans too—prefer stimuli that are four times more unpleasant as long as their timing is predictable rather than random.
I’ve always wondered if uncertainty in a referee’s reaction could yield better behavior from athletes. In football, a referee might give a yellow card—a warning—or a red card—ejection from the game—to a violator.
Now imagine two referees. One is decisive and predictable, gives out many red cards, and you know exactly that if you kick someone in the shin, you’ll be ejected. The punishment is severe but not variable—a referee with low standard deviation.
Now consider the second referee. On average, he gives out the same number of cards but is very unpredictable. Sometimes you get a card when you don’t deserve punishment, and sometimes he overlooks clear fouls. Overall, the number of cards is the same, but the volatility is higher—more uncertainty.
Which of these two referees could get better behavior from players and reduce fouls? I suspect the second referee is more successful.
He probably terrifies the players. In fact, I suspect his unpredictable behavior is so deterrent that even with fewer cards, he creates more fear on the field. Beyond football, this unpredictability is already embedded in the behavior of bad bosses worldwide.
And finally, a military example of how to use uncertainty as a weapon.
In naval warfare, there is a phenomenon known as the ‘Fleet in Being.’ This strategy, first employed by English Admiral Arthur Herbert in the 17th century, involves nothing more than anchoring a fleet in port.
The mere existence of such a fleet—the possibility that the ships might sail out at any moment and choose their target—can impose a heavy burden on the enemy. The enemy is forced to engage a large number of ships to counter this potential threat, even more than is actually needed to destroy the fleet.
Part of this effect arises from logical calculations—the probability of attacks on various locations.
But a more important part comes from the fear that uncertainty creates in the enemy’s mind.
