1. Trade-offs underpin local species coexistence. Trade-offs between interference and exploitative competitive ability provie a mechanism for explaining species coexistence within guilds that exploit overlapping resources. 2. Omnivorous, leaf litter ants exploit a shared food base and occur in species-rich assemblages. In these assemblages, species that excel at usurping food items from other species are poor at finding food items first. In assemblages where some members are attacked by phorid fly parasitoids, host species face an additional trade-off between defending themselves against parasitic attack and maximizing their competitive abilities. Host species thus face two trade-offs that interact via the trait-mediated indirect interaction generated by phorid defence behaviour. 3. In this study we test for the existence of these trade-offs and evaluate the predictions of a model for how they interact in an assemblage of woodland ants in which two behaviourally dominant members are attacked by phorid fly parasitoids as they attempt to harvest food resources. 4. The major findings are that unparasitized species in the assemblage follow a dominance-discovery trade-off curve. When not subject to attack by phorid flies, host species violate that trade-off by finding resources too quickly for their level of behavioural dominance. In contrast, when attacked by their phorid parasitoids, the host species dominance drops such that they fall into the assemblage trade-off. 5. These results match the predictions of the balance of terror model, which derives the optimal host response to parasitism, indicating that the host species balance the competing fitness costs of reduced competitive dominance and loss of workers to parasitism. This result supports the view that understanding the structure of ecological communities requires incorporating the indirect effects created by trait plasticity.