How Trump Reversed His Stance on Tariffs | US News

“Liberation Day” has now transitioned into Capitulation Day.

On Wednesday, US President Donald Trump decided to retract a series of severe tariffs aimed at both allies and adversaries in a bold attempt to overhaul the global economic landscape.

The announcement from Mr. Trump came after a turbulent week where Republican legislators and advisors privately cautioned him that these tariffs could devastate the economy.

His own staff had quietly expressed concerns about the financial markets ahead of his suspension of a tariff policy that he had dramatically introduced just one week prior during a Rose Garden event.

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Following this reversal, the stock market surged, reversing several days of losses that had led older Americans, investing their savings into 401(k)s, to reconsider their retirement strategies.

Before Mr. Trump’s announcement, some of his aides were in a state of near panic regarding the bond markets, a senior administration official informed NBC News, a partner network of Sky News.

Interest rates on 10-year Treasury bonds had risen, which is atypical when stock prices decline and investors usually seek safety in treasuries.

This unusual trend indicated that the tariffs could lead to increased prices, compelling individuals to pay more for homes or credit card debts due to rising interest rates. Additionally, businesses aiming for expansion would incur higher costs for new loans.

Two of Mr. Trump’s top advisors, Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, presented a cohesive appeal on Wednesday, advocating for the suspension of tariffs considering the conditions of the bond market, according to the administration official.

In a social media update, Mr. Trump communicated a 90-day pause which he stated he would use to negotiate agreements with numerous countries willing to discuss adjustments to the trade terms he believes exploit American businesses and workers.

One notable exception is China, where Mr. Trump raised the tariffs on the nation, the US’s largest geopolitical opponent, to 125%, contributing to a retaliatory escalation in an ongoing trade conflict.

Mr. Trump reversed his position just one week after unveiling his initiative to restore jobs to the United States in the Rose Garden, where he showcased a chart detailing the heightened tariffs imposed on various countries, proclaiming: “My fellow Americans, this is Liberation Day.”

However, the optimism proved fleeting as markets plummeted in anticipation of intensified trade disputes, erasing trillions of dollars in wealth.

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Democrats have capitalized on this situation, aiming to undermine a critical aspect of Mr. Trump’s appeal: the perception that he is capable of effectively managing the nation’s economy.

“Donald Trump’s market crash has wiped out an astonishing $104,000 from the average retirement account,” stated Senate Minority Leader Chuck Schumer on the Senate floor just hours before the president’s reversal.

This incident revealed the deep divides within Mr. Trump’s cadre of senior advisors as the White House struggled to provide a coherent and consistent rationale regarding the tariffs’ duration.

While Mr. Bessent appeared amenable to negotiations, senior trade advisor Peter Navarro maintained a more hardline stance.

Elon Musk, the billionaire CEO of Tesla, who has been advising Mr. Trump on workforce issues, referred to Navarro as “dumber than a sack of bricks,” while Navarro countered by labeling Mr. Musk merely “a car assembler, in most cases”.

Nevertheless, the recent week highlighted the risks tied to a decision-making process heavily influenced by the preferences and whims of one individual: Donald Trump.

When asked about the controversy between Mr. Musk and Mr. Navarro, Republican Senator Lindsey Graham, who shares a golfing friendship with Mr. Trump, remarked: “I don’t think it matters. The only one who matters is Trump.”

Markets typically favor stability, a sentiment echoed by business leaders determining the locations for their new facilities. However, when Mr. Trump charts a path, detours are inevitable.

A friend who spoke to Mr. Trump in recent days mentioned that he showed no signs of hastily “backing down” from his strategies.

Mr. Trump believes other nations engage in unfair trade practices and regards tariffs as a means to bolster the competitiveness of the United States, according to the source.

“He’s confident this approach will yield favorable outcomes for him,” the individual shared, speaking on the condition of anonymity.

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Nevertheless, leading up to Wednesday’s announcement, both Mr. Trump and his staff received feedback from GOP legislators and external allies advocating for a different approach.

One of them was Larry Kudlow, who previously served as a senior economic advisor during Mr. Trump’s first term and now hosts a show on Fox Business Network.

Mr. Kudlow disclosed that he has engaged in “ongoing” discussions with contacts in the West Wing about the necessity of negotiating with other nations prior to imposing enduring tariffs.

Labeling Mr. Trump’s Wednesday decision as “fabulous,” Mr. Kudlow remarked: “Dealmaking is the optimal strategy. In the past 48 hours, Trump has shifted from a non-negotiating stance to that of negotiation.”

“It’s very clear that Bessent is now serving as the primary negotiator on trade. Very apparent.”

Worried GOP legislators also voiced their concerns.

Mr. Graham noted he had a lengthy conversation with Mr. Trump on Tuesday night, relaying feedback from automobile manufacturers anxious about how the tariffs could impact their operations. BMW, which has a facility in Mr. Graham’s state, was one of the companies he referenced.

Senator John Kennedy, another Republican who was also communicating with the administration, indicated on Tuesday his intentions to have lunch with Mr. Bessent. By Wednesday, he informed NBC News he was still engaging with the White House.

Mr. Kennedy compared Mr. Trump to “the pit bull that caught the car”, expressing that the next question is, “What are you going to do with the car?”

In light of further market declines this week and increasing pressure from Republican members on Capitol Hill, Mr. Trump started to reconsider his stance.

Throughout his first term, he often regarded the fluctuations of the stock market as a report card for his presidency, celebrating its gains. The recent downturn had certainly captured his attention.

“People were feeling a bit uneasy,” he admitted on Wednesday during an event with NASCAR champions.

He disclosed that he began seriously contemplating pausing the additional tariffs “over the last few days,” as he stated to reporters later during an Oval Office appearance.

One intriguing option for him was to personally negotiate new trade agreements with countries eager to escape the tariffs, as revealed by the senior administration official.

He had finalized his decision. Alongside Mr. Bessent and Mr. Lutnick, he drafted a note publicizing the 90-day deferment, momentarily rectifying the most significant economic crisis of his nascent presidency.

“We crafted it with genuine intent, right?” Mr. Trump remarked. “It was composed as something I believe would be very beneficial for the world and for us; we don’t aim to harm countries that don’t deserve it, and they all wish to negotiate.”

The day concluded with the Dow Jones Industrial Average gaining nearly 8%, recuperating some—though not all—of the losses endured after the “Liberation Day”.

Contrary to any chaos, his administration asserted that everything is progressing as planned.

“What you are witnessing is the most impressive economic strategy deployed by an American president in history,” White House Deputy Chief of Staff Stephen Miller tweeted on Wednesday afternoon.