Donald Trump remained bullishly committed to his global tariff agenda until the moment of his dramatic U-turn.
On Tuesday night, the president was assuring supporters that foreign governments were “kissing my ass…they are dying to make a deal”.
But on Wednesday afternoon, he announced a 90-day pause on higher-rate tariffs for every country except China, keeping only a 10 per cent baseline rate in place.
Trump’s representatives insisted the shift was part of a masterplan as financial markets rebounded, claiming his moves had strengthened the US position. “This was his strategy all along,” said Treasury Secretary Scott Bessent.
But Trump himself hinted at a more ad hoc approach over the turbulence of the past days, explaining that he was acting “instinctively, more than anything else”.
The president appeared unfazed by initial market turmoil after the tariff announcements of “Liberation Day,” with stock markets losing trillions of dollars in value, telling allies the pain would only be short term.
But Trump had changed his mind by Wednesday when he explained the tariff pause. “I thought that people were jumping a little bit out of line,” he said. “They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid.”
Trump’s tariffs led to a historic dip for stick markets (Photo: Timothy A. Clary/AFP/Getty)Going further, the president appeared to highlight a key factor in his decision by claiming that “people were getting a little queasy in the bond market”.
While Trump was prepared to accept major stock market dips, a sell-off of US government bonds would have been more of a concern, financial analysts suggested, as it could have signalled a fire sale of all kinds of US assets.
Trump was afraid of a 2008-level crash that could have been laid at his door, advisors told The New York Times.
Investors also pointed to concerns raised by financial executives, such as JP Morgan CEO Jamie Dimon, who warned that Trump’s moves risked driving the US into a recession.
The investment bank Goldman Sachs increased the possibility of a recession in the next year to 45 per cent – up from the 35 per cent it predicted at the end of March.
“This was a recalibration not a reversal,” Charu Chanana, chief investment strategist at Saxo investment bank, told IFA magazine. “Trump’s decision appears reactive to pressure from financial leaders and bond market signals.”
Inner circle pressure
Trump’s top advisers and officials have been outwardly supportive of his tariffs, but some have applied pressure behind the scenes to change course.
Trump and Elon Musk in the Oval Office in February (Photo: Alex Brandon/ AP)Treasury Secretary Bessent is said to have been at the forefront of efforts to soften the president’s position, urging him to focus on China as the main offender while offering improved terms to US allies.
In recent days, the president and senior officials emphasised flexibility and openness to negotiations on trade deals in public statements.
Bessent reportedly used a flight with Trump on Air Force One to press him to find agreements with other countries, stressing his unique skills as a negotiator, and the urgency of calming financial markets.
Trump’s influential adviser Elon Musk also raised doubts over the tariff agenda, publicly advocating a policy of zero tariffs between the US and Europe. “That has certainly been my advice to the president,” he said.
The South African tech billionaire also branded Trump chief trade adviser, Peter Navarro, a vehement supporter of tariffs, a “moron.”
The billionaire hedge fund manager Bill Ackman, who endorsed Trump after the assassination attempt on him in July, said that unless the president changed course the US was heading for an “economic nuclear winter”, adding: “The president is losing the confidence of business leaders around the globe”.
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Trump may also have been stung by criticism of his tariff policies from usually supportive outlets.
The president gained a reputation as an avid viewer of Fox News during his first term, often phoning in to shows and responding to broadcasts in real time.
But the usually staunchly pro-Trump network broadcast rare criticism of the president in the days leading up to his U-turn. Fox & Friends co-host Steve Doocy said Republican donors were “terrified” by the impact of tariffs on stock markets, and warned some of the costs would be borne by US consumers.
The network’s business programme, The Bottom Line, took aim at Navarro and the contentious formula that was applied to produce tariff rates for each country.
Host Dagen McDowell said: “I am all in on a fair, level trading field. I am all in on level tariffs with all nations. But I am not all in on Peter Navarro and his reciprocal trade–girl math that’s kneecapping the US.”
One of Trump’s favoured newspapers, the New York Post, which has twice endorsed him for president and backed many of his contentious policy moves, also shone a harsh spotlight on the tariff agenda, warning it could cost households $3,800 (£2,940) a year.
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