In the end, Trump’s stunning about face on tariffs

In the end, Trump’s stunning about face on tariffs was driven by chaos in the bond market including soaring 10yr and 30yr treasury yields; the prospect of huge Republican losses in next year’s midterm elections; and pressure by Trump’s billionaire supporters (Dimon, Ackman) who convinced him his tariff plan could cause a severe recession.

Bond Chaos, Deal Mania and Dimon: Inside Trump’s Tariff Reversal

By Justin Sink

04/09/2025 18:02:24 [BN]

(Bloomberg) -- As Donald Trump’s sweeping “reciprocal” tariffs took effect just after midnight on Wednesday, the president was watching the bond market.

Long-term yields were soaring. The 10-year Treasury saw the biggest three-day jump since 2001. The president was confronting a worst-case scenario: voters who had returned him to the White House because of inflation now faced both increased prices and higher borrowing costs.

“People were getting a little queasy,” Trump allowed.

The president had for days been debating whether to fully push ahead with the tariff program, which resulted from a frenetic meeting with his economic aides just hours before he rolled out the announcement in the White House Rose Garden last week.

Within 14 hours, Trump would go on to execute one of the biggest economic policy reversals in modern presidential history, implementing a three-month pause on expanded tariffs on dozens of countries and rallying stocks that had been in free-fall since his announcement a week earlier.

China, which met Trump’s tariffs with equal retaliatory measures, was the only country not offered a reprieve; instead, the president again raised tariffs on the world’s second-largest economy.

White House officials framed Trump’s decision as the artful execution of a carefully calibrated policy that yielded offers from allies and trade partners who had approached the administration in recent days seeking to make a deal to avoid the levies.

Yet Trump himself, meeting with several race-car drivers on the South Lawn of the White House on Wednesday afternoon, conceded that the decision was driven in no small part by the chaos roiling financial markets.

Trump speaks during an event with racing champions on the South Lawn of the White House on April 9.

“Well, I thought that people were jumping a little bit out of line,” Trump said. “They were getting yippy — you know, they were getting a little bit yippy, a little bit afraid.”

On Tuesday night, before the tariffs hit, longtime ally Senator Lindsey Graham of South Carolina called the president to relay his concerns about their impact.

“I said, ‘Listen, you’re trying to bring about a level playing field you’ve been talking about for four years, now there’s a way to do it. People are responding to what you’ve done. Sit down with them and see what kind of deals you can get,’” Graham said.

When Trump woke up Wednesday morning, the warning seemed to be playing out in real time. The president started his day monitoring the reaction on Fox Business, where a parade of executives and traders on the normally friendly network sounded alarm.

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon piqued the president’s interest, particularly when he said it was “perfectly reasonable” to conclude that global trade was unfair. Dimon encouraged foreign policymakers to take a calm approach and “negotiate some trade deals.”