U.S. president Donald Trump flipped on his tariff plans a mere 14 hours after they went into effect on Wednesday midnight, Apr. 9.
He announced — via his Truth Social social media platform — a complete 90-day pause on all the “reciprocal” tariffs, as well as a simultaneous increase in levies on imports from China, while maintaining a 10 per cent base tariff.
The wording of his post was not run past his legal team, multiple news articles have since reported, which quoted Trump as admitting on Wednesday after his announcement went out.
So, what caused Trump's about-face behind the scenes and how coordinated was the response of the reversal?
Trump watched the bond market tank
The Wall Street Journal reported that Trump said the reaction to the tariffs was getting a bit “yippy”.
The president then reportedly relied on his instincts to change course as he watched the bond market tank, which occurred at the same time as the stock market got routed.
"I saw last night where people were getting a little queasy," Trump said on Wednesday as markets recovered.
What are bonds?
Bonds are essentially loans to the U.S. government, which got sold off and yields spiked to 4.5 per cent on Wednesday morning.
Known as long-term yields, the 10-year Treasury saw the biggest three-day jump since 2001.
In other words, this translates to higher borrowing costs as yields surged, which could worsen the already sticky inflation situation.
When yields spike, it becomes costlier to borrow money, which impacts businesses and consumers, including those who voted for Trump.
Trump listened to business leaders
Trump reportedly heard out business leaders and industry leaders over the past few days, which indicated he was closely watching the markets, as per WSJ.
Banking executives sought out Republican lawmakers to pass the message to Trump that he was going to tank the economy.
Trump was reportedly swayed by the stock market and the multiple business leaders expressing concerns.
The president reportedly also met with financier and investor Charles Schwab, as well as Michigan Democratic Governor Gretchen Whitmer.
Whitmer passed on the message that Michigan was already feeling the impact of the tariffs throughout its automotive industry.
Listened to JPMorgan Chase CEO Jamie Dimon
One person who likely influenced Trump was JPMorgan Chase CEO Jamie Dimon.
But he did not do it in person.
Dimon appeared on Fox Business for an interview that had been planned for some time.
The banking chief reportedly knew that Trump and his inner circle often watched Fox.
On the programme, the well-known CEO expressed fears of a recession.
Dimon said a recession was a “likely outcome”, but also defended the idea of some tariffs to improve trade.
He urged the president to allow deals with countries to be made.
Dimon said it was “perfectly reasonable” to conclude that global trade was unfair.
He added he is taking a calm view, but things could get worse.
South China Morning Post reported that the interview piqued Trump's interest as he responded: “He’s very smart, and very genius financially, did a fantastic job at the bank.”
Trump continued: “And he knows that everybody knows that.”
Trump praised Dimon and said “he understood it”.
WSJ reported that Trump was aware he got cause a recession, but he said he wanted to be sure it did not cause a depression, according to people familiar with the conversations.
Trump thought about the tariffs for a few days
Trump told reporters on Wednesday that he had been thinking about pausing tariffs “over the last few days”, adding “it probably came together early this morning, fairly early this morning.”
The pause kicked in on Wednesday afternoon.
Trump also said he did not consult with lawyers for the wording of his announcement.
He tapped out his Truth Social post about halting tariffs in the Oval Office with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick.
“We wrote it up from our hearts,” Trump said. “We don’t want to hurt countries that don’t need to be hurt, and they all want to negotiate.”
After the post went out and markets rose, Bessent stood outside the White House West Wing and told reporters he had discussed the matter with Trump on Sunday and this was the president's strategy all along.
Bessent said he had a long talk with Trump.
WSJ also reported that Bessent received many worried calls from Wall Street and he felt he had to persuade Trump to pause the tariffs.
And another reason Trump backed down was because many countries are in negotiations with the administration.
Bessent, who has been given a more prominent role in the administration among the various economic advisers, reportedly told Trump to focus on the negotiations.
Trade representative testifying about tariffs got grilled
The timing of the announcement of the tariffs reversal occurred just as U.S. Trade Representative Jamieson Greer was testifying about the tariffs before the House Ways and Means Committee.
About 20 minutes after Trump made the announcement of the reversal, Replication Steven Horsford brought up the shift and asked if Greer was aware of the pause.
Greer then had to deflect allegations that the president purposefully manipulated the markets.
"We asked you all along, ‘What’s the strategy?’” Horsford said, as he blasted Greer.
He also asked: “This is amateur hour and it needs to stop... How are you in charge of negotiating if the president is tweeting about this from wherever the hell he is?"
Horsford continued: "Did you know that this was happening?... Is this market manipulation?”
“No,” Greer responded.
“Why not? If it was a plan, if it was always the plan, how is it not market manipulation?” Horsford shot back.
“It’s not market manipulation, sir,” Greer said. “We’re trying to reset the global trade system that has offshored all our factories.”
“How have you achieved any of that?” Horsford said by cutting Greer off. “Who’s benefiting? What billionaire just got richer?”
The S&P 500 surged more than 9 per cent on Apr. 9 afternoon (U.S. time) after Trump announced the tariff pause.
Top photo via Donald Trump Truth Social
