'Everything is going to work out well': Trump on tariff reversal decision

Tyler Pager, Maggie Haberman, Ana Swanson & Jonathan Swan 

For the past week, President Trump has been urging calm in the face of the financial chaos that he created and resisting calls for him to rethink his approach.

 

“I know what the hell I’m doing,” he told Republicans on Tuesday as the massive tariffs he had imposed sent global markets into a tailspin. “Be cool!” he said in a social media post on Wednesday morning. “Everything is going to work out well.”

 

On Wednesday, the president was still bullish on his policy, posting on Truth Social: “This is a great time to buy!!!”

 

But in the end, it was the markets that got him to reverse course.

 

The economic turmoil, particularly a rapid rise in government bond yields, caused Trump to blink on Wednesday afternoon and pause his “reciprocal” tariffs for most countries for the next 90 days, according to four people with direct knowledge of the president’s decision.

 

Asked to explain the decision, Trump told reporters: “Well, I thought that people were jumping a little bit out of line. They were getting yippy, you know, they were getting a little bit afraid.”

 

Behind the scenes, senior members of Trump’s team had feared a financial panic that could spiral out of control and potentially devastate the economy. Treasury Secretary Scott Bessent and others on the president’s team, including Vice President JD Vance, had been pushing for a more structured approach to the trade conflict that would focus on isolating China as the worst actor while still sending a broader message that Trump was serious about cracking down on trade imbalances.

 

After his reversal on social media, Trump’s team was put in the unenviable position of trying to spin the media that this was the plan all along, a brilliant strategy straight out of the pages of the president’s best-selling book, “The Art of the Deal.” Bessent went so far as to deny that the bond market had driven the change.

 

When Trump came out to explain his decision on Wednesday, however, he undercut both Bessent and Karoline Leavitt, the White House press secretary, citing the jittery market and saying he was acting “instinctively, more than anything else.”

 

Many of Trump’s most senior advisers and officials were unaware of this major shift in policy until the last minute. Jamieson Greer, the US trade representative, only learned of Trump’s decision while defending the original tariffs before a House committee, a person familiar with the situation said.

 

Bessent played a significant role in steering the president toward the pause. But the real credit, Trump’s advisers admit privately, should go to the bond markets. Trump’s decision was driven by fear that his tariffs gamble could quickly turn into a financial crisis. And unlike the two previous crashes of the past 20 years — the global financial crisis of 2008 and the pandemic of 2020 — this crisis would have been directly attributable to only one man.

 

The details of the plan and its goals remained foggy. In the run-up to the tariff announcement last week, Trump’s economic team debated until the last minute about what form the tariffs should take, with Bessent and Commerce Secretary Howard Lutnick both privately arguing for more limited tariffs, according to two people familiar with the plans.

 

When the tariffs finally were announced last Wednesday, the markets tanked.

 

By Sunday, Bessent decided that he needed a private audience with the president. In less than 24 hours, the markets would reopen and investors were predicting a “Black Monday.”

 

Bessent rode with Trump back to Washington on Air Force One. During the flight, Bessent advised the president to focus on negotiating with other countries, saying Trump is the most deft negotiator there is, four people briefed on the discussion said. But he also stressed that Trump needed to articulate the endgame of his plan because the markets needed more certainty.

 

 Trump pushed back, the people said, emphasizing the pain was “short term,” one of the people said. But Bessent said that could mean many months in market terms. The president apparently absorbed only part of the message. On Monday morning, he drafted a Truth Social post to say “talks” were going to take place with countries; he changed it to say that they would “negotiate.”

 

For a while, the tariffs created a dynamic Trump most enjoys — global leaders coming to him and, as he said on Tuesday night, “kissing my ass” in search of deals. Administration officials said that more than 75 countries had reached out to them.

 

But the warning signs became too severe to ignore.

 

On Wednesday morning, Trump encouraged Americans to buy stocks and urged firms to move to the US. It was not clear, at that point, that hours later he would abruptly change course and place a 90-day pause on many of the tariffs. The financial markets soared after the reversal, leaving questions about whether Trump’s earlier recommendation of a buying opportunity amounted to a signal that some investors might have used to cash in on the sharp rise in stock prices.

 

But soon after Trump posted his missive on social media, he met in the Oval Office with Bessent, Lutnick and Kevin Hassett, the director of the National Economic Council. They discussed with the president the 10-year Treasury yield, emphasizing concern about the health of the broader US financial system. Trump, in particular, understood what the rise in bond yields would mean for banks and their long-term lending, a topic he understands intimately from his years running a real estate company.

 

The tariffs had triggered a sharp sell-off in US government bond markets and the dollar, which investors usually see as safe-haven assets in times of turmoil.  The pause, along with leaving a 10 percent tariff rate in place for most countries, was a version of what a number of people had urged Trump to put in place for days.

 

Speaking with reporters soon after Trump announced the reversal, Bessent and Leavitt both tried to create the impression that this was the culmination of a carefully laid plan — to isolate China as the main culprit inflicting pain on American workers. “This was his strategy all along,” Bessent said. Leavitt tried to frame the policy backflip as a work of negotiation genius.