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WASHINGTON — “Liberation Day” just gave way to Capitulation Day.
President Donald Trump pulled back Wednesday on a series of harsh tariffs targeting friends and foes alike in an audacious bid to remake the global economic order.
Trump’s early afternoon announcement followed a harrowing week in which Republican lawmakers and confidants privately warned him that the tariffs could wreck the economy. His own aides had quietly raised alarms about the financial markets before he temporarily suspended a tariff regime that he had unveiled with a flourish just one week earlier in a Rose Garden ceremony.
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The stock market rose immediately after the about-face, ending days of losses that have forced older Americans who’ve been sinking their savings into 401(k)s to rethink their retirement plans.
Ahead of Trump’s announcement, some of his advisers had been in a near panic about the bond markets, according to a senior administration official. Interest rates on 10-year Treasury bonds had been rising, contrary to what normally happens when stock prices fall and investors seek safety in treasuries. That unusual dynamic meant that at the same time the tariffs could push up prices, people would be paying more to buy a home or pay off credit card debt due to higher interest rates. Business looking to expand would pay more for a new loan.
Two of Trump’s most senior advisers, Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, presented a united front on Wednesday, urging the president to suspend the tariffs in light of the bond market, the administration official said.
In a social media post, Trump announced a 90-day pause that he said he’ll use to negotiate deals with dozens of countries that have expressed openness to revising trade terms that he contends exploit American businesses and workers. One exception is China. Trump upped the tariff on the nation’s biggest geopolitical rival to 125%, part of a tit-for-tat escalation in an evolving trade war.
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Trump’s reversal came one week after an appearance in the Rose Garden where he unveiled his plan to bring jobs back to the U.S. Displaying a chart showing the new, elevated tariffs that countries would face, Trump proclaimed, “My fellow Americans, this is Liberation Day.”
It proved short-lived.
Markets plunged in anticipation of heightened trade wars, wiping out trillions of dollars in wealth. Democrats seized on the issue, looking to undercut a source of Trump’s popular appeal: the view that he can be trusted to steer the nation’s economy.
“Donald Trump’s market crash has vaporized a whopping $104,000 from the average retirement account,” Senate Democratic leader Chuck Schumer said Wednesday in a speech on the Senate floor, hours before Trump’s reversal.
The episode laid bare the rifts within Trump’s team of senior advisers as the White House struggled to offer a clear, consistent argument about the duration of the tariffs. While Bessent seemed open to negotiations, Peter Navarro, a senior trade adviser, appeared to take a more hardline posture.
Elon Musk, the billionaire Tesla CEO who has been advising Trump on the government workforce, called Navarro “dumber than a sack of bricks,” while Navarro described Musk as someone who is merely “a car assembler, in many cases.”
But the week-long drama also underscored the peril of a policy-making process that is often tied to the wishes and vagaries of one man: Trump.
Asked about the dustup between Musk and Navarro, Sen. Lindsey Graham, R-S.C., a golf partner of the president, said: “I don’t think it matters. The only one who matters is Trump.”
Markets tend to favor predictability, as do business leaders deciding where to build new plants. When Trump sets a course, however, there are bound to be detours.
One friend of his who spoke to him in recent days said that Trump gave no sign he was about to “back down quickly on this stuff.”
Trump believes that other countries trade unfairly and sees tariffs as a tool to make the U.S. more competitive, the person said.
“He’s very confident it’s going to work for him,” the person added, speaking on condition of anonymity.
And yet in the runup to Wednesday’s announcement, Trump and his aides were also hearing from GOP lawmakers and outside allies urging an alternate path.
One was Larry Kudlow, who hosts a show on Fox Business Network and was a senior economic adviser in Trump’s first term.
Kudlow told NBC News that he has had “ongoing” talks with friends inside the West Wing about the need to negotiate with other countries before slapping them with tariffs that stand in perpetuity.
Describing Trump’s move Wednesday as “fabulous,” Kudlow added: “Dealmaking is the best thing to do. In the last 48 hours, Trump has gone from non-negotiating to negotiating. It’s very clear that Bessent is now the point man on trade. Very clear.”
Anxious GOP lawmakers also weighed in.
Graham said he spoke to Trump at length Tuesday night and told him he’s been hearing from car manufacturers who are worried about how the tariffs would affect their business. BMW operates a plant in Graham’s home state and is one of the companies the senator said he has spoken to.
Sen. John Kennedy, R-La., was also a lawmaker in touch with the administration, saying on Tuesday that he planned to have lunch with Bessent. On Wednesday, he told NBC News he was also talking to the White House. Kennedy likened Trump to the “pitbull who caught the car.” Now, he said, the question becomes: “What are you going to do with the car?”
After more market losses this week, and with pressure mounting from Republicans on Capitol Hill, Trump began having second thoughts. In his first term, he often viewed the ups and downs of the stock market as a kind of report card on his presidency, celebrating its rise. The downturn had gotten his attention.
“People were getting a little queasy,” he acknowledged Wednesday during an event with NASCAR racing champions.
“Over the last few days,” according to Trump, he began to more seriously consider pausing the additional tariffs, he told reporters later in the day in an Oval Office appearance. One prospect that intrigued him was personally negotiating new trade deals with the countries looking to get out from under the tariffs, the senior administration official added.
He’d made up his mind. Sitting with Bessent and Lutnick, he crafted the note announcing the 90-day postponement and ending, for the time being, the biggest economic crisis of his young presidency.
“We wrote it from our hearts, right?” Trump said. “It was written as something that I think was very positive for the world and for us, and we don’t want to hurt countries that don’t need to be hurt, and they all want to negotiate.”
The day closed with the Dow Jones Industrial Average up nearly 8%, erasing some — but not all — of the post-“Liberation Day” losses.
Messy as it all may have seemed, his administration insisted that all is unfolding as planned.
“You have been watching the greatest economic master strategy from an American President in history,” White House deputy chief of staff Stephen Miller posted Wednesday afternoon.