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.
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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.
“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.”
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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.”
Trump praised Dimon, saying “he understood it.”
“He’s very smart, and very genius financially, did a fantastic job at the bank,” he continued. “And he knows that everybody knows that.”
But Dimon also warned that a recession was a likely outcome of Trump’s moves and that businesses were cutting back amid the uncertainty.
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“Markets aren’t always right, but sometimes they are right,” Dimon said.
The concern expressed on television was not dissimilar from what Trump had publicly and privately been hearing from some of his wealthiest allies in recent days.
Elon Musk, his billionaire adviser, spent recent days assailing the tariff decision and mocking Peter Navarro, the president’s counselor on trade matters, in deeply personal terms. Bill Ackman, the hedge fund manager who had backed Trump’s campaign, had in recent days floated the idea of a 90-day pause on the expanded tariffs to allow for deals.
Trump turned to social media to encourage followers it was “a great time to buy.” The missives underscored to Wall Street that the president was paying attention, helping fuel a stock rebound.
“BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!” Trump posted to his Truth Social site.
Still, as the morning stretched on, Trump decided to gather some of his top economic advisers at the White House. Notice went out to US Trade Representative Jamieson Greer, who was testifying before a House panel, that Trump was rethinking the tariff levels.
Treasury Secretary Scott Bessent, who had been scheduled to address the congressional Republican Study Committee to discuss tax legislation, hastily canceled his appearance to return to the White House. Commerce Secretary Howard Lutnick was also summoned. The financial markets were weighing heavily on his mind.
“Over the last few days, it looked pretty glum,” Trump said.
The flood of outreach from other countries now making “the right kind of offers” also played a role, Lutnick said. Trump was particularly intrigued that countries were beginning to offer concessions that hadn’t previously been on the table, including addressing non-tariff trade barriers.
“It just became crazy, the amount of calls we got,” Lutnick said.
Ultimately, Trump was swayed – it was time to largely pause the “liberation” he had unveiled just days before.
The trio sat to draft a social media post to tell the world that he was, at least temporarily, rolling back the tariffs, writing the text without even consulting the president’s legal team.
“Just wrote it up,” Trump said. “It was written from the heart, and I think it was well written, too.”
Some officials in the West Wing didn’t know the post was coming, and quickly joined meetings trying to decipher Trump’s intentions. Unanswered questions about how the directive would be implemented, and the full impact not only on China but also countries like Canada and Mexico had to be sorted out.
The president, who for days had insisted he wasn’t interested in delays or exemptions, was undisturbed by the about-face. And now, he allowed, he would consider exemptions for companies that were facing severe consequences from tariffs.
“You have to be able to show a little flexibility,” Trump said. “I’m able to do that.”
