Four Reasons for Trump's Sudden Shift on Tariffs

Written by: Li Xiaoyin, Wall Street Journal

Trump has finally made a concession.

According to the Shanghai Securities Journal, on April 9, during trading hours in the U.S. East Coast, President Trump posted on social media that he had authorized a 90-day suspension of tariffs on certain countries, during which tariffs would be significantly reduced to 10%.

However, according to Xinhua News Agency, just this past Monday, Trump had stated that he was not considering a temporary halt to the so-called "reciprocal tariff" plan for multiple countries, but hinted at a willingness to negotiate.

What exactly caused Trump to change his stance on tariffs so dramatically in just two days?

Internal Power Struggle: Treasury Secretary Mnuchin Gains Key Influence

Reports indicate that before Trump's pivot, top government officials had dispersed to meet with lawmakers, barely mentioning what was about to happen.

Just hours after the new tariff policy officially took effect, Trump "suddenly" announced his shift via his social media platform. He then made the announcement in the Oval Office, accompanied by Treasury Secretary Mnuchin and Commerce Secretary Ross.

Mnuchin explained to the media outside the White House that the decision to suspend some tariffs was discussed during a meeting between the two on Sunday, and he insisted that this "has always been his strategy."

This indicates that Mnuchin has been granted more power within the trade advisory team. He also revealed that after meeting with Trump, he was authorized to publicly comment on the agreement.

At the press conference, Trump told reporters that he had been considering the suspension of tariffs "over the past few days" and added that "it may have formed quite early this morning."

He stated that he did not consult lawyers about the wording of the announcement but directly took the opinions of Mnuchin and Ross:

"This is something we wrote out of feeling; we do not want to harm some countries, they all want to negotiate."

Although senior Treasury officials told the media that the government unanimously supports Trump's strategy to promote the U.S. economy and national security, trade advisor Navarro, who has consistently supported Trump's aggressive tariff plans, was not mentioned at the press conference. U.S. Trade Representative Jamieson Greer also learned of the news from Trump's post while he was testifying in Congress, defending the previous tariff plan.

Business CEOs Apply Collective Pressure

Business leaders expressing concerns about tariffs also influenced Trump.

Reports indicate that in recent days, numerous corporate executives and lobbyists have called White House Chief of Staff Susie Wiles, hoping that Trump and his advisors could make concessions to "find a way out" for them.

Banking executives felt frustrated by their lack of influence in front of government officials, so in recent days, they sought help from Republican lawmakers to lobby Trump on the tariff issue. Insiders revealed to the media that the message they wanted to convey was that Trump's actions would drag down the economy.

Reports suggest that Trump has indeed been in a continuous listening mode—over the past few days, he has been asking friends and advisors about market conditions and has indicated that he is closely monitoring the situation.

On Wednesday, Trump had lunch at the White House with financier and investor Charles Schwab and met with Michigan Democratic Governor Gretchen Whitmer, who warned that Michigan's auto industry has already felt the impact of the tariffs.

Panic in the Bond Market: Jamie Dimon Warns of Recession Risks

Following the announcement of the tariff policy last week, the U.S. bond market experienced a panic sell-off, with the yield on the 10-year U.S. Treasury bond soaring nearly 40 basis points in two days, briefly reaching 4.5%, while the 30-year yield even surpassed 5%.

The risk of a bond market collapse also sent alarms to Trump. On Wednesday, Trump stated that he had noticed the bad news of the bond market's plunge, saying, "Last night I saw people becoming a bit uneasy."

Trump mentioned that he watched an interview with JPMorgan CEO Jamie Dimon on Fox News on Wednesday morning.

In the interview, Dimon stated that the "possible outcome" of the new tariff plan is an economic recession and urged the president to give Mnuchin time to reach an agreement, saying:

"I am calm about this, but the situation may continue to worsen."

According to media reports citing insiders, Dimon had not had substantial conversations with Trump for years, but he knew that Trump and his inner circle often watch Fox News, so his message was likely to be conveyed to them.

Stock Market Rebound May Support Trump's Decision to Shift

On Wednesday morning at 9:33 AM, Trump posted on Truth Social urging everyone to "stay calm," and then at 9:37 AM, he added that "now is a good time to buy."

According to media reports citing a government official's perspective, Trump had not yet made a final decision at that time.

Subsequently, Trump's statements triggered a stock market frenzy, and panic sentiment quickly reversed, which may have provided a "shot in the arm" for Trump's shift.

Reports indicate that Mnuchin and other White House aides described this series of actions by Trump as part of a negotiation strategy, believing he was using maximum leverage to force countries to the negotiating table.

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