WASHINGTON — “Liberation Day” has now transitioned into Capitulation Day.
President Donald Trump moderated his stance Wednesday by retracting a series of severe tariffs aimed at both allies and adversaries in an ambitious effort to reshape the global economic landscape.
The announcement from Trump came in the early afternoon, following a tumultuous week where Republican legislators and advisors expressed concerns that the tariffs could undermine the economy. His aides had discreetly signaled worries about the financial market state before he decided to suspend a tariff plan he had introduced just a week earlier in a dramatic Rose Garden speech.
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The stock market reacted positively to the reversal, bouncing back from days of decline that had prompted many older Americans investing in 401(k)s to reconsider their retirement strategies.
Before Trump’s declaration, several advisors appeared nearly frantic regarding bond market conditions, as relayed by a senior administration source. Interest rates for 10-year Treasury bonds had been climbing, which is atypical when stock prices drop and investors typically seek the safety of bonds. This unusual situation posed a dual challenge: rising prices from the tariffs coupled with higher borrowing costs for home purchases and credit card payments due to increased interest rates, affecting loans for businesses looking to grow.
On Wednesday, two of Trump’s key advisers, Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, presented a united stance urging him to halt the tariffs considering the bond market circumstances, according to the administration source.
In a social media announcement, Trump indicated a 90-day halt that he plans to use for negotiating agreements with numerous countries that he believes have unfair trade practices affecting American businesses and workers. However, this does not extend to China, where he has increased tariffs to 125% as part of a retaliatory escalation in an ongoing trade conflict.
Just a week prior, Trump had proudly revealed his plan to bring jobs back to the United States in the Rose Garden, showcasing a chart of the elevated tariffs that countries would encounter, declaring, “My fellow Americans, this is Liberation Day.”
That sentiment, however, was short-lived.
Anticipation of intensified trade conflicts caused markets to plummet, erasing trillions in wealth. Democrats seized the opportunity to challenge a cornerstone of Trump’s appeal: the belief that he can effectively manage the economy.
“Donald Trump’s market crash has evaporated approximately $104,000 from the average retirement account,” Senate Minority Leader Chuck Schumer, D-N.Y., remarked Wednesday on the Senate floor, hours before Trump’s decision to reverse course.
This episode highlighted the divisions within Trump’s senior advisory team as the White House struggled to deliver a coherent, consistent narrative regarding the tariffs’ future. While Bessent seemed open to negotiating, senior trade adviser Peter Navarro appeared to adopt a more stringent approach.
Elon Musk, billionaire CEO of Tesla and a Trump advisor regarding the government workforce, referred to Navarro as “dumber than a sack of bricks,” while Navarro dismissed Musk as “a car assembler, in many cases.”
However, the weeklong saga also revealed the risks inherent in a policymaking process often swayed by the fluctuating whims of one individual: Trump.
In response to the clash between Musk and Navarro, Sen. Lindsey Graham, R-S.C., who plays golf with Trump, stated: “I don’t think it matters. The only one who matters is Trump.”
Markets generally prefer stability, which influences business leaders’ decisions on where to establish new facilities. Yet when Trump charts a course, there are inevitably changes ahead.
A close associate who spoke with him recently relayed that Trump showed no indication he was prepared to “back down quickly on this stuff.”
Trump holds the belief that other nations engage in unfair trading practices and views tariffs as a mechanism to enhance America’s competitiveness, the individual said.
“He’s very confident it’s going to work for him,” the source added, opting for anonymity.
Nevertheless, leading up to Wednesday’s revelation, Trump and his aides were receiving pressure from GOP legislators and external allies advocating for a different direction.
Among them was Larry Kudlow, a Fox Business Network host and former senior economic adviser during Trump’s first term.
Kudlow informed NBC News about his “ongoing” discussions with colleagues in the West Wing regarding the necessity to negotiate with other nations before imposing enduring tariffs upon them.
Labeling Trump’s decision on Wednesday as “fabulous,” Kudlow remarked: “Dealmaking is the optimal approach. In the last 48 hours, Trump has shifted from a non-negotiating to a negotiating mindset. It’s clear that Bessent is now the primary player in trade negotiations. Very clear.”
Concerned Republican lawmakers also weighed in.
Graham shared that he had a lengthy conversation with Trump on Tuesday night, relaying sentiments from automobile manufacturers anxious about the tariffs’ potential impact on their businesses, including BMW, which has a facility in Graham’s home state.
Sen. John Kennedy, R-La., who communicated with the administration, stated that he planned to have lunch with Bessent and later told NBC News he was also engaging with the White House. Kennedy compared Trump to “the pit bull who caught the car,” now positing the question: “What are you going to do with the car?”
After witnessing further market declines this week, and as pressure mounted from Republicans on Capitol Hill, Trump began reconsidering his course of action. In his first term, he frequently regarded stock market fluctuations as a reflection of his presidency’s performance, celebrating gains while the downturn caught his focus.
“People were getting a little queasy,” he admitted Wednesday at an event with NASCAR champions.
“In recent days,” he began to more seriously contemplate pausing the additional tariffs, later telling reporters in the Oval Office that he found the idea of personally engaging in trade negotiations with nations looking to alleviate the tariff burden attractive, according to the senior administration source.
He reached a decision. Accompanied by Bessent and Lutnick, he drafted the message announcing the 90-day delay, temporarily concluding the most significant economic crisis of his presidency thus far.
“We wrote it from our hearts, right?” Trump remarked. “It was framed as something that I believe was very positive for the world and for us, and we don’t aim to harm countries that need not be harmed; they all want to negotiate.”
The day ended with the Dow Jones Industrial Average rising nearly 8%, recovering some — yet not all — of the losses incurred post-“Liberation Day.”
Despite the apparent chaos, his administration maintained that everything is proceeding as intended.
“You have been witnessing the greatest economic master strategy from an American President in history,” White House deputy chief of staff Stephen Miller posted Wednesday afternoon.
