The call ended abruptly.
In a communication from the Oval Office, President Trump had just shared some disheartening news with three of the most influential executives in the American automotive industry: Mary Barra of General Motors, John Elkann of Stellantis, and Jim Farley of Ford.
Everyone better prepare, Mr. Trump stated during the call that occurred in early March. Tariffs will be implemented starting April 2. It’s time for all to align.
The auto leaders, much like figures in other sectors, had been contending that Mr. Trump’s 25 percent tariffs on vehicles importing from Canada and Mexico would severely disrupt their supply chains and greatly harm their businesses. They had managed to negotiate a sort of temporary relief when Mr. Trump granted them a one-month delay, until April 2.
However, at this point, the heads of the Big Three automakers seemed to understand that further resistance was futile. They had achieved about the extent of their concessions.
For corporate America, including several major donors, the surprise of Mr. Trump’s second term is that it appears he genuinely holds the beliefs he has voiced publicly for four decades: Foreign nations are taking advantage of America, and tariffs are a panacea for the nation’s challenges. When he declares that “tariff” is the most beautiful word in the dictionary, he is sincere.
To Mr. Trump, tariffs are far from just a negotiating tactic. He believes they are the key to restoring America’s wealth. Moreover, they encapsulate two of his preferred aspects of the presidency: They represent a unilateral authority he can wield at will, and they foster a climate of dependency, compelling influential figures to appeal to him for leniency.
This account is founded on discussions with over a dozen officials from the Trump administration and others knowledgeable about the tariff dynamics at the White House. They requested anonymity to share insights from private conversations.
Within the corporate sector—a group that invests heavily in experts to decode Mr. Trump’s actions, where the mantra of taking him “seriously but not literally” is prevalent—many had been holding on to the belief that he only viewed tariffs as a leverage instrument. They rationalized that Mr. Trump didn’t genuinely relish tariffs; he merely appreciated the leverage they could provide in negotiations.
Over the years, it had become widely accepted that the stock market served as Mr. Trump’s guiding principle and safeguard, with any significant market decline limiting the reach of his tariffs, which were more strategically applied seven years prior.
However, Trump 47 has thus far shown no signs of being swayed by a falling market or headlines that would have compelled Trump 45 to reconsider. The Dow Jones industrial average has dropped more than 600 points since the new tariffs were announced. The S&P 500 has slid into correction territory, indicating a drop of over 10 percent from its peak.
During his initial term, Mr. Trump exhibited a lesser tolerance for the economic distress caused by a much more limited tariff agenda. He enacted tariffs on products totaling over $300 billion throughout his first term; currently, less than two months in, he has imposed tariffs on approximately $1 trillion worth of goods.
Some recent public opinion polls indicate an increasing disapproval rate among Americans regarding Mr. Trump’s economic management, but his advisors argue this sentiment stems more from ongoing high prices than the tariffs themselves.
One of Mr. Trump’s advisers, speaking under the condition of anonymity to discuss private deliberations, expressed that the Biden presidency has taught Mr. Trump that the stock market is not an infallible predictor of the economic landscape or voter attitudes. If it were, Mr. Biden, who presided over a thriving stock market, would undeniably be the current president, the advisor elaborated, revealing Mr. Trump’s perspective.
Advisors have indicated that Mr. Trump is aware that foreign leaders are observing whether he will follow through on his threats, looking for any signs of vulnerability. They believe he thinks that retreating on tariffs could irreparably undermine his desired image as a strong leader.
At times, he has granted a form of leniency—such as when he exempted from tariffs goods from Canada and Mexico that align with his North American trade agreement. Yet he has consistently stated that larger and additional tariffs are forthcoming.
Business leaders are now swiftly reevaluating the optimistic assumptions that had influenced their outlook since Election Day.
Bill Reinsch, a senior advisor at the Center for Strategic and International Studies and a former official at the Commerce Department, noted that Mr. Trump had been very clear about his intentions during the campaign, and that his tariff suggestions this time around are significantly broader and deeper than in his initial term.
“I think his message was unequivocal,” he commented. “I don’t believe people adequately acknowledged it.”
Their misinterpretation is understandable.
Leading up to the 2024 election, Mr. Trump’s new team of economic advisors conveyed calming messages to Wall Street. Their public statements implied that Mr. Trump’s trade approach in his second term would largely mirror that of his first. In September, Howard Lutnick, now the commerce secretary, referred to tariffs as a “bargaining chip” that would eventually lead to freer markets. Furthermore, Scott Bessent, who was appointed Mr. Trump’s treasury secretary, penned a letter to his clients last year asserting that “the tariff gun will always remain loaded and on the table but will seldom be fired.”
It remains possible that Mr. Trump may retract some of his tariffs, but if he is considering a reversal, it would be news to his closest advisors. Mr. Trump has repeatedly asserted his intention to impose far more extensive tariffs on April 2, and his team has informed foreign officials and CEOs that he will not back down. His interactions with cabinet secretaries and aides in Oval Office meetings align with his public statements, according to two individuals with direct knowledge, who spoke on the condition of anonymity to discuss private matters.
Mr. Trump personally composes or dictates his posts on Truth Social that threaten ever-increasing tariffs as responses to reprisals from China, Canada, and the European Union. Even former aides who believe his aggressive stance is misguided acknowledge that he raises valid points regarding the unfavorable trade treatment the United States has received from China and Europe.
He is said to feel that the current pressure has been effective, citing Mexico’s commitment to limit the influx of undocumented migrants and fentanyl into the U.S. Even after Mexico implemented those measures, Mr. Trump continued to push for 25 percent tariffs, pausing their application only on select items.
One of the most notable contrasts between his first term and the present is that Mr. Trump has grown significantly more assured in his instincts and has surrounded himself with individuals who share them. He seldom encounters strong opposing viewpoints regarding his economic policies.
During his first term, Mr. Trump faced significant opposition to tariffs from those who argued they would increase consumer and business costs and stifle economic growth. His team included individuals Mr. Trump would derisively label as “globalists”—such as Steven Mnuchin, the then treasury secretary, and economic adviser Gary Cohn, who actively worked to prevent tariffs by removing papers from the president’s desk and presented the president with charts and maps forecasting the benefits of trade. Other aides, like Larry Kudlow, were less confrontational but still skeptical of a protectionist strategy.
Mr. Trump’s trade adviser Peter Navarro used to engage in heated disputes against the so-called globalists. Now, returning for a second term, Mr. Navarro’s disagreements with other advisors are comparatively more nuanced.
Mr. Bessent, a hedge fund manager, and Mr. Lutnick, who headed the Wall Street firm Cantor Fitzgerald, both publicly supported tariffs before assuming their roles. And regardless of their private opinions on the tariffs, no one is currently in front of Mr. Trump arguing vehemently against his economic strategies. The discussions among his present team revolve around how to communicate about tariffs to the public, including exemptions and the magnitude and timing of the tariffs, but no one contests the principle of employing them in some capacity.
Additionally, Mr. Trump is not facing strong opposition from the legislature. Republican lawmakers have largely either embraced protectionism or are intimidated against voicing dissent. The Wall Street Journal editorial board is one of the rare conservative-leaning entities that consistently criticizes his trade policies.
Mr. Lutnick, who is also managing the U.S. trade office, receives numerous calls from discontented business leaders, along with White House chief of staff Susie Wiles, and agriculture secretary Brooke Rollins.
On the evening of March 13, Mr. Lutnick, Mr. Bessent, Kevin Hassett, who directs the National Economic Council, and several others convened at the Naval Observatory with Vice President JD Vance to strategize a coherent public statement about the economy, in light of complaints from allies regarding inconsistency, according to four individuals informed on the discussions.
White House officials declined to comment on this meeting.
However, in a statement provided by the White House, Mr. Navarro portrayed Mr. Trump’s advisors as following his direction, describing them as “a diverse group with complementary skills and a high level of trust, featuring individuals like Bessent, Greer, Hassett, and Lutnick, who debate privately and emerge unified.”
There have been limited exceptions to this approach. Ms. Rollins received requests from farmers seeking an exemption for potash, a crucial component of fertilizer production. Ultimately, Mr. Trump consented to a reduced 10 percent tariff, though he was displeased about the exemption, according to a knowledgeable source. In a statement, Ms. Rollins indicated that the president’s “reduction of tariffs on potash is a vital measure in assisting farmers to manage and secure essential input costs during the peak planting season while reinforcing long-term agricultural trade relationships.”
Nevertheless, in numerous other instances, Mr. Trump has appeared far less inclined to grant substantial industry exemptions than he did during his initial term.
Although some industry leaders have attempted to contest decisions during discussions with the White House, very few have publicly voiced their concerns; those who have faced backlash from the Trump administration. Those willing to speak privately have typically reframed their criticisms with generous praise.
Certain firms have felt “intimidated” about opposing tariffs, fearing they might become targets, Mr. Reinsch noted. “No one wants to go public,” he stated, “because they are worried about the repercussions.”
Yet, those companies remain hopeful for favorable policies, such as tax reductions and deregulation.
