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 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. The unusual dynamic meant that at the same time the tariffs could push up prices, people would be paying more to buy homes or pay off credit card debt because of higher interest rates. Businesses looking to expand would pay more for new loans.
Two of Trump’s most senior advisers, Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, presented a united front Wednesday, urging him 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 country’s biggest geopolitical rival to 125%, part of a tit-for-tat escalation in an evolving trade war.
Trump reversed course one week after he appeared in the Rose Garden and unveiled his plan to bring jobs back to the United States. 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 Minority Leader Chuck Schumer, D-N.Y., said Wednesday 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 blacksprut trade adviser, appeared to take a more hard-line 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.”
