‘Near panic’: Real reason Donald Trump reportedly hit tariff pause button
Close advisers to Donald Trump were in meltdown mode prior to him pausing the highest tariffs as one particular market went haywire.
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There were reports of “near panic” in the White House hours before Donald Trump paused the harshest of his tariffs - and it was less about the plummeting stock market and more about another financial market that was making officials sweat.
It was all about bonds.
Last week, the US President imposed a baseline 10 per cent tariff on almost all countries = even those like Australia, where the US sells more to us than we buy.
But some nations and blocks - like China, Japan, the European Union and even some tiny countries - saw far higher import taxes imposed.
Global stock markets plunged, US allies were left perplexed and American consumers looked on in horror as their retirement savings went down by thousands.
Mr Trump had urged Americans to “be cool” and all would be well.
But NBC News has reported that it was, in reality, a “harrowing week” for the US government.
The Democrats’ Chuck Schumer claimed the volatile markets had “vaporised a whopping $104,000 from the average retirement account”.
It wasn’t just about opposition.
“Republican lawmakers and confidants privately warned him that the tariffs could wreck the economy,” NBC reported.
“His own aides had quietly raised alarms about the financial markets.”
But while Mr Trump was confident that, at some point, the stock market would bounce back, all eyes were on the bond market.
Bonds are where individuals, institutions or even nation states lend money to the government in return for either a fixed return or fixed interest.
In times of economic woe, government bonds are generally seen as a safe haven - rather than shares or property - as governments are less risky.
But if there are fewer takers for bonds, it’s an economic vote of no confidence in the government. Fewer people buying bonds means the interest rate on them rises, making government borrowing more expensive.
“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,” the NBC report stated.
“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.”
The report said that Treasury Secretary Scott Bessent - who has been seen as more moderate and keen for Mr Trump to do deals with countries - and Commerce Secretary Howard Lutnick - who is more pro-tariff - teamed up.
The pair presented a “united front” to the President, asking him to end the tariff trauma.
Mr Trump himself referred to the bond market when he spoke about the pause.
“The bond market is very tricky … people were getting a little queasy,” he said on Wednesday.
In the end, Mr Trump looked to have been persuaded to step back by a combination of his officials, Republicans he trusted and even TV commentators.
Nonetheless, the White House has insisted Mr Trump’s backflip was not in panic.
Mr Bessent said it was planned all along, while press secretary Karoline Leavitt said it was merely the “art of the deal”.
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Originally published as ‘Near panic’: Real reason Donald Trump reportedly hit tariff pause button
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