A wild 24 hours in US trade policy

Good morning and welcome to yet another new global trade order. Follow the latest developments on our live blog and you can measure the impact with our tariff tracker. Today let’s look at:

• Trump’s game of chicken

• Consultants’ “insulting” savings proposals

• An unhappy bro-sphere

Donald Trump blinked.

After vowing not to back down from his aggressive, sweeping so-called reciprocal tariffs, the president made an abrupt reversal yesterday, authorising a 90-day pause in additional levies on a wide range of countries willing to negotiate with the US [free to read]. 

As he backed down, stocks soared to their best day in 17 years. The massive rally added about $4.3tn to the market value of the S&P 500, according to FT calculations.

Trump played chicken with the market for an entire week, but his multi-front trade war had become unsustainable economically, financially and politically.

While administration officials tried to paint the stunning shift as part of a master plan, Trump showed that he’s still vulnerable to backlash from Wall Street, lawmakers and donors.  

He said he’d been mulling a pause for “the last few days” because “people were “getting . . . a little bit afraid” and “jumping a little bit out of line. They were getting yippie.”

Once the market crisis extended to a sell-off in US government debt he buckled. The president started favouring advice from Treasury secretary Scott Bessent instead of trade hardliner Peter Navarro. He was also watching JPMorgan chief executive Jamie Dimon’s cable TV warning that the US was heading into a recession. 

“The bond market is very tricky, I was watching it . . . people were getting a little queasy,” Trump said as he explained his policy change yesterday.

One Wall Street executive close to the White House told the FT’s James Fontanella-Khan that Bessent had helped Trump conclude that the US should pause tariffs on countries with which it has historically had good ties.

“Trump is fine with Wall Street taking a hit but he doesn’t want the whole house to come down,” another person close to the White House told the FT’s Aime Williams. 

The president did, however, get more aggressive with Beijing, increasing additional levies on China to 125 per cent, escalating his trade stand-off with the world’s second-largest economy. As businesses scramble to adapt, some Chinese sellers on ecommerce platforms are raising prices by up to 70 per cent for US consumers.

So just because the markets breathed a collective sign of relief yesterday, it doesn’t mean the trade uncertainty is gone. Investors are bracing for price falls ahead of the Wall Street open in 30 minutes.

The latest headlines

• Small businesses in the US are still reeling from Trump’s trade moves and tariffs on China, as Americans grow disenchanted with their economy. 

• US shale oil producers face their biggest threat in years, as a crude price sell-off triggered by Trump’s trade war pushes parts of the sector to the brink of failure.

• Here’s how China’s record trade surplus sparked Trump’s steepest tariffs.

• Apple is deepening its relationship with India to help it counter the immediate impact of Trump’s aggressive China tariffs, after failing to win an exemption.

• The administration is threatening to terminate hundreds of billions of dollars’ worth of consulting contracts, after finding firms’ savings proposals “insulting”.

• The US has revoked the visas of more than 500 foreign students in recent weeks.

What we’re hearing

Trump’s Wall Street allies were not the only ones bewildered by the president’s tariff blitz.

Before Trump’s reversal and immediate stock market rally, conservative American “bro-casters” — influencers whose support was crucial for his victory — took to the airwaves to express their bafflement.

Adin Ross, a very popular online streamer, had only three words: “Bro, holy fuck.”

“What the fuck is going on in our country? Guys, why am I poor?” he asked his legions of fans. “Can someone please explain what’s going on? Why are we all losing? Why are we all negative right now?”

This podcaster’s comments were emblematic of political sympathies that were tested across the online “bro-sphere”, where young men flock to socialise, discuss sports, energy supplements and consume massive amounts of content by the likes of Joe Rogan.

And it’s not just about their stock holdings. Even before the market chaos, Rogan was uneasy about Trump’s immigration policies. Last month he hit out at the White House over its decision to deport a Venezuelan make-up artist and hairdresser to a prison in El Salvador.

At the end of last month, Rogan said on his podcast that it was “horrific” that “people who aren’t criminals are getting lassoed up and deported”.

However, the manosphere was not uniform in its criticism. More hardcore rightwing influencers such as Charlie Kirk or Tim Pool stood unwaveringly by Trump’s trade moves, in sharp contrast to streamers and podcasters like Ross who were pro-Trump but not necessarily super political. 

Trump was attempting a “historic reorganisation of the global and the American economy, and it’s gonna come as a shell shock”, said Kirk. “It’s basically like taking cough syrup”.

Viewpoints

• In today’s environment, we cannot insist on achieving certainty or even confidence before acting, argues Howard Marks, co-founder and co-chair of Oaktree Capital Management.

• Progressive Democratic US senator Elizabeth Warren called on her Republican colleagues to “stiffen their spines” and contain the damage from Trump’s tariffs.

• Trade economist Rebecca Harding says a multilateral defence bank for Europe and its non-US allies is now more urgent, since the defence industry will be among the first to feel the pain if global credit conditions deteriorate quickly.

• Taiwanese president Lai Ching-te says there is a road map for deeper trade ties with the US. [Bloomberg]