After promising that tariffs against dozens of countries were here to stay, no matter how much they hurt businesses or the stock market, President Trump has abruptly reversed course.But there’s an exception: his levies on China, which he said he would raise to 125 percent.Jonathan Swan, who covers the White House, explains why the president changed his mind, and David Pierson, who covers China, discusses why Beijing won’t back down.Guest:Jonathan Swan, a White House reporter for The New York Times.David Pierson, a foreign correspondent for The New York Times covering China.Background reading: Inside President Trump’s reversal on tariffs.The United States and China are engaged in a risky game of chicken with no off-ramp in sight.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday. Photo: Eric Lee/The New York Times Unlock full access to New York Times podcasts and explore everything from politics to pop culture. Subscribe today at nytimes.com/podcasts or on Apple Podcasts and Spotify.
Chapter 1: Why did President Trump pause tariffs?
President Trump says that he is pausing some of the tariffs that took effect overnight. He announced a 90-day pause on most of his new tariffs.
After promising that tariffs against dozens of countries were here to stay, no matter how much they hurt businesses or the stock market, President Trump has abruptly reversed course
A universal 10% tariff is in place while country-specific deals come together and sector-specific tariffs remain.
It looks like the U.S. has blinked. Except when it comes to China.
The president also saying that he will raise the tariff on Chinese imports now up to 125%.
Today, Jonathan Swan on why the president changed his mind and David Pearson on why China won't back down. It's Thursday, April 10th. Hey, Jonathan. Thank you for coming in very last minute and joining us. Thanks for having me. So the question here is very simple. Why did Donald Trump reverse himself here and take the off-ramp from these tariffs that none of us thought he was very likely to take?
What happened here?
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Chapter 2: What is the significance of the 90-day pause?
Well, if you listen to the public explanations from his aides... This negotiation went exactly the way we had hoped it would go.
This is... This was the plan all along.
As I told everyone... A week ago, do not retaliate and you will be rewarded.
The Treasury secretary, the press secretary.
Many of you in the media clearly missed the art of the deal. You clearly failed to see what President Trump is doing here.
The genius out-of-the-deal strategy to isolate China and, you know, negotiate with the rest of the world.
The entire world is calling the United States of America, not China, because they need our markets, they need our consumers, and they need this president in the Oval Office to talk to them.
Right, this was all pre-planned.
Yeah, that's not true. Behind the scenes, what actually happened, and we're still getting more detail now, you know, my colleagues Maggie Haberman and myself and others on our team have been reporting this out, but... Right, it's only five o'clock.
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Chapter 3: How did the bond market influence Trump's decision?
The entity that deserves most credit for today's decision is the bond markets and fear among Trump's team that this could spiral out into a full-blown financial panic. So just explain the meltdown, Jonathan, in the bond market. Well, you've got the worst person you can possibly ask to explain the meltdown in the bond market. You actually need someone who knows what they're talking about.
Okay, okay. Jonathan, we figured this might be the case, that you are not the authority on the bond market. And so in the grand tradition of phoning a friend and having Marshall McLuhan behind the potted plant, we're going to bring on someone who is an authority on bonds to briefly explain what the heck just happened there.
I think that's very wise for your listeners. Yeah.
Hello? Hey, Peter Goodman. Michael Barbaro. How are you, sir?
Good, good. Also, hello to Jonathan Swan, who has just acknowledged what I would acknowledge in this moment, too, which is that the bond market is pretty hard to explain. So we decided to call you and ask you to just briefly explain... What happened in the bond market? Because as Jonathan just put it, that felt decisive in the Trump administration's decision to hit pause on the tariffs.
That terrified them, Jonathan just said. So what happened? Why would it merit terror from this administration?
Sure. So there are not a lot of sure things in this world, but one of them is that in times of crisis, people around the world buy the US dollar, and specifically, they buy US government bonds. because there's this built-in assumption that whatever happens, war, aliens invade, you know, whatever, the U.S. government's going to endure.
And that appears to have broken down, not fully, but at least in the margins, this idea that the U.S. is the ultimate safe haven is broken down. And when people are less willing to buy U.S. government debt, the U.S. government has to pay a greater rate of return to persuade people to buy our debt. They have to pay higher rates. interest rates basically.
And a lot of other interest rates are paid to the rates on U.S. government debt, mortgages, credit cards. And so you've got both the message of the bond market freaking out, which is that people who trade money for a living worry that bad days are ahead. And then you've got the direct consequences of jacking up borrowing rates, which is an easy way to end up in a nasty recession.
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Chapter 4: What are the risks of increasing tariffs on China?
They start selling these bonds, and it starts to mess up all other kinds of borrowing rates around the economy, and that's how you suddenly get into a situation where... this all starts to go really sideways.
Yeah, I mean, you know, your mortgage goes up, well, you're going to spend less on other parts of the economy, which means you're depriving businesses of income. Maybe you're not going to buy that house you were thinking about, and now the housing prices don't go up as much, and some developer doesn't make as much money as they hoped, and construction companies get less business as a result.
This is how economic downturns happen. One key trigger is when the cost of borrowing money goes up, and especially quickly, that can be a real shock to the system.
Got it. And that shock is exactly what happened today in the bottom. Okay, Peter, this is really helpful. So thank you. Thank you. Okay, Jonathan, do you get it now?
I kind of got it before, but not in a way that was going to be very useful to your listeners. I'm glad you got Peter on.
Well, perhaps you could have done it just as well. We'll never know.
No, no, no, no, no. You made the right decision.
So what else is factoring into the White House decision beyond the bond market? When we had been talking to you a couple of days ago, there were all these CEOs knocking on the president's door. and saying this is not sustainable, none of that mattered? It was just the bond market suddenly going haywire? Or was it all kind of becoming one big collective untenable situation?
Well, I don't want to pretend omniscience here. It's very hard to kind of get inside Trump's head. As I said to you in the last time we talked, the only thing you could really go by is what he's saying privately and what he's saying publicly.
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Chapter 5: What pressures were on Trump before the tariff pause?
My colleague, Maggie Haberman, has some reporting that Scott Besson, the Treasury Secretary, flew with Trump to Washington from Palm Beach on Sunday night and had a really important conversation with him on the plane, steering him more in this direction. J.D. Vance, actually the Vice President, was supportive of this idea of being more structured with the tariffs, focusing more on China.
So these conversations were happening, but when we last spoke, which was Monday, I didn't have any sense and neither, this is the more important part, neither did Trump's most senior advisors that he was going to back off these tariffs.
Mr. Trade Representative, are you aware that the tariffs have been paused? I am, yes. When were you made aware of that?
The U.S. trade representative, Jameson Greer, was on the Hill. Right.
What are the details? How long is the pause? How many days? How many weeks? I understand it's 90 days. I haven't spoken to the president since I've been in this hearing. So the trade representative hasn't spoken to the president of the United States. He didn't know about it before it happened.
Right. And that earned him some serious mockery from Democrats who said, who is in charge here? Because if the U.S. trade representative is in front of Congress defending these tariffs while the tariffs are paused, it did not seem to the members of that congressional committee that there was any unified vision of what was happening.
Right, but this just goes to show how quickly this all came together and how much it was driven by pressure, external pressure and anxiety rather than something that was preordained, you know, the plan all along. I mean, give me a break.
So, Jonathan, we're learning something it seems pretty important about this president, which is contrary to our belief that after the first term, he was no longer swayable by market forces when it came to something like tariffs, that if the markets went down, even if perhaps the bond market started to go haywire, he was deeply committed to this vision of tariffs. That was our thinking. And
the markets were not going to take him off that position.
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Chapter 6: How does the economic situation affect Trump's policies?
We hear something very different, including the president personally in front of the White House acknowledging that people were getting the yippies. That was his word.
The bond market right now is beautiful.
But yeah, I saw last night where people were getting a little queasy. And so clearly this is the president conceding that he is at the mercy of the markets to a degree.
For sure. And what we did today was we located his pain threshold. He actually withstood way more pain.
$10 trillion in wealth wiped out.
Yes. This was not term one Trump until now. It required genuine fear of some of his top officials that this really could spiral out of control. This could bring about a recession on his watch. Trump has privately, certainly in the last two years, he's been talking about I don't want to be Herbert Hoover.
He talks about 1929 a lot privately, this idea that some catastrophic Great Depression-type event could happen on his watch. He really fears that. And up until now, what he had seen in the markets obviously did not lead him to the conclusion that he could be Herbert Hoover. And I think the signals that they were seeing today tipped him over the edge.
I'm curious what it does to Trump's credibility going forward to have that pain threshold reached in such a short period of time, less than a week when it came to these tariffs. And so if you're the rest of the world looking at whether Trump and his administration can stand by these difficult positions like tariffs that he said were a long-term project to bring jobs back to the U.S.,
Who's going to believe him the next time he wants to create leverage in one of these situations?
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Chapter 7: What lessons can be learned from this tariff situation?
did not know whether they could trust the president's word, whether his negotiators actually spoke on his behalf. I have spoken to a number of foreign officials who really struggle negotiating with this White House because they don't know if their interlocutors are going to have the rug pulled out from under them from the president. any minute.
So Scott Besson, the Treasury Secretary, talked today about more than 75 countries have reached out for negotiations. They're going to be, quote unquote, bespoke. Each one is individual, blah, blah, blah. Well, that's fine.
But I think that it's not going to be so easy to negotiate necessarily with all these different countries because they don't necessarily know that they can rely on the word of the And I think that's actually going to be the real challenge.
Again, asking you to do something that perhaps is a little uncomfortable for you, which is to speculate on what happens next. But is there any sense that in 90 days the president would ever restore these tariffs, knowing the amount of trauma they inflicted on the U.S. and the global economy?
Or is the sense that they have every incentive to do deals and not bring these tariffs back across the world?
Well, I'm not going to make a speculation about what Trump might do, but I think the markets already have. I think the market reaction to this, as exuberant as it was, suggests that people think that the idea of Trump launching a global trade war against allies and adversaries alike has... Passed. Yes, and that this is more likely to be
an America versus China trade war with a baseline tariff of 10%, which is much more tolerable for not just foreign governments, but the markets.
Right, and we should just say the state of play at this moment is that tariffs that were varied based on countries, and in some cases extremely high, have gone down to a much, much smaller universal tariff of 10%. The rest have been paused, but not... when it comes to China, those originally very high tariffs remain.
And in fact, through tit for tat and back and forth, they've gone up past 100% from the U.S. as of Wednesday. And so therefore, we now have a trade war that has seemingly been narrowed down to China. And I wonder how you think about that and how far we think the president is willing to take that particular face off.
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