Background on Tariff Discussions

In private discussions leading up to the announcement of significant tariff proposals, senior advisers to President Trump expressed growing apprehension regarding the potential repercussions of these measures on both global financial markets and the U.S. economy. These concerns intensified prior to the April 2 initiative, aptly named “Liberation Day” by the White House.

Internal Debates Among Key Advisers

Evidence of internal discord became apparent before the formal tariff unveiling, particularly during a heated meeting at Chief of Staff Susie Wiles’ office in late March.

In discussions between Treasury Secretary Scott Bessent and Trade Adviser Peter Navarro, a striking divergence in perspectives emerged. Navarro advocated for a sweeping 25% tariff on all $3 trillion of imported goods. Bessent, drawing from his extensive background on Wall Street, countered with warnings about potential market upheaval and illustrated various adverse scenarios.

According to sources present, Navarro derided Bessent’s caution: “You’re doing the same thing they did in the first term. Don’t pull this. Don’t be him,” referring possibly to more moderate approaches taken by former advisers Steven Mnuchin and Gary Cohn.

Varied Perspectives Within the Administration

Commerce Secretary Howard Lutnick also voiced strong reservations, projecting certain tariffs could precipitate global economic turmoil. Bessent consistently pushed for a more strategic implementation of tariffs rather than the broad strokes proposed by Navarro.

Notably, Elon Musk, while serving in an advisory capacity, did not participate in key tariff discussions and expressed skepticism about certain aspects of the tariffs in limited circles.

Despite the debate, Navarro maintained a firm stance against negotiations, arguing that tariffs should remain to generate revenue and incentivize U.S. production.

The Market Reaction

Following the “Liberation Day” announcement, financial markets experienced considerable volatility, validating many advisers’ forecasts concerning the economic fallout. Major stock indexes saw significant declines, with alarming signals emerging from the bond market. Influential Wall Street firms, including Goldman Sachs, began to predict a heightened likelihood of recession, prompting responses from top executives.

JPMorgan Chase CEO Jamie Dimon expressed concern about recession risks as a “likely outcome” during an interview on April 9. Similarly, Delta Airlines CEO Ed Bastian described the situation as “self-inflicted,” leading the company to suspend its full-year guidance amid the prevailing uncertainty.

Presidential Response to Market Concerns

In an attempt to calm investors and business leaders, Trump issued an encouraging message on social media: “BE COOL! Everything is going to work out well.” However, by the end of the day, amid input from Bessent and Lutnick, Trump announced a temporary pause on certain tariffs for 90 days.

Reflecting on the reaction to the tariffs, he remarked, “Well, I thought that people were jumping a little bit out of line. They were getting yippy — you know, they were getting a little bit yippy, a little bit afraid.”