Yesterday Trump announced that he wasn’t going to impose all those tariffs he announced last week after all. Instead, he’s putting a 10 percent tariff on everyone, and 125 percent on China.Nevertheless, we appear to have avoided an even worse outcome, at least temporarily. There was a big rally in the markets in response to Trump's 90-day pause (although U.S. stocks are down again as I type this).
... this new announcement still sets tariffs at a much higher level than they were before Trump took office, indeed higher than he suggested during the campaign. For example, during the campaign researchers at the Peterson Institute for International Economics constructed a model assuming Trump implemented a 10 percent tariffs across the board and 60 percent on China. The researchers concluded that this regime would impose a nasty shock on the US economy. Now we are facing a tariffs of more than twice that level against China as well as 10 percent on all other countries.
... With a 125% tariff on Chinese imports and a 10% tariff on all other imports, I arrive at an effective tariff rate that is slightly below the Smoot-Hawley level of 1930. But this still represents a huge jump in tariffs in a US economy that now imports three times as much as it did in 1930. Trump’s post-pause tariff regime remains the biggest trade shock in U.S., and I think world history.
One aspect of yesterday's rally seems suspect to a lot of people. The New Republic's Malcolm Ferguson writes:
Trump may have accidentally confessed to insider trading and market manipulation on Truth Social.But is it true that someone with knowledge of an economic policy change that would cause the markets to shoot back up would be posting about how great a time it is to buy right before the policy change happened -- announcing it to the world, rather than whispering it to a select few who are in on the scheme?
“THIS IS A GREAT TIME TO BUY!!! DJT,” the president wrote on Wednesday, a mere four hours before announcing a 90-day pause on most retaliatory tariffs except for China....
Insider trading is a very illegal practice that involves using special or private information to give yourself an advantage in buying and selling stocks. Someone with knowledge of an economic policy change that would cause the markets to shoot back up would be posting about how great a time it is to buy right before the policy change happened.
I really don't know. Maybe the answer to my question is: Yes, Trump posted this message for all the world to see, but only a select few understood it as code for "I'm pausing the tariffs."
I think this could be insider trading. But it also seems plausible to me that Trump is a deranged idiot and what happened fits the specific pattern of his idiocy and derangement.
Let's start with the idea that Trump engaged in insider trading to help his rich friends. How often does Trump try to help other people? Even his biggest donors don't get much love from him -- just a couple of days ago we were reading headlines such as "Big Tech Bet on Trump. It’s Still Waiting for the Payoff." Trump looks out for the interests of Trump. It's hard to imagine him looking out for the interests of anyone else.
The counterargument to that is contained in this Wall Street Journal report:
Trump Says He Will Consider Exempting Some U.S. Companies From TariffsHe certainly seems to be soliciting bribes -- but I question whether he'll actually give anything to the bribed.
President Trump said Wednesday that he’s considering granting some U.S. companies an exemption from his tariff program. “There are some that have been hard,” Trump told reporters when asked about companies requesting exemptions. “There are some that, by the nature of the company, get hit a little bit harder. We'll take a look at that.”
The Wall Street Journal reported this about the tariff pause:
“THIS IS A GREAT TIME TO BUY!!! DJT,” Trump posted at 9:37 a.m. Wednesday. An administration official said no decision had been made at that point.I know that White House insiders lie to reporters. Maybe the pause decision had been made at that point. On the other hand, isn't this kind of ... plausible? Isn't it plausible that Trump imposed these cataclysmic tariffs, and was trying to root the market on to a rally that would show all the haters that they were an awesome idea -- and then he just changed his mind and flip-flopped within a couple of hours? Isn't that a likely product of his Diet Coke- and/or Adderall-fueled tiny brain?
I believe Trump imposed the tariffs because he really believes in tariffs. He wanted to prove that everyone else in the world is wrong about tariffs and he's right. He wanted to demonstrate that his gut instincts contain more wisdom than the recommendations of so-called smart people who read books and engage in serious study of the subjects they talk about. I think he wanted to stay the course, because he is an idiot.
But the markets freaked -- first the stock market, then the bond market. Meanwhile, administration insiders and rich influencers approached the crisis from several different angles, until they found one that worked. When they failed with the direct approach -- Bill Ackman's tweet warning of a possible "economic nuclear winter," for instance -- they began working on Trump indirectly, in part through Treasury Secretary Scott Bessent, as The Wall Street Journal noted:
Bessent was flooded with worried calls from Wall Street over the weekend and felt strongly he had to persuade Trump that a pause was needed.The message that began the process of steering Trump away from national economic suicide? Tariffs aren't what makes your policy brilliant, sir -- deals are.
[A pause] wouldn’t be a capitulation, Bessent argued, because they were going to have so many deals.Lindsey Graham and other GOP senators who appeared on an episode of Sean Hannity's show Tuesday night that Trump watched also tried to steer Trump's thinking to deals, The Washington Post reports:
Some of the senators expressed a desire for Trump to negotiate with other countries coming to the table on tariffs, and several of them spoke to the president after the show ended.If this were a planned pump-and-dump, I don't believe you would have seen so much desperate effort to urge a course correction from rich investors, key administration figures, and congressional Republicans.
“I’ll leave it up to you what’s enough, what’s not enough,” Graham said he told Trump Tuesday night, “but I think you can see people are looking for some points on the board.”
And once Trump was convinced that he could look like the Great Dealmaker even if he paused the tariffs -- and once he also saw that the bond market was tanking -- he impulsively decided on a pause. Politico reports:
... a cadre of his economic advisers made a two-part pitch.... First, they told the president about their grave concerns over the bond market, which moved rapidly in the wrong direction overnight into Wednesday morning. Second, crucially, they praised Trump’s approach, telling him in effect: “This has already been successful. All these countries are coming to the table. Now we need time to negotiate.”This seems like pure Trump -- he acknowledged the surprising news that the markets (which he cares a lot about) weren't responding well to his brilliance, but, ultimately, he was swayed by flattery. Bill Ackman eventually realized what Trump wants:
This was brilliantly executed by @realDonaldTrump. Textbook, Art of the Deal.
— Bill Ackman (@BillAckman) April 9, 2025
Maybe, in all this desperate work to prevent Trump from steering the car off the cliff, there was time to wink at rich cronies and say, "Buy now -- we're pivoting." But you should at least consider the possibility that it was all done in great haste, and that it was all these folks could do to ease Trump's lead foot off the gas pedal.
Prior to the pause, Republicans were selling the policy as if it would be in place for a long time. They said it would return manufacturing to America. They said it would solve the masculinity crisis. They said only weak people were worried about losing money.
Then came the pivot. I think it was Trump being impulsive. I don't think it was part of the plan. And I don't think he would encourage anyone else to get rich from the change of course, because he's too selfish. But I could be wrong.
