Trump 2.0: Tariff Turnaround

0:06Hi, Molly. Hey, Kate. I know you're not surprised to see me here, but I'm here for Ryan. Yeah, I was hoping you'd do like a Ryan impression, you know, like maybe you can like talk about basketball and I could be confused. And the Ducks. Yes, definitely some Oregon references. Got to get that in here. But we're not going to do that. Anyway, great to have you. How are you doing? I'm doing just fine. I'm a little bit exhausted from the tariff roller coaster of the last week. It's been a lot. Indeed. Since so-called Liberation Day, when Trump announced sweeping tariffs, the markets tanked. And then on Wednesday, Trump put in place a 90-day pause.

0:50And the stock market shot up. That's right. So, Molly, what does this mean for Trump? Politically, how is it playing out? Not great. We've now had several polls come out since Liberation Day. All of these polls are showing that his approval rating on the economy specifically has tanked. It's underwater. The tariffs are not popular by big double-digit margins, 20, 30 points with all kinds of voters. So, yeah, it's not going great. And is that why the pause button was hit? Well, we're going to talk about that. It seems to have had less to do with the politics than with the markets. That seems to have been what finally scared him straight.

1:39From the Journal, this is Trump 2.0. I'm Kate Leinbaugh. And I'm Molly Ball. It's Friday, April 11th.

1:52Coming up, we'll break down the weekend tariffs and go behind the scenes at the White House.

2:16So, Molly, last week, Trump announced these sweeping tariffs and seemed to be sticking to his guns until Wednesday, day when, in a post on Truth Social, he announces this pause. Were you surprised? I mean, you know me. I try never to be surprised by anything Trump does. He had repeatedly said that he, like you said, was going to ride this out, was going to stick to his guns, didn't mind the pain, didn't care what was happening in the economy and the markets. But we were hearing this rising tide of angst from people around him and people in the Republican Party, so it wasn't too surprising that he did decide to change course.

3:00But if there's anything that's predictable about Trump, it's unpredictability. And to help us understand what happened in the Trump orbit, we're joined by our colleague, White House reporter, Josh Dossie. Hey, Josh. Hey, Josh. Hi. How are you guys? Doing well. Thanks for being with us. Of course. Josh, what has the mood been like at the White House since Liberation Day? Well, at the White House, I think it depends who you talk to. There were certainly folks who were deeply concerned about the markets and watching them plummet every day and getting lots of calls from corporate America, from lobbyists, from all sorts of folks asking for a pause.

3:40And then others who said, you know, we're going to be resilient. We're going to take this pain for a little bit. It's a global reordering of the economy. Frankly, it's going to suck for a while. And we're just going to hang tight. Of course, then the president decided to change course. So I think over the past week, you saw really factions. Some people who thought, you know, it's time. We've got to do something. This isn't sustainable. And other folks who said, you know, this is going to hurt for a little bit. Who were the players in the administration who were getting pressure? Well, I think Chief of Staff Susie Wiles was getting pressure from lots of corporate America, from politicians.

4:19I think Treasury Secretary Scott Pesant, I was told, was getting lots of calls from people on Wall Street. Peter Navarro gets less of that. He's one of the president's trade advisors. He's probably the biggest tariff hawk in the White House. And I think most folks who wanted to see the president believe talking to Peter was a waste of time. But I was talking to some lobbyists during this who said, you know, anyone who had any sort of connection to the White House, they were trying to use in this moment just to get messages to Trump about how bad it is. When would you say that Trump really saw how bad it was and started to think about changing course?

5:00Well, I would start this weekend where Scott Bessent went down to Florida and met with him. And our understanding is, you know, made a case that you could make deals with these countries and there were lots of things the administration could do that would not look like a capitulation. I also think Trump heard from a lot of different friends in New York about the tariffs while he was down in Florida this weekend. As you know, everyone from New York sort of goes to Palm Beach in those circles in the winter. And his club was packed. He was at various fundraisers, various events at the club. Also, multiple people told us that he was watching not just the stock market, but the credit market and the bonds.

5:39And we're seeing some bad signs there and that those things mattered. But, you know, it's really hard to know. I mean, I talked to someone who had done a call with Trump on Monday, and this person said on Monday Trump was saying, you know, I like the position I'm in. It was going to be a little bit of pain, but we're going to get through it. And then by Wednesday, you know, I changed his mind. So it's hard to know, but there were lots and lots and lots of factors I think at play here. Molly, I'm curious, like, as he was holding his guns, sticking to this policy earlier in the week, what were you hearing?

6:13Well, you know, there's always been this divide in the Republican Party between the sort of new right protectionists who have actually been cheering what Trump has been doing. And I talked to some of them as well as the more traditional Republicans, most of whom have been pretty horrified by Trump's moves in this direction. So, you know, there were some in like the sort of new right think tank world who were saying, yes, he's finally doing it. This is the promise that we believe he was elected on. And, you know, this is a very influential faction in today's White House, not only the sort of Peter Navarros of the world, but J.D.

6:54Vance is really one of the intellectual architects of this movement that wants to move the Republican Party in what they see as a pro-worker direction. and they're true believers in this philosophy Trump has been espousing about sort of gutting it out in the name of long-term re-industrialization. So some people were absolutely thrilled to see that Trump was not cowed by the markets and they were relatively dismayed to see him then cave. What role did his team play in changing his mind? Well, I mean, a lot of the particulars were still trying to figure out. But on Wednesday, he had a meeting with Scott Pesant, his Treasury Secretary, and Howard Lutnick.

7:39And in that meeting is when he dashed off that Truth Social post at 1.18 p.m. that sort of sent the market surging up. I think he had talked to lots of his trade advisors on Monday and Tuesday, you know, throughout the day about what he should do. I think the way it was described to me by multiple people is that Treasury Secretary Scott percent has been the key player here in getting him to this outcome. And the face-saving solution is that this 90-day pause grants him time to negotiate. Yeah. And I think what the argument was is that in this 90 days, you'll have lots of countries that come to the table and want to make deals with us.

8:19And it won't just be viewed as a capitulation of the end of 90 days. You'll have a lot to show for it. Now, we'll see if the White House is able to actually pull that off or not. But we're hearing pretty reliably that, you know, lots of different countries really are coming to the table and have been in the most recent days because, you know, they don't want extraordinary tariffs from the United States on their products. Josh, one thing I've been interested about in this whole episode is that I felt like sort of infighting between different White House officials was a big theme of the first Trump term.

8:53But there hasn't necessarily been as much of it this time around. But now with these conflicts over economic policy, we're really seeing a return to that. I mean, how much are they sort of at each other's throats in the White House these days? Well, I think it is less in the first term. But, you know, it's rare that you see one top advisor to the president, Elon Musk, call another when Peter Navarro, his other trade advisor, a complete and total moron publicly. And this administration, it's just Caroline Leavitt goes out to the podium. She says, we're the most transparent administration ever. Boys will be boys and move it right along.

9:33Right. It's a certainly, like, there's a pretty remarkable, you know, that word has been used a lot for Trump, but sometimes it's hyperbolic and whatever. But to see, like, people actively working for a president going publicly and calling others idiots and morons and, you know, even using the R word that I'm not going to use here because it's a family-friendly podcast, you know, it's pretty remarkable. I mean, it's pretty remarkable. So where are we left in this conversation about tariffs? right now? I think that's really the big question is sort of where do we go from here? Because we saw the market spike up on Wednesday with the announcement of the pause, but then it sort of fell back to earth on Thursday in part because I think Wall Street collectively realized like, oh, this isn't over.

10:23We still don't know where this is all going to land, number one. Number two, with the extremely high tariff on China, which of course used to be a major American trading partner, and that across the board 10 % tariff that remains in place, this is still a very large hike in tariffs, even if it's less than what was originally proposed. And we've talked about this on the show before. It's the uncertainty, stupid, right? I'm not calling you stupid. I'm just referring back to the cliche about the economy. Because what I think a lot of people on Wall Street have taken from this whole episode is just that so much is riding on the president's whims and he has such vast unilateral authority, unless the courts or Congress reign him in, that we're likely to be on this roller coaster for a while longer.

11:14I don't know. What do you think, Josh? Yeah, I mean, Trump obviously believes in tariffs. It's one of his only things that he's, I think, kept a set position on for many, many decades. I mean, And you go back to the 1980s and watch interviews with him. And he was saying the United States was getting ripped off and we need tariffs. So I don't think this is going to be the last you hear of them. I mean, I think countries that do not give him what he wants in the next 90 days or give him something that looks like a win in the next 90 days probably are going to get more tariffs. We're going to take a quick break.

11:45And when we're back, we're going to hear some listener questions and look ahead to what the next 90 days hold for Trump's tariffs. Stick with us.

12:09so we would like now to hear from a listener and we have a question from tim madison in houston my question has to do the president's ability to significantly shift market returns Can he profit personally from these rapid shifts by using his foreknowledge of his actions, which caused them to adjust his personal investments prior to his public announcements? If so, is this a case of insider trading? If so, is he protected from legal consequences of this action by the recent Supreme Court immunity decision? Thank you for your important work. I am not familiar with all the legalities involved, but certainly this is something that Democrats are on fire about.

13:00You know, on Wednesday morning before he announced the rollback of the tariffs, Trump posted that it was a great time to buy. And there's some evidence that at least some people did take that advice. And so the question is, did they have foreknowledge? And, you know, the president himself had people in the White House and he's pointing at them saying, like, look how much money they made off of taking my advice. So and Democrats are saying that this is something that they're going to investigate. And to be clear, right now, there's no evidence that Trump himself profited personally. No. Again, we have no evidence of that.

13:34But it's certainly like an open question of something that I think is worth exploring. And I'm sure it's something a lot of reporters are exploring right now. But now we'd like to hear from another listener, Richard Czernick in Spokane, Washington. Hello, my name is Richard and my question is this. Instead of imposing tariffs on every country in the world and affecting the American economy in a detrimental manner, why didn't the Trump administration just go out and negotiate or renegotiate with all of those countries for more favorable domestic manufacturing and importing and exporting of goods, whereby they look like they're getting a win-win situation instead of expecting every country on Earth to come to us?

14:21Well, they could have done that, and I think that's a fair question. I think what Trump would say is you are better having negotiations when you have leverage, right? If you go out and say we're going to make deals and people aren't feeling any pain or any punishment, they might be less likely to come to the table. I think you could have had a lot less of an impact on the economy. Certainly the way they did it had a deleterious impact on markets, really sort of threw the world into chaos. And I think there are a lot of questions on whether that is worth it. But I think in Trump's mind, he says, you know, I showed you I was playing hardball here at least for a week, and I might do this again if you don't give me a deal and you need to come to the table.

15:05Right. So, you know, I think it's certainly a fair question to say you could have just gone out and make deals with these countries one-on-one, would the countries have been as eager to come to the table without this? I don't know the answer to that. In his 90-day pause, he paused these so-called reciprocal tariffs on all countries but one. He still kept the tariffs on China and turned up the heat. What does that say? Well, I think he wants to put China in an uncomfortable spot. He wants to build a wall kind of around them, so to speak, right? I also think in that move, you know, it gave him a way to not just say that he was pausing the tariffs and saying that he was taking a more aggressive stance towards one of these countries, right?

15:53And I think it was to send a message to the rest of the world that, you know, if you come and give me a deal, you're not going to have to be like China, right? He wants to alienate them, to put them on an island. I think that's part of his strategy. Yeah, I mean, look, the trade war with China is well underway. And with the caveat that Trump is nothing if not unpredictable and could reverse himself in any way at any moment, the reality is this is now a major trade war, much bigger than anything Trump did against China in his first term. And we are still at the very beginning of these tariffs actually being implemented.

16:32So the market gyrations may calm down a bit, but the real impact on the economy, which most economists believe we're going to see in the form of rising prices on a lot of imported products, that is, we are only at the beginning of that potentially starting to happen. And most forecasters are still saying we're likely going to be in for a recession. And I think we just don't know where the economic picture is going to end up. The stakes are really high for the administration here, and they have this 90-day window. What does the administration need to get done in that period? It depends who you ask.

17:17I mean, I think what Trump wants to get done is a lot of deals with various countries. And then he will, you know, go out and tout his deal-making process and say, you know, you guys, we had to make these drastic steps. And that brought everyone to the table. And no other president would have done that. And, you know, look at me. I mean, as someone was pointing out to me, you know, just as Trump has his politics here, every other country's leader has their politics as well. Do they want to be seen as kowtowing to Trump internally? Do they have to take him on more aggressively? I mean, I think it will be individual choices and we'll watch those play out over 90 days.

17:58But, you know, I was talking in the past couple of days to a couple of the biggest lobbyists in Washington who, you know, raise money for Trump and are always at the White House with various clients. And, you know, they're all signing these countries right now because these countries are trying to find someone with close ties to Trump to hopefully get, you know, a better deal. Something we still don't know is sort of what is the endgame here. Because the administration keeps kicking the can down the road, we still don't know, they still haven't told us where they want to end up, what would constitute a satisfactory deal that would allow them to remove some of the tariffs on a permanent basis, what the 90-day pause means, right?

18:40It obviously means they've created space for this kind of dealmaking. But at the end of 90 days, does the door come slamming back down? Or is there another pause? Is there some kind of—is it country by country? They really have not made clear just sort of where it's all going. But last week on this podcast, we heard Howard Lutnick saying that in six months, you'd start to see a revival of American manufacturing because of these tariffs. So what does this mean for the policy objectives that were used as the justification for these tariffs? That's a good question. I mean, I think if you ask some of Trump's advisors, like Peter Navarro, and I think Trump has even said this, that, you know, in one day he'll say the whole goal is to bring back American jobs, to impose these tariffs, to stop offshoring, to fundamentally reshape the economy.

19:36me. And then other days he says, I'm up for negotiation, right? Give me the best deal you'll give me. What I suspect will happen, and again, you know, I don't want to get in the prediction business, particularly with Donald Trump, but I suspect you will see a lot of deals because countries will want to give him things. He will want to have showy Rose Garden press conferences where he announces X, Y, or Z and, you know, probably put some spin on it, so to speak. I bet you watch a lot of that play out in the next three months. And I think what you'll also see him do is play some of these countries against each other, right?

20:14If you give me this, I'm going to do this. If this country's doing this, you've got to do better than that. Sort of this elaborate gamesmanship is what I'm expecting.

20:27Well, Josh, thanks so much for joining us. This was fun. Thank you so much. Molly, do you think this is going to be the last time we talk about tariffs? Well, we only have a couple more episodes, so maybe. You know, it's possible that there will be so much else going on that we just won't even be able to get to them. But the tariffs have been a pretty big storyline of Trump 2.0 so far, so I'd be surprised if they don't come up again. They're not going to come up next week because we're taking a week off. That's right. I'm going to spend my kids' spring break hopefully not thinking about tariffs at all.

21:02Have fun. As you just heard, Trump 2.0 is taking a break next week. But we'll be back in two weeks on Friday, April 25th. Trump 2.0 is part of The Journal, which is a co-production of Spotify and The Wall Street Journal. This episode was produced by Enrique Perez de la Rosa and edited by Katherine Whalen. Molly Ball is The Wall Street Journal's senior political correspondent. I'm Kate Leinbaugh. This episode was engineered by Nathan Singapak. Our theme music is by So Wiley and remixed by Peter Leonard. Fact-checking by Kate Gallagher. Artwork by James Walton. See you in two weeks.

21:54Thank you.