In a surprising turn of events, just hours after urging Americans—especially Wall Street elites—to “BE COOL” and calmly await a new economic dawn, Donald Trump abruptly backtracked on his aggressive tariff plans. Announced on his Truth Social platform, the 90-day pause on tariffs was framed as a momentary relief.
During this period, tariffs would be reduced to 10%, a rate that had originally been set for all U.S. trading partners. This sudden policy reversal, designed to ease tensions, sent ripples through the financial world and briefly revived markets that had been spiraling due to fears of an impending recession.
Temporary Tariff Halt Briefly Stabilizes Markets But Raises Uncertainty Over Trade Policy
The announcement of a temporary halt to Trump’s tariffs seemed to have achieved its intended effect. Financial markets, which had been suffering in the wake of last week’s “Liberation Day” ceremony, showed signs of recovery. Goldman Sachs, which had recently forecast a likely recession, quickly adjusted its position in response to the news of the tariff pause, though the revised outlook still predicted a 45% chance of a recession and stagnant GDP growth.
Despite the brief optimism, the recovery was short-lived, and financial markets were left unsettled. This pause may have provided a temporary reprieve, but the underlying uncertainties about U.S. trade policies persisted, particularly as the Treasury bond market, a traditional safe haven for investors, continued to decline.
Even before Trump’s official announcement, the markets had experienced a series of unsubstantiated rumors that briefly alleviated investor concerns. On the day before the tariff pause was revealed, a fake social media post from a troll account claimed that Trump would announce a 90-day tariff suspension, sending stocks soaring.
However, the White House quickly debunked this claim, sending the markets back into turmoil. This episode highlighted the fragility of market sentiment and how easily investors can be swayed by speculative and unverified reports. These false starts revealed just how much uncertainty hung over the future of U.S. trade policy, and how vulnerable financial markets are to sudden shifts in rhetoric or policy.
Trump’s 90-Day Tariff Pause Temporarily Calms Markets but Deepens GOP and Wall Street TensionsDespite the temporary tariff pause, Trump’s commitment to protectionist trade policies remains steadfast. Even as he sought to de-escalate the situation with a short-term relief measure, he simultaneously announced new tariffs, including a drastic 125% tariff on Chinese exports to the United States.
This move added another layer of complexity to an already convoluted trade strategy. The decision to reduce tariffs temporarily while imposing additional punitive measures on China seemed contradictory, and analysts quickly pointed out the lack of a coherent overall policy direction. Trump’s approach appeared to be driven more by a desire for short-term political gains rather than a long-term economic strategy.
The rationale behind the pause was particularly difficult to follow. Trump claimed that the 90-day break would reward the countries that had complied with U.S. trade demands and refrained from retaliating against American tariffs. He pointed to more than 75 countries that, according to his administration, had agreed to negotiate trade terms with the U.S. in good faith. In Trump’s view, these nations deserved a reprieve from the tariffs for their cooperation.
However, this reasoning seemed illogical when considered in light of the broader geopolitical landscape. While Trump offered temporary relief to compliant countries, he continued to punish China with additional tariffs, despite the fact that China’s trade retaliation was a direct response to his own policies. This uneven approach suggested that the tariff pause was less about crafting a sustainable trade agreement and more about managing short-term political optics.
GOP Divisions Deepen as Wall Street Frustration Grows and Legal Challenges Emerge
While Trump’s erratic trade policy may have temporarily appeased some market actors, it also laid bare deeper fractures within the Republican Party. The tensions between the GOP’s traditional financial backers and the populist wing of the party were becoming increasingly difficult to ignore.
Wall Street, which had long been supportive of the GOP due to its alignment with free-market principles, found itself at odds with the administration’s aggressive trade tactics. Many of Trump’s financial supporters, who had previously embraced his tax cuts and deregulation efforts, began to express serious concerns about the long-term consequences of his tariff policies.
These divisions within the Republican Party are not new. For decades, the GOP has been an uneasy coalition between the party’s establishment, which favors pro-business policies, and a more populist base that has increasingly embraced nationalist and anti-globalization rhetoric.
Trump’s 90-Day Tariff Pause Temporarily Calms Markets but Deepens GOP and Wall Street TensionsTrump’s rise to power effectively bridged this gap, but his trade policies are now threatening to unravel that alliance. The frustration of Wall Street elites with Trump’s tariffs is a stark reminder that, for all his populist appeal, the president’s policies have significant repercussions for the very financial class that has long been the backbone of the GOP.
Adding another layer of complexity to the situation, Trump’s tariff policies are facing legal challenges from within the conservative movement. The New Civil Liberties Alliance, a group with ties to prominent conservative figures such as Charles Koch and Leonard Leo, has filed a lawsuit against the president’s tariff actions.
The lawsuit, which is being coordinated with a Florida-based company, argues that the broad tariffs on Chinese imports are unrelated to the stated goal of combating the opioid crisis. The plaintiffs claim that the tariffs are, in fact, a thinly veiled attempt to address the trade deficit and generate federal revenue rather than an emergency measure to combat fentanyl.
The involvement of the Federalist Society and its donors in this legal challenge is notable. Leonard Leo, a key figure behind the conservative legal movement, has long supported Trump’s judicial appointments, and the Federalist Society has been instrumental in shaping the right-wing judiciary.
However, in this instance, Leo’s network is directly challenging Trump’s executive power. This highlights the growing unease among some conservative elites with Trump’s overreach and his disregard for the traditional economic policies that have guided the Republican Party for decades.
Billionaires and GOP Divisions: Conservative Financial Interests Clash with Trump’s Protectionist Policies
The legal challenge against Trump’s tariffs is also tied to the interests of influential right-wing billionaires. Barre Said, a Chicago-based industrial magnate, is one of the key financial backers behind the legal efforts to oppose Trump’s trade policies.
Said, who has donated heavily to the Federalist Society, is concerned that the tariffs will disrupt existing supply chains and labor markets that have long benefited his business operations. This is not an isolated case; many conservative billionaires who have traditionally supported Trump are now finding their financial interests at odds with his protectionist trade agenda.
The involvement of billionaires like Said in opposing the tariffs underscores the complex relationship between moneyed interests and political power in the modern Republican Party. These billionaires are deeply invested in the global economy and fear that Trump’s policies could disrupt the supply chains and markets that generate profits.
Their opposition to the tariffs also reflects the broader political rift within the GOP, where financial elites are increasingly at odds with the populist base that has rallied around Trump’s economic nationalism.
As Trump’s trade policies continue to spark controversy, members of Congress—both Republicans and Democrats—are beginning to push back. The Senate recently approved a measure aimed at reversing Trump’s tariffs on Canada, signaling a growing discontent within the GOP ranks.
Furthermore, Republican Senator Chuck Grassley has teamed up with Democratic Senator Maria Cantwell to introduce legislation that would require congressional approval for any new tariffs within 60 days. This move represents an effort to rein in executive power and restore some degree of congressional oversight over trade policy.
Trump, however, has vowed to veto any such legislation, signaling his determination to maintain control over tariff decisions. While it remains uncertain whether these legislative efforts will succeed, they reflect a broader dissatisfaction with Trump’s handling of trade policy and the growing realization that his tariff strategy may be more harmful than beneficial in the long term.
The ongoing tariff battles are exposing deep cracks in the Republican coalition, which has historically been built on a shared commitment to free-market principles and limited government intervention.
Trump’s protectionist policies are challenging the foundational assumptions of the GOP, and his unpredictable economic moves are causing increasing strain between the party’s financial backers and its populist base. These fissures will likely continue to grow, and it remains unclear whether the GOP will be able to reconcile its differences or whether Trump’s policies will cause long-term damage to the party’s political and economic future.