President Trump appeared to moderate his position on tariffs and the Federal Reserve this week following intense pressure from corporate leaders and volatile financial markets. The shift came after a period of escalating threats that rattled investors and raised concerns about the economic outlook.
On Monday, top executives from the nation’s largest retailers, including Walmart, Target, and Home Depot, reportedly met privately with the president. Sources familiar with the discussion indicated they warned Trump that his trade policies, particularly the proposed high tariffs on imports, could disrupt supply chains.
These retail leaders conveyed that while prices might be steady now, they would likely rise significantly. More starkly, they warned the president that store shelves could become noticeably empty in as little as two weeks if the policies were implemented as threatened.
Simultaneously, financial markets reacted negatively to Trump's tough talk. Stocks slumped, bond prices declined, and the dollar weakened amid investor panic over potential high tariffs on China and speculation about the independence of the Federal Reserve, including reports the White House was studying the option of removing Fed chair Jerome Powell.
Following Monday's turbulence, the administration began signaling a change in posture on Tuesday. The Treasury secretary and White House press secretary indicated trade talks with China were imminent and on a positive path, suggesting a future deal might involve significantly lower tariffs than previously threatened.
President Trump himself later stated that he had "no intention" of firing Powell. This marked a notable retreat from earlier rhetoric and appeared aimed at calming market anxieties regarding the central bank's autonomy.
White House officials have pushed back on the idea that the president softened his stance due to pressure. One senior official suggested Trump was simply demonstrating readiness to make a deal and was "optimistic we can move forward," characterizing the approach as leading with leverage to bring parties to the negotiating table.
The recent developments highlight how market reactions and appeals from powerful corporate interests continue to serve as constraints on some of the administration's more aggressive economic proposals. This aligns with past instances where market signals seemed to influence policy direction, demonstrating that financial reality remains a factor in policy considerations.
The president himself acknowledged the market impact in the past, admitting he paused tariff increases when "people were getting a little queasy" about the bond market, a factor among others like pressure from CEOs, friends, and GOP senators.
