U.S. President Donald Trump has privately acknowledged that the comprehensive tariff proposal he announced last week could push the U.S. economy into recession, according to The Wall Street Journal. However, he stated that his intention is to avoid causing a widespread recession.
Citing informed sources, the newspaper reported that Trump told advisors he was prepared to accept the "pain" to the economy that the tariff strategy might cause, although increasing pressure on the bond market had forced a partial reversal of this policy.
This plan, which includes significant tariffs aimed at protecting U.S. industries, has raised concerns among economists that disruptions to global trade could slow economic growth. While a recession is increasingly seen as a possibility, experts did not foresee the more severe consequences of a downturn, which historically include prolonged economic recessions and rising unemployment.
The United States has not experienced a recession since the Great Depression of the 1930s, when the unemployment rate reached 25%. Economists say that stronger fiscal tools, monetary policy, and federal protective measures such as FDIC deposit insurance have helped prevent such extreme conditions in modern times.
The financial market reacts quickly to policy shocks. Bond yields rise while stocks fall, causing concern for investors. The yield on the 10-year Treasury bond rose slightly above 4.5% due to speculation that major bondholders such as Japan and China are dumping U.S. bonds. As yields rise, bond prices fall.
Trump finally lifted tariffs on some countries on Wednesday, helping the market to recover. The S&P 500 recorded its strongest one-day increase since 2008.
National Economic Council Director Kevin Hassett told CNBC that the chaos in the bond market has added to the urgency of Trump's move. "There is no doubt that what happened in the bond market yesterday has likely added a bit of urgency to this decision," Hassett said.
In a comment after retracting his position, Trump stated that the market has reacted excessively: "I think people have lost control a bit," he said, adding: "They are a little excited, they are a little scared."
Another factor in the change, according to the WSJ, is the increasing influence of Treasury Secretary Scott Bessent in trade negotiations. Sources say the growing number of countries negotiating with the United States also contributes to Trump's openness to changing his approach.
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Insiders reveal the secret behind why Donald Trump suddenly decided to raise tariffs.
U.S. President Donald Trump has privately acknowledged that the comprehensive tariff proposal he announced last week could push the U.S. economy into recession, according to The Wall Street Journal. However, he stated that his intention is to avoid causing a widespread recession. Citing informed sources, the newspaper reported that Trump told advisors he was prepared to accept the "pain" to the economy that the tariff strategy might cause, although increasing pressure on the bond market had forced a partial reversal of this policy. This plan, which includes significant tariffs aimed at protecting U.S. industries, has raised concerns among economists that disruptions to global trade could slow economic growth. While a recession is increasingly seen as a possibility, experts did not foresee the more severe consequences of a downturn, which historically include prolonged economic recessions and rising unemployment. The United States has not experienced a recession since the Great Depression of the 1930s, when the unemployment rate reached 25%. Economists say that stronger fiscal tools, monetary policy, and federal protective measures such as FDIC deposit insurance have helped prevent such extreme conditions in modern times. The financial market reacts quickly to policy shocks. Bond yields rise while stocks fall, causing concern for investors. The yield on the 10-year Treasury bond rose slightly above 4.5% due to speculation that major bondholders such as Japan and China are dumping U.S. bonds. As yields rise, bond prices fall. Trump finally lifted tariffs on some countries on Wednesday, helping the market to recover. The S&P 500 recorded its strongest one-day increase since 2008. National Economic Council Director Kevin Hassett told CNBC that the chaos in the bond market has added to the urgency of Trump's move. "There is no doubt that what happened in the bond market yesterday has likely added a bit of urgency to this decision," Hassett said. In a comment after retracting his position, Trump stated that the market has reacted excessively: "I think people have lost control a bit," he said, adding: "They are a little excited, they are a little scared." Another factor in the change, according to the WSJ, is the increasing influence of Treasury Secretary Scott Bessent in trade negotiations. Sources say the growing number of countries negotiating with the United States also contributes to Trump's openness to changing his approach.