Trump’s day of tariff mayhem contains a scary lesson for his second term

CNN
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There is no plan.

America and the world just learned the scariest lesson about Donald Trump’s second term after a week of his capricious tariff war leadership.

The fate of the US economy, the jobs and retirement savings of millions of people, and global security are liable at any moment over the next four years to be thrown into turmoil by the volatile moods and untested obsessions of the 47th president.

This time it was a self-induced economic meltdown. The next time it could be a national security crisis.

Trump blinked on part of his tariff onslaught Wednesday — pausing reciprocal duties on dozens of nations and territories as the dire economic implications of his strategy began to accelerate.

But he typically atoned for his impetuousness with another escalatory act — hiking China’s tariff to 125%. While a surge of relief sent stock markets rocketing after days of losses, the showdown between the world’s two largest economic powerhouses could still tip the United States into recession.

There are several ways to interpret Wednesday’s day of chaos, contradictions and spin by a White House that conjured a new reality to portray an embarrassing walk-back by the president as an act of leadership genius.

You could take the official version of events at face value — and believe that a stampede of grateful foreign powers are now offering attractive “deals” that will help America at their own expense. If that happens, Trump will have reshaped global trade like no modern president and delivered meaningful change for voters.

Or, like Wall Street traders, you could take comfort that as the bottom threatened to fall out of the US economy on Wednesday, even Trump — who has removed all restraining influences from his second-term White House — stepped back in the knowledge that to persist in his course could trigger disaster.

But the truth may lie in the bond market.

US Treasuries are often referred to as the world’s safest investment since they are guaranteed by the world’s largest economy, the almighty dollar and American credit. But a sell-off of US government bonds over the last 48 hours raised alarms about the impact of Trump’s tariffs.

In a metaphorical sense, investors were selling the idea that the United States, long a bedrock of the global economy, was a rock of safety. Their ebbing confidence encapsulated how Trump’s volatile style has turned the United States from a bastion of the world’s stability to one of its most destabilizing influences.

Trump’s reversal was more shocking because his top aides had spent days — since his “Liberation Day” declaration of trade wars last week — insisting he’d never back down. Indeed, after stock markets spiked on Monday on rumors of a 90-day tariff pause, the White House branded the report “fake news.”

In a rollercoaster week since reciprocal tariffs were announced, retirees endured the agony of seeing their 401(k) plans drain. Some Americans were laid off as companies battened down against a possible recession. But as it turned out all this suffering needn’t have happened. Trump folded after his gambit failed.

Farcical scenes played out in Washington.

US Trade Representative Jamieson Greer was spending a second day testifying to Congress on what the Trump White House insisted was a trade “emergency” that needed unprecedented action. But he learned about his boss’ about-face during the hearing, in an episode that shattered his credibility in future trade talks.

Treasury Secretary Scott Bessent emerged from a meeting with Trump insisting that pausing tariffs was the plan all along. “It was the president’s decision to wait until today,” he said. “No one creates leverage for himself like President Trump.”

This crisis might suggest that Bessent — seen by Wall Street as a safe pair of hands — has prevailed over Trump’s more incendiary economic gurus, like trade adviser Peter Navarro.

But shortly after Bessent spoke, the president undermined his treasury secretary by making it clear he was improvising again.

“The bond market is very tricky. I was watching it. But if you look at it now, it’s beautiful. The bond market right now is…