President Donald Trump radically softened some of his most severe rhetoric after CEOs of the nation’s biggest retail chains warned him of looming price rises and empty shelves.
The CEOs of Walmart, Target, and Home Depot met privately with Trump on Monday and told him that although prices were steady at that moment, his trade policies could have devastating effects within just two weeks with supply chains disrupted, Axios reported.
“This wasn’t about food. But he was told that shelves will be empty,” a source told the outlet.
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The president was also reportedly spooked by investors’ reaction to his threats to fire Fed Chair Jerome Powell. Stocks, bonds, and the dollar all slumped this week—until Trump abruptly toned down his statements.
He told reporters on Tuesday he didn’t plan to play hardball with China, and that he was confident the two countries could strike a deal that would bring the tariffs well below their current levels.
“145 percent is very high and it won’t be that high,” he said, according to CNN. “It won’t be anywhere near that high. It will come down substantially, but it won’t be zero.”
Earlier in the day, Treasury Secretary Scott Bessent had told investors at a closed-door event hosted by JPMorgan Chase that the president’s trade war was unsustainable and he expected it to de-escalate.
In response, the markets rallied after a major sell-off Monday, with the Dow gaining 1,017 points and closing up 2.66 percent. The S&P 500 rose 2.51 percent, while the tech-heavy Nasdaq gained 2.71 percent.
Trump also told reporters on Tuesday he had “no intention” of firing Powell—less than a week after writing on social media, “Powell’s termination can’t come fast enough!”
The president’s top economist, Kevin Hassett, had also confirmed that Trump and his team were studying how to take the unprecedented step of removing the Fed chair.
But the president’s advisors reportedly warned him that getting rid of Powell could cause as much market turmoil as his trade war, according to CNN.
That news was also cheered on Wall Street, where Dow futures shot up 750 points, or 1.9 percent, on Wednesday morning. S&P 500 futures went up 2.6 percent, and Nasdaq futures rose 3 percent.
U.S. Treasury bond sales were also up.
The changes reportedly come as Bessent has been able to exert a stronger influence on Trump. Bessent had warned for months that firing Powell could lead to a prolonged legal battle, according to CNN.
He has also pushed Trump to adopt more targeted tariffs, whereas Commerce Secretary Howard Lutnick has encouraged the president to aggressively impose universal duties.
When other advisers aren’t around, Bessent rushes the Oval Office to lobby Trump to take a more market-friendly approach, according to Axios.
This week, the International Monetary Fund warned that Trump’s economic policies had caused a “major negative shock” to growth in the global financial system.
The president announced a “Liberation Day” on April 2 as he unveiled universal 10 percent tariffs against all products entering the U.S. from other countries. Additional tariffs were added for products from countries that have trade deficits with the U.S.
The duties are an import tax paid by American companies, with the added costs typically passed on to consumers. Other countries have vowed to retaliate against the measures, including China, which hit all U.S. products with its own 125 percent tariffs.
The trade wars have sent global stock markets tumbling—wiping out trillions of dollars in value—and even shaken the usually stable U.S. bond markets.
Some financial authorities are consequently fearful that the U.S. is heading toward recession. Trump was reportedly unfazed by the prospect of a recession but privately expressed concern that his tariffs could lead to a more severe depression before he agreed to halt levies on dozens of countries for 90 days.
The duties on Chinese products, however, remain in effect.
