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TaxAct knows you probably don't need help filing taxes. But if you get stuck, we have live experts you can talk to. And who knows, you could hit it off and become long-term tax friends. Staying up late at night, talking about deductions, refunds, personal exemptions. Heck, you could even fall in love and create a little dependent of your own one day. Or they could just answer your filing questions.
Tax Act. Let's get them over with. So you guys might or might not have seen, but there was a surprise guest in the Ophel office on Wednesday. It was Michigan Governor Gretchen Whitmer, who you might know as a Democrat. The appearance did not turn out so well for her. It turned out she was standing there as Trump was not only talking about rigged elections, but was also signing executive orders that were targeting his political opponents.
Guys, I wondered, have you seen the photo of Whitmer standing in the Oval Office looking, I think it's fair to say, not terribly comfortable? I can. It looks like she's regretting some life choices. That's exactly the way I thought about it. It kind of reminds me of that meme of Homer Simpson shrinking into the shrubs. Into the hedge, yeah. That is the...
real-life version of that. I should emphasize that a spokesperson for Whitmer said that she was, quote, surprised that she was brought into the Oval Office during the press conference and that, quote, her presence is not an endorsement of the actions or statements made at the event. From the newsroom of The Washington Post, this is Post Reports. I'm Aaron Blake, senior politics reporter and host of the Post Reports Weekly Politics Roundtable. It's Thursday, April 10th.
I'm joined this week by global economics correspondent David Lynch. Hey, David. Hi, Aaron. We're also here with Kat Zekreski, a White House reporter for The Post who focuses on a very relevant issue this week, which is how tech billionaires are shaping the second Trump administration. Hey, Kat. Hey, thanks for having me on the show. Thank you.
So today we're going to be digging into the major story this week, which is, of course, the tariffs. They're on, they're paused, they're making the markets go wild, and we don't really know what happens from here.
Later in the show, we're also going to be talking about a key ruling from the U.S. Supreme Court and early signs of just how willing it is to check Donald Trump's power grabs. So guys, let's start with the big news Wednesday, and that was that Donald Trump suddenly, early Wednesday afternoon, decided to water down the big tariffs that he announced just a week before.
David, can you just set the parameters here? What did Trump initially announce and what was the new announcement on Wednesday? Sure. So a week ago on April 2nd, he announced a surprisingly large package of tariffs that took the markets by surprise. He had been telegraphing for some time that this was coming, but the expectation was that it would not be as massive as it turned out to be. And he came out with sort of a two-part plan
plan. Number one was a 10% across-the-board tariff on just about everything that we import, which is about $3.3 trillion worth of stuff every year, which by itself, I should say, would be a massive increase in U.S. tariffs. Our average tariff rate before the announcement was something like 2.5%. But then he unveiled what he called a
a separate set of reciprocal tariffs on dozens of individual countries. Now, we should pause to note these were not by any means reciprocal in the common English language understanding of what that word means, but that was his marketing pitch.
And for some countries, these levies went up to 40 and 50 percent, which for small countries like Vietnam, Cambodia, some countries in Central Africa, would be absolutely punitive and punishing.
The president's argument was that this was in response to both tariff and non-tariff barriers, regulatory stuff, product safety requirements, subsidies for manufacturers, that in his view meant that other countries have been taking advantage of us, getting their way with the richest country on the planet, and he wanted to put a stop to that.
So, that was the big announcement a week ago. And then yesterday after markets were going haywire, particularly the bond market, after the big ultra-high tariffs took effect, after about 15 hours of that, he suddenly walked it back and said, "We'll put this on pause for 90 days, but the 10% tariff on everything, that does take effect." So, we're kind of in this purgatory, I suppose, for the next 90 days.
Yeah. And that's the point that I've seen from a lot of people after this. Like it is a retreat to some extent from the tariffs that Trump initially announced. But again,
the ones that remain are very significant, right? Like if he had announced these tariffs in the first place, if he was going to tariff virtually all the world's countries at 10%, if he was going to tariff Chinese goods more than 100%, which is where we're at right now, like these are still very significant tariffs that would have been big at that point, right? Absolutely. And I hadn't mentioned the China part, which of course by itself is of incredible importance. It's impossible to overstate the importance of what he's doing vis-a-vis China.
Because of how much we import from China. Correct, correct. We import over $400 billion worth of stuff every year from China. Relations have been fraying for some time now, but this is really bringing down the hammer in a way that suggests one of two outcomes. Either we're just not going to trade with China at all,
which is difficult to imagine, or he's got a very difficult negotiation ahead of him to try and find some middle ground with the Chinese.
Which is not going to be easy to do because Chinese President Xi Jinping, because of his own domestic politics, cannot be seen to be caving to the American president. And there's almost no trust left in the bilateral relationship between US and China. So it's one thing to get the sort of deals that the president is seeking over the next 90 days with China.
some of our major allies, Japan, South Korea, the European Union. Those talks can be difficult, but you can certainly see a road to a deal. But the Chinese negotiation, particularly telescoped into a small period of time, is very high stakes and no guarantee of a successful outcome.
Yeah, we're going to get into what happens next a little bit later. But Kat, right now, I wanted to talk about the politics of this a little bit more. David mentioned the big shifts in the market, the fact that the S&P index was down almost 20%, which usually signals a bear market. There were a lot of concerns about a recession creeping in. There was the bond market signs, which were increasingly bad over the weekend. Can you just tell us, Kat, like,
Is there a sense that Donald Trump backed down in the face of all that? Is it as simple as that or how should we read this? So I think Trump himself yesterday acknowledged that he was responding to the fact that people were, as he said, jumping out of line and getting a little bit yippy were the terms he used. People were jumping a little bit out of line. They were getting yippy, you know, getting a little bit yippy, a little bit.
It's clear he was responding to some of the panic. My colleagues and I have reported that, you know, in 18 hours leading up to this decision, he was talking to Republicans in the Senate who were warning about the political risks of creating a recession. He was watching Fox News where Jamie Dimon was on the air saying,
saying that he thought that there was a growing risk. The CEO of JPMorgan Chase. Exactly, who was really viewed as a bellwether for the mood on Wall Street. He was talking about the risk of a recession. But how significant would you expect that? Do you personally expect a recession? I am going to defer to my economists at this point, but I think probably that's a likely outcome.
We know that he was at the White House yesterday with investor Charles Schwab. So he was increasingly around people in the business community who were worried about this. Also, up to this point, Republicans on the Hill have really been in lockstep with the president and his agenda. And tariffs were really one of the first issues where we started to see that fray a little bit. And it's clear that had a bit of an impact on his actions over the last 24 hours.
And you could see some of that political blowback the other day when Jameson Greer, who's the president's chief trade negotiator, was in front of the Senate Finance Committee. And it was one thing to get the sort of expected blowback from Democrats who weren't wild about what the administration was doing, but half a dozen Republican senators, including, you know, quite prominent figures like Tom Tillis from North Carolina, Steve Daines from Montana. I share the president's determination.
to end these unfair trade practices, whether they are tariffs or non-tariff barriers. I hope we can avoid an all-out trade war. A trade war will mean higher prices for the American consumer because I think we could do a little FOD exercise at the moment. Who pays these high tariffs?
In the short, medium term, it will be the consumer. It'll be the consumer. We're couching their questions in a sort of, you know, of course we support the president. He's a great dealmaker. We look forward to seeing great deals. But, you know, we're worried about our companies back home that are getting crushed or could be getting crushed by these tariffs and may not have the same sort of runway that the president has to get to deals with.
In addition to that, there was another possible pressure point here, which you've written about, David, which is the bond market. Can you just describe the bond market aspect of this for the lay people who are listening? What is it like?
Why was that so troubling for this tariffs gambit and why might it have pushed the administration into more of a retreat? Yeah, it's been really interesting watching Trump's reaction to the financial markets because in his first term, he regarded the stock market as really a report card, a running report card on his performance. He was happy to brag about it on a weekly basis.
This time around, he has explicitly said, "You know what? Wall Street's gonna be fine. I'm not paying that much attention to the stock market. We're worried about Main Street, not Wall Street." But the bond market is different. The bond market is sort of this quiet financial enterprise that the average person pays almost no attention to, but it's really the foundation of the entire financial system, particularly treasury securities, government debt.
These are regarded as risk-free because, you know, if you lend money to the federal government, you're going to get your money back. If you buy a 10-year treasury bond, you're going to get your money back plus a little bit of return. And you don't have to worry about it, unlike a stock where you buy a share of a stock and maybe that company goes bankrupt and you lose everything. So every other asset is priced against the treasury. If you earn a return of, you know, 4% on treasuries, well, then a riskier asset like a stock should pay you 5% or 6% or 7%.
And so that is absolutely fundamental to valuing everything that we trade and own in financial markets around the world. Everybody prices things off the treasury. And so it doesn't – the price of it doesn't really change all that much all that quickly.
Well, all of a sudden in the hours late Tuesday running up to the deadline for the imposition of these tariffs, the bond market started going haywire in a way that was just not normal. Prices started moving very quickly and what it means in practical terms is the yield or the rate on those bonds started shooting up. Now, why should the average person care about that? Because mortgages, car loans, all sorts of consumer credit is priced off that 10-year treasury.
And when those kind of episodes happen, it's never good news. It's a financial crisis or it's on the precipice of a financial crisis. And if that market, the treasury market, $28 trillion worth of treasuries going back and forth all over the globe, if that seizes up, then banks can't operate, companies can't operate, and you have a real problem. Now, again, we weren't there, but we could see that from where we were standing.
Interesting. Kat, we saw shortly after this announcement, early Wednesday afternoon, Treasury Secretary Scott Besson, White House Press Secretary Caroline Leavitt coming out and basically arguing that this was the plan all along. I could just
- Add to what the secretary said. Many of you in the media clearly missed the art of the deal. You clearly failed to see what President Trump is doing here. - And then a couple hours later, I think it was, Trump comes out and basically says, "Yeah, I was reacting to the markets. I was, you know, looking at the bond markets yesterday." - 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 beautiful.
But yeah, I saw last night where people were getting a little queasy. But those were not the first mixed messages we got on this whole thing over the course of the last week. There was, I think, most notably...
very mixed messages on whether this was something that the White House was willing to negotiate with other countries about, you know, like, are these tariffs in place for the foreseeable future, which is what the likes of trade advisor Peter Navarro and Commerce Secretary Howard Lutnick argued. I don't think there's any chance that President Trump's going to back off his tariffs. This is the reordering of global trade.
But then we had Trump coming out and saying, yeah, I'm talking to other countries and they're all coming to me and we're, you know, having these negotiations and this is a great negotiating tool. Like how mixed was the messaging here and what impact did that have on how this played out?
Well, the messaging was very conflicted and it added to a lot of the uncertainty for investors over the last week. And it really wasn't until early this week where you saw Trump and his advisers really coalesce more around the message that
hey, we're open to negotiations. 70 countries want to come to the table and talk to us. We have so many people wanting to talk, we can't even set up times with all of them. And so that was really a shift that we saw in the lead up to the pause. And to me, that really seemed like one of the first times you saw Trump and his top advisors responding to the market a bit more in all of this, because they saw that when they talked about
And David, I wanted to dig in a little bit more on that with you because
I think it's no secret that mixed messages are not foreign to this White House. That was certainly the case in the first Trump administration where Trump was, you know, constantly undermining the claims of the people around him. And there didn't seem to be a whole lot of messaging discipline there.
from the White House. And I think they're in a situation like this, as Kat notes, there's a benefit to saying, yeah, we can negotiate because that can soothe the markets. But like, doesn't that kind of undercut the whole tariff exercise in the first place? Like if you're trying to get companies to invest in domestic manufacturing, which is the supposed benefit of these tariffs,
Those companies aren't going to be making those decisions if they believe these things are just going to be going away, right? No, that's entirely correct. And that's been a problem with the administration and the president's messaging on the trade war from the get-go because there are conflicting messages and conflicting objectives. The president's talked about the tariffs.
as a way to raise a lot of money, to offset planned tax cuts, also as a way to encourage people to stop buying foreign products because the tariffs make them more expensive, and buy domestic products and have manufacturers come home. Well, you can't do both, or you can't do both fully, because to get all that revenue, you need people to keep buying the foreign products because that's how they pay the tariffs.
If they stop buying the foreign products because the tariffs have made them too expensive, you might get more domestic production, but you're not going to get the revenue. So if you're a company and you're trying to figure out, you know, can I keep importing my product from China or Mexico or anywhere else, the president's made it very confusing because he's telling you rhetorically, hey, you've got to come back here. You've got to produce here.
But are those tariffs going to be in place six months from now? Are they going to be in place after President Trump leaves the White House? It's entirely possible that the next president could be a Democrat who could unwind some or all of those tariffs. So making the calculations you need to make to justify what in some cases can be a multibillion-dollar investment at the moment is just almost impossible.
And Kat, one more thing I wanted to get into. We've talked about the Republican resistance to this. And I think one question that we ask a lot on the show is like, where are the guardrails and how you know, what are the things that are going to check Trump because he seems to be trying to well, he is taking a lot of actions that are intended to increase his power. And we've seen
congressional Republicans, especially not really signaling much of a willingness to stand in his way on a lot of these things. And I think tariffs are a big one because, you know, tariffs are a power that is constitutionally given to Congress. This is something that they could take the power back if they want to. And there's been some talk about that even among some Republicans. David talked about the hearing with the trade representative Jamison Greer this week.
where Republicans were pretty skeptical of this exercise. Is there a sense that this had an impact, that congressional Republicans, with their kind of gentle suggestions that maybe we should negotiate these tariffs away, is there a sense that that had an impact here? And what does that say about their willingness to check Trump? Certainly, it seems that the conversations that Trump was having with Republican members of Congress in the lead up to yesterday had an impact on some of his actions
decision making here. I think, you know, there's still a question of in this Congress, whether you'd be able to reach a veto proof majority to actually challenge some of the actions that the president is taking. But, you know, I think you need two thirds of both chambers to override a veto. So it's not just a matter of things passing by majority. Exactly. But, you know, I think we saw the Republicans in Congress
My colleagues and I wrote a little bit too about some of the conservative influencers who up to this point have kind of been cheerleaders for the president's policy goals. We saw Ben Shapiro, the conservative podcaster who runs The Daily Wire, criticize the tariffs. You saw Bill Ackman, a hedge fund investor who endorsed Trump in July, come out and talk about how this is really a nuclear option.
And we saw David Portnoy, the founder of Barstool Sports, who was a Trump supporter during the election, come out and criticize the tariffs after he said he lost a lot of money over the last week. And so I think all of those things combined put a bit of pressure on Trump. And, you know, it just raises the question of what resistance will look like moving forward in this administration. It's certainly been a shift recently.
from the first administration where there were advisors and members of his own cabinet who really aggressively opposed some of the actions he wanted to take on tariffs that time around. We didn't see that in the lead up to the so-called Liberation Day announcement, but given the fallout of this, you have to wonder if that will shift moving forward. And Kat, one person who we somehow haven't mentioned yet who was
seemingly critical of this idea was somebody who you spend a lot of your time following, which is, of course, is Elon Musk. Of course, he is a White House advisor, and he was posting a lot of criticisms of Peter Navarro, the trade advisor, who's kind of the architect of some of these tariff policies. Can you just speak a little bit about what that was and what impact that might have had?
Of course. So our colleagues have actually reported that Elon Musk went directly to President Trump over the weekend to raise some of his concerns about the tariffs. I mean, when you think about Elon Musk and his business empire, which includes
Tesla, he has companies that are going to very much be impacted by this tariff regime. And he also is very close to a lot of people in the tech industry and broader business world who are extremely worried about these tariffs. And so he really, on social media over the last few days, was attacking Navarro in a way that was really stunning to see two people
advisors of the president publicly spar in this forum. And he's calling Peter Navarro like a moron and stuff like that. Exactly. It wasn't like couched as like, oh, I don't know about this idea. It was like, no, the guy behind this is a moron and dumber than a bag of bricks. I think dumber than a bag of bricks. Yes, exactly. And I think we we
see, too, that world leaders and business leaders don't know who to talk to in this administration is one thing that I keep hearing from diplomats and lobbyists. You know, because there's this infighting and different positions and the pecking order constantly changes in terms of who has Trump's ear. There's this real question of if you're a Fortune 100 CEO or an ambassador, if you tell
Howard Letnick something? Is that going to reach the president? Is it going to make any impact? Well, I'm glad you guys brought this up because that's what I wanted to get into a little bit more after the break. We're going to talk about what comes next in this tariff saga, which is very much not over. And we'll also get into some big Supreme Court decisions this week. We'll be right back. My name is Michelle Singletary, and I'm the personal finance columnist for The Washington Post.
When I was growing up, I was raised by my grandmother, who was such a masterful money manager. And I watched her handle her money and talk to me about it. And I like to think that I'm the reader's big mama. There's so much information about your money out there. A lot of it wrong or inappropriate. But when you pay for a subscription to The Post, you're paying for a skilled journalist who has had years of experience, who
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TaxAct knows you probably don't need help filing taxes. But if you get stuck, we have live experts you can talk to. And who knows, you could hit it off and become long-term tax friends. Staying up late at night, talking about deductions, refunds, personal exemptions. Heck, you could even fall in love and create a little dependent of your own one day. Or they could just answer your filing questions.
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So, guys, as I've been saying repeatedly, and I don't think we can emphasize enough, this is not a story that is over. The tariffs are smaller than they were initially announced, but they're still relatively large compared to where we are historically speaking. I think these are
Now, still the largest tariffs that we've seen since the Great Depression is what I've seen. Correct me if I'm wrong about that, David. No, that's right. Even before the Great Depression, back to, I think, 1909. Yeah, I mean, that's pretty incredible. Like, this is a little bit closer to what Trump was talking about on the campaign trail, where he talked about 10% tariffs on other countries. Of course, the China tariff is over 100%. That's a big lingering issue there.
The White House claims that this was a negotiating ploy and that it was fruitful and that all these countries are coming to us and trying to cut deals, you know, that would seemingly be favorable to to us. But what what have we seen concrete on that front? Like they backed away from this tariff gambit. Do we have anything that they can actually point to that says we got a better deal with X, Y, Z country? And what's the outlook for actually cutting those deals right now?
Yeah, I think from the president's perspective, tariffs are the Swiss army knife of economic policymaking. Going forward, what he calls the reciprocal tariffs were so high, they certainly seemed like a negotiating tool from the start. It was hard to imagine having 46% tariffs on Vietnam forever. But I have to say, trying to negotiate what Scott Best and the Treasury Secretary has called bespoke tariffs
trade deals with 50 or 60 countries over the next 90 days,
is going to be quite a heavy lift. So I don't know whether we'll see a handful of deals done with major players like Japan, South Korea, and others, or just how this will play out. But, you know, I think the U.S. trade rep, Jameson Greer, the treasurer, Secretary Besson, Howard Lutnick of Commerce, they're going to be working seven-day weeks between now and July 4th.
Guys, before we go today, I wanted to touch on something that I also think is a major story this week, and it has to do with the Supreme Court. You know, we've been talking on this show about the guardrails that exist that will prevent Donald Trump from doing things. I think we saw the stock market and maybe some of the people around him prevailed upon him to some extent with respect to these tariffs. But we also saw this week a pretty significant ruling from the Supreme Court.
This deals with Trump's attempt to quickly deport people without due process under what's known as the Alien Enemies Act. This is the 1798 law that basically allows you to do that during a wartime or if the country is being invaded, which the administration claimed we are under invasion by gang members from Venezuela, basically Trendy, Aragua.
The Supreme Court weighed in. They sided with the administration on a procedural matter. But, Kat, they also said basically that these people are entitled to due process, right? Can you talk a little bit about what I think is a little bit of a split decision here?
Yes, I think there's some question of what this will mean moving forward as President Trump really tries to move with a very aggressive immigration regime. And certainly this situation has really encapsulated a lot of the questions around the legality of the moves that he and his
cabinet members are making. And just in general, too, I think when you talk about the Supreme Court and the guardrails here with this president, we consistently see them push for
the legal boundaries and try to get cases like this before the court in order to get precedents that might be favorable. And so I think, as you mentioned, they walked away with a bit of a mixed bag here where, you know, the court upheld this, but it does raise the question of whether they'd be able to do this again, given what the court said about due process.
Yeah. And the administration pretty instantly celebrated this as a win. The Supreme Court basically said the way that these claims were brought by people who were being deported was not in the right jurisdiction and they had to bring it. And this is getting complicated, but they had to bring habeas corpus proceedings instead of administrative procedure act proceedings. Basically, the law that they were using was not the right one and they need to pursue these things in different ways.
But that's the key point here, which is that the Supreme Court, and it appears from the opinion that they're saying that there needs to be some due process here. And the administration was using this law because it wanted to avoid due process. So like...
Isn't this at least something of a setback on that front? I think it could be. I mean, the big question that we're watching is how the administration responds to a ruling like this. One of the big questions throughout this process was just how responsive they were to the federal judge. And I think a mixed ruling like this, that they're painting as a victory, really raises the question of how...
How much will they stick to what the court said in this decision and how much will they try to find other loopholes or workarounds? Yeah, and I should say that after this ruling from the Supreme Court, later in the week, we saw a federal judge in Texas, actually a Trump appointee, say that the Supreme Court ruling meant that the administration had to pause the deportations that were taking place in that district because it required more due process. So we're
We're seeing some early signs that this has at least hamstrung the administration a little bit when it comes to those deportations. Certainly a story that we're going to keep watching and talking about on this show. But that's all the time we have for today. Thank you so much for joining me, Dave and Kat. Glad to be here. Thank you. David Lynch is a global economics correspondent for The Post, and Kat Zekreski covers the White House.
A quick postscript on our show. After my conversation with David and Kat, the stock market started dropping again, moving down more than 1,000 points by the end of the day. That signals there are still fears about the significant tariffs that do remain in place and others that the Trump administration has talked about implementing. Several prominent tech companies with extensive business related to China saw their stocks drop. Tesla tumbled more than 10%, and Amazon and Apple lost 7%.
And for listeners who are curious about how Republicans in Congress are reacting to the president's chaotic tariff strategy, stay tuned for tomorrow's episode of Post Reports.
My colleague Colby Ikowitz sits down with Congressman Jeff Hurd from Colorado. He's the Republican in the House leading efforts to actually take tariff powers away from the president. Just as a new member of Congress, one of the things I did was make sure I reread the Constitution before I took my oath of office. And I remember that Article 1, Section 8 specifically says that Congress has authority with respect to tariffs. That interview with Congressman Hurd airs on Friday.
Today's episode was produced by Renny Svarnovsky with help from Ted Muldoon and Laura Benshoff. It was mixed by Sean Carter and edited by Rena Flores, Lucy Perkins, and Anna Ashbrenner. I'm Aaron Blake. We'll be back tomorrow with more stories from The Washington Post. Auto insurance can all seem the same until it comes time to use it. So don't get stuck paying more for less coverage. Switch to USA Auto Insurance and you could start saving money in no time. Get a quote today. Restrictions apply. USA!