When President Donald Trump declared in the House Chamber this week that executives at the nation’s top automakers were “so excited” about their prospects amid his new tariff regime, it did not entirely reflect the conversation he’d held with them earlier that day. Ford Motors, GM and Stellantis argued on that call that the new 25% tariffs the president applied on Canada and Mexico earlier this week could disadvantage their American-based businesses in favor of foreign carmakers — appealing directly to Trump for a reprieve, administration officials said. The message seemed to break through. A day later, after the automakers talked to Trump again, the White House announced a one-month exemption from the tariffs for autos coming into the United States. “The president is happy to do it,” White House press secretary Karoline Leavitt said Wednesday, announcing the change. For as often as Trump talks about tariffs, he is often talked out of imposing them – especially if the pressure is coming from titans of industry or the market, a barometer that Trump carefully follows. And as he works to realign global trade using his favorite tool, the president has made clear the threat of tariffs is as much a motivator as the actual thing. “The president is open to hearing about additional exemptions,” Leavitt said. “He always has open dialogue and he’ll always do what’s right, what he believes is right for the American people.” While Trump was willing to give the automakers a month before applying the new tariffs, he offered no such concessions to Canada’s Prime Minister Justin Trudeau. Instead, he said he told Trudeau on a Wednesday telephone call that he hadn’t done enough to curb fentanyl crossing the border — despite the minuscule amount that arrives in the US from its northern neighbor. Trump suggested after the call — which he said “ended in a ‘somewhat’ friendly manner” — that the outgoing Trudeau could be using the tariff issue to “stay in power.” As his long-promised tariff threat on Canada and Mexico turned into reality this week, top White House advisers began fielding a wave of calls from business leaders, particularly in the automotive sector, along with GOP lawmakers who were sounding the alarm. White House and administration officials offered little specific guidance on those calls for how they would proceed with the tariffs but did convey they understood the concerns, people familiar with the conversations said. Trump, who spent Tuesday mostly behind closed doors preparing for his prime-time speech, spoke to the top auto executives to hear out their concerns. Earlier in the day, a top auto lobby group warned vehicle prices could jump as much as 25%, with the impacts being felt “almost immediately.” At the same time, Trump – who has long fixated on how his policies perform in the markets – and his team were paying close attention to the stock market on Tuesday, watching as it fell on the implementation of the tariffs, a source familiar with the discussions told CNN. Many people close to Trump believe the markets will ultimately stabilize, two sources familiar with the discussions said, though the tumble was a jolt inside the West Wing. Leavitt on Wednesday downplayed the role that a sweeping decline in the stock market played into the president’s decision to offer a one-month reprieve for auto companies. “I think for folks on Wall Street who may be concerned, look at what this president did for you in his first term,” Leavitt told reporters. “Wall Street boomed. Stock market boomed. The president expects that to happen again.” Some officials this week also began to voice concerns internally at how the tariffs would affect areas of the country close to the northern border such as Michigan, a state Trump flipped red in November and has the highest number of auto industry jobs in the US. “As pain begins to hit American cities, particularly those nearer to Canada, there are concerns that the fentanyl argument isn’t going to be strong enough” for Americans being impacted, a source familiar with the discussions told CNN, referring to Trump’s rationale for slapping the new tariffs on. Ten minutes after markets closed on Tuesday — the Dow Jones Industrial Average ended down 670 points, or 1.55% — Trump’s Commerce Secretary Howard Lutnick had taken to Fox Business to preview a potential reprieve. Indeed, it was Lutnick who appeared on the leading edge of the tariff relief, appearing on television at least two more times in the next 24 hours to suggest Trump was considering steps to ease off, at least temporarily. Yet speaking from the House Chamber on Tuesday evening, Trump did not sound like a man ready to back down. “If you don’t make your product in America under the Trump administration, you will pay a tariff and in some cases a rather large one,” he insisted. But the next day’s reprieve – to which markets showed early signs of a positive response – was the latest example of economic whiplash by the Trump administration over tariffs. It remained an open question whether the 36 hours of chaos was a case of mixed messaging or a White House simply scrambling to appease various constituencies. “We’ve had two days of uncertainty in the market and everybody’s hair is on fire,” Peter Navarro, senior counselor to the president on trade and manufacturing, told CNN on Wednesday. While the auto industry welcomed the monthlong relief, those whose livelihoods depend on a stable market said the uncertainty would still pose a steep challenge. “It’s certainly a relief, but long term the situation doesn’t change,” said David Kelleher, the owner of a Dodge, Chrysler, Jeep and RAM dealership in Glen Mills, Pennsylvania. “Long term, I think it would be great for the administration to work with these companies and figure out means to enhance our position in America,” he said on CNN. “We build a majority of our vehicles in the United States. We’re already building a majority in the United States. For a car dealer, this percentage would completely ruin my bottom line.”

Canada tries to navigate Trump’s tariffs

In Ottawa, officials worked to reconcile the various messages coming from Washington. For the past week, Trudeau had been trying to reach Trump by telephone without success, a repeat of his attempts when Trump first came into office to speak with his counterpart. By the time he emerged to angrily denounce Trump’s plan in a press conference on Tuesday, Trudeau seemed at a loss for what Canada could do to satisfy Trump. “We don’t want this,” he said. “We want to work with you as a friend and ally, and we don’t want to see you hurt either. But your government has chosen to do this to you.” Watching Trudeau’s press conference at the White House, officials took note when the Canadian leader referred to Trump as “Donald” instead of “president,” which they took as a show of disrespect (nevermind Trump has taken to calling Trudeau “governor” in a reference to his farfetched territorial ambitions). There is no warm sentiment in Trump’s White House for the outgoing prime minister, who has spent his final week in office contenting with the economic fallout of the tariffs. Trump’s advisers believe Trudeau’s likely Liberal Party successor Mark Carney could be a more “reasonable” partner, US Treasury Secretary Scott Bessent said this week. Still, no Canadian politician is going to embrace Trump’s tariff strategy. Even the leader of the Conservative Party, Pierre Poilievre, said Tuesday that Trump “stabbed America’s best friend in the back” with the new tariffs. Other leaders in Canada have also caught the attention of White House officials. Ontario’s premier Doug Ford vowed to cut electricity exports to the US “with a smile on my face” if Trump’s tariffs were enacted. But even as some of his traditional allies on Wall Street and Capitol Hill have urged Trump to abandon the notion of tariffs as a crucial negotiating tool, he and his advisers insist the strategy has been working and say they are proceeding full-steam ahead to enact reciprocal tariffs on April 2. “We’ve seen incredible movement on the part of the Mexican government, but we need to see more from Canada. We’re talking about additional border security,” Trump’s national security adviser Mike Waltz told CNN on Wednesday. “Their borders are cutting off fentanyl, but also things like Arctic security, northern bases and other pieces that we need to see as part of this tariff negotiation.”

In the waning days of 2024, as the world braced for the start of the second Trump presidency, there was a theory making the rounds that went like this: Sure, economists said his agenda could spell disaster but there’s at least one institution that would be able rein in Trump’s worst instincts — Wall Street! There was good reason to believe that Donald Trump was so afraid of stocks falling on his watch that he’d retreat from some of his more extreme policies. Like across-the-board tariffs, which would eat into profit margins and infuriate investors. Several analysts said as much to my colleague Matt Egan at the time. And more than a dozen people close to the president told the New York Times that he “sees the market as a barometer of his success and abhors the idea that his actions might drive down stock prices.” It was a nice idea — and, based on evidence from his first term, a probable one. It hasn’t held up so far. Stocks tumbled around the world Tuesday in response to Trump’s decision to go through with tariffs on America’s closest trading partners, Canada and Mexico, both of which immediately announced plans to retaliate with tariffs on US imports. The Dow ended the day down 670 points, or 1.5%. The Nasdaq fell 0.3% and the S&P 500 fell 1.2%. Yet Trump doubled down on tariffs during his joint address to Congress Tuesday, though he acknowledged that tariffs are unpopular and could cause some pain. In one of his more vulnerable moments during the speech, Trump pleaded for patience, asking farmers who could be hurt by retaliatory tariffs to “bear with me,” and said “there will be a little disturbance.” Still, there’s some suggestion that the market might have started to get to Trump: Commerce Secretary Howard Lutnick went on Fox Business Tuesday night to say that “both the Mexicans and the Canadians were on the phone with me all day” and that a deal to roll back some of the tariffs could come as soon as Wednesday.

The end of the ‘Trump put’

Wall Street was already on a tear when Trump clinched the election in November, but hopes for more deregulation and a potential dealmaking renaissance poured kerosene on that fire. Even as Trump’s tariff rhetoric intensified, investors largely shrugged, in some cases assuming he was bluffing — that tariff threats were just a negotiating tool. *Narrator voice:* They were not. The past few months have been the era of the “Trump put,” in Wall Street lingo. That’s the theory (or the hope) that the president would ultimately reverse course if his tariff gambits did what tariff gambits tend to do. If the S&P 500 dropped below its Election Day level, for instance, surely that would set off an alarm at the White House. Right? Not yet, anyway, my brothers in banking. The S&P 500, the broadest measure of the US stock market, has erased all of its gains since Trump’s re-election and is down nearly 4% since he took office. The index fell 2% on Monday, its worse day of the year, and continued its decline Tuesday down as Trump doled out tariffs that he has assured the public are just the beginning. The Dow has shed 1,300 points in two days, and it’s down nearly 2,000 points since its all-time high in the beginning of December. But the tech-heavy Nasdaq has really taken it on the chin, tumbling 7% since Trump’s inauguration. Tech stocks, which had been flying high over the last two years on investors’ dreams of an AI-powered future, are particularly sensitive to signs of a weakening economy. “This is a very dumb thing to do,” Canadian Prime Minister Justin Trudeau said Tuesday, echoing a Wall Street Journal editorial that reads: “Trump Takes the Dumbest Tariff Plunge.” As Bloomberg noted, strategists are now debating whether any market threshold exists that would push Trump to change course. And even if that level does exist, it’s not clear Trump could just snap his fingers and turn investor sentiment on a dime. “I think he tried to implement the Trump put in cryptos, and it didn’t have a huge lasting effect,” Sosnick said, referring to Trump’s announcement Sunday of a crypto reserve that sparked a short-lived rally in digital assets.

Cue the blame game

Back in November, as the market guardrail theory emerged, not everyone was convinced. Notably, Jeffrey Sonnenfeld, the founder and president of the Yale Chief Executive Leadership Institute, told CNN that Trump would take any negative feedback from the stock market as a chance to blame someone, or anyone, but himself. “He’ll blame Democrats, the drug companies, the tech companies — anybody,” Sonnenfeld said at the time. “It will never be his fault.” Sure enough, when a plane crashed in the Potomac shortly after Trump took office, it was, in his telling, DEI’s fault. Also his predecessors. And Democrats broadly. When a January inflation report showed consumer prices rising more than expected, it was “Biden’s inflation.” Treasury Secretary Scott Bessent further laid the groundwork for that narrative on Friday, telling Bloomberg in an interview that the economy becomes Trump’s responsibility only after he’s been in office six to 12 months. “That means the administration views everything that is occurring right now as cleaning up the Biden administration’s mess,” said Mike O’Rourke, chief market strategist for Jones Trading, in an email. “In essence, this is a political kitchen sink quarter.”