Insiders Reveal the Secret Why Donald Trump Suddenly Decided on Increase Tariffs

US President Donald Trump has privately acknowledged that the sweeping tariff proposal he unveiled last week could send the US economy into recession, according to The Wall Street Journal. However, he said his intention was to avoid triggering a widespread depression.

Citing people familiar with the matter, the newspaper reported that Trump had told advisers he was prepared to accept the economic “pain” that the tariff strategy could cause, though mounting bond market pressure forced a partial reversal of the policy.

The plan, which includes significant tariffs aimed at protecting U.S. industries, has raised fears among economists that disruptions to global trade could slow economic growth. While a recession is increasingly seen as a possibility, experts have not foreseen the more serious consequences of a depression, which historically includes prolonged economic downturns and rising unemployment.

The U.S. has not experienced a depression since the Great Depression of the 1930s, when unemployment reached 25%. Economists say stronger fiscal tools, monetary policy and federal safeguards such as FDIC deposit insurance have helped prevent such extremes in modern times.

Financial markets responded quickly to the policy shock. Bond yields rose while stocks fell, triggering investor anxiety. The yield on the 10-year Treasury note briefly rose above 4.5% on speculation that major bondholders such as Japan and China were dumping U.S. bonds. As yields rose, bond prices fell.

Trump eventually rolled back tariffs on some countries on Wednesday, helping markets recover. The S&P 500 posted its strongest single-day gain since 2008.

National Economic Council Director Kevin Hassett told CNBC that the turmoil in the bond market added urgency to Trump’s move. “There’s no doubt that what happened in the bond market yesterday added perhaps a little bit more urgency to the decision,” Hassett said.

Trump said in his comments after the backpedal that markets had overreacted: “I thought people got a little bit out of line,” he said, adding: “They got a little excited, they got a little scared.”

Another factor in the shift, according to the WSJ, has been Treasury Secretary Scott Bessent’s growing influence in trade negotiations. The sources said the growing number of countries negotiating with the U.S. has also contributed to Trump’s openness to changing his approach.

*This is not investment advice.