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The Day the U.S. Nearly Went Broke Over Trump Tariffs [1]
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Date: 2025-04-09
Quick action by staffers at the New York Federal Reserve Bank and the Treasury Department was likely needed to save the U.S. financial system on Wednesday as Trump’s tariffs nearly caused a complete meltdown.
The catastrophe loomed when people all over the world, fed up with Trump’s tantrums and mismanagement, started to lose confidence in America. For a very long time, the U.S. has been the bedrock of stability in world markets. On this Wednesday, rash uninformed and ill-advised moves caused markets to lose confidence in U.S. bonds.
"The market has lost faith in U.S. assets," a Deutsche Bank analysts wrote … .
In a secure room at the NY Fed, analysts watching screens, would have picked up instantly on the crisis. They would have quickly reached out to their counterparts at the Treasury Department. The contact would have taken place a level or two below the Treasury Secretary, who is something of a figurehead, removed from the day-to-day work of protecting the American economy.
Once the Treasury staffers were alerted, they had to deal with the hot potato — or maybe we should call it a live grenade. They needed immediate action. In fact, they needed to convince Trump to immediately drop his cherished tariffs. While normal administrations have people in place to deal with emergencies, few deal well with Donald J. Trump.
Most likely, Treasury made an early call to the White House chief of staff, Susie Wiles. The ask would have been something like this, “The bond market is falling fast. He needs to give up on his tariffs right now.”
She must have an ability to get his attention when she really needs it. When the house is on fire, it tends to focus the mind.
Trump issued his tweet halting many tariffs for 90 days for all countries but China.
PBS quoted the president as saying he had been watching the bond market and that people were “getting a little queasy.” But after his tariff pause, Trump told PBS that the bond market was “beautiful.”
U.S. Trade Representative Jamieson Greer was not in the loop on Trump’s quick change in tariff policy. He was testifying to Congress and had not realized that Trump had changed direction until members of Congress at the hearing informed him. Never mind.
It’s hard to know where this leaves us. Certainly these antics weaken Trump. People who get to Congress have unfailing instincts for their own survival. The Supreme Court is very much up in the air. It will be a long 18 months until the midterms.
As Bruce says, “Hold tight to your anger. Don’t fall to your fears.”
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