The line fell silent.
In a phone call from the Oval Office, President Trump had just delivered unwelcome news to three of America’s most powerful auto executives: Mary Barra of General Motors, John Elkann of Stellantis and Jim Farley of Ford.
Everyone needs to buckle up, Mr. Trump said on the call, which took place in early March. Tariffs are going into effect on April 2. It’s time for everyone to get on board.
The auto chiefs, like the leaders of other industries, had been arguing that Mr. Trump’s 25 percent tariffs on cars coming from Canada and Mexico would wreak havoc on their supply chains and blow a hole through their industry. They had won a concession of sorts when Mr. Trump agreed to give them a one-month reprieve, until April 2.
But now, the Big Three automaker chiefs seemed to realize there was no point in fighting for more. They had gotten as much as they were going to get.
For corporate America, including some major donors, the shock of Mr. Trump’s second term is that it turns out he really does believe the thing he’s been saying publicly for 40 years: Foreign countries are ripping America off, and tariffs are a silver bullet for America’s problems. When he says that “tariff” is the most beautiful word in the dictionary, he means it.
To Mr. Trump, tariffs are not merely a negotiating tool. He believes they will make America rich again. And they combine two of his favorite features of the presidency: They are a unilateral power that he can turn on or off on a whim, and they create a begging economy, forcing powerful people to come before him to plead for mercy.
This account is based on interviews with more than a dozen Trump administration officials and others familiar with the dynamic at the White House over tariffs. They asked for anonymity to discuss private conversations and deliberations.
In the corporate community — a group that spends a fortune on consultants to interpret Mr. Trump, and where the cliché of taking him “seriously but not literally” is in high circulation — many had been clinging to the view that he saw tariffs only as a tool of leverage. It was not that Mr. Trump loved tariffs, they told themselves. It was that he loved what the threat of them could yield in a negotiation.
Over the years, it had become conventional wisdom that the stock market was Mr. Trump’s guiding light and guardrail, and that any plunge in the markets would limit the scope of his tariffs, which were more surgically applied seven years ago.
But Trump 47 has so far been undeterred by a plummeting market and by headlines that would have forced Trump 45 into reverse. The Dow Jones industrial average has shaved off more than 600 points since the new tariffs began. The S&P 500 slid into a correction, meaning it has fallen by more than 10 percent from its peak.
During his first term, Mr. Trump had a weaker stomach for the economic pain caused by a far narrower program of tariffs. He placed tariffs on more than $300 billion of products throughout his first term; now, less than two months in, he has slapped tariffs on roughly $1 trillion of goods.
A few recent public opinions polls show a growing number of Americans disapproving of Mr. Trump’s handling of the economy, but his advisers insist that’s more about lingering high prices than tariffs.
One of Mr. Trump’s advisers, speaking on the condition of anonymity to describe private conversations, said the Biden presidency proved to Mr. Trump that the stock market is not a foolproof barometer of the economy’s future, nor a useful indicator of voter sentiment. If it were, Mr. Biden, who presided over a booming stock market, would surely be the president, the adviser said, explaining Mr. Trump’s thinking.
Advisers say Mr. Trump knows that foreign leaders are watching to see whether he follows through on his threats, looking for signs of weakness. They have said he believes that backing off his tariffs would permanently damage his preferred image as a strongman.
Sometimes he has granted absolution of sorts — like when he exempted from tariffs products from Canada and Mexico that comply with his North American trade deal. But he has repeatedly said that more and bigger tariffs are on the way.
Business leaders are now rapidly reassessing the cheerful assumptions that had guided their thinking since Election Day.
Bill Reinsch, a senior adviser at the Center for Strategic and International Studies and a former Commerce Department official, said Mr. Trump had been explicit in the campaign about his intentions, and that his tariff proposals this time have been much deeper and broader than in his first term.
“I think he was clear,” he said. “I don’t think people paid much attention.”
Their misread is understandable.
In the lead-up to the 2024 election, Mr. Trump’s new crop of economic advisers sent reassuring signals to Wall Street. Their public remarks suggested that Mr. Trump’s second-term trade policy would be much the same as the first. In September, Howard Lutnick, now the commerce secretary, described tariffs as a “bargaining chip” that would ultimately lead to freer markets. And Scott Bessent, who became Mr. Trump’s treasury secretary, wrote in a letter to his clients last year that “the tariff gun will always be loaded and on the table but rarely discharged.”
It is still possible that Mr. Trump backs away from some of his tariffs, but if he’s contemplating a reversal it would be news to his closest advisers. Mr. Trump has said repeatedly he plans to issue much more extensive tariffs on April 2, and his advisers have told foreign officials and chief executives that he won’t be deterred. His comments to his cabinet secretaries and aides in Oval Office meetings track with his public rhetoric, according to two people with direct knowledge, who spoke on the condition of anonymity to describe private conversations.
Mr. Trump personally drafts or dictates his Truth Social posts that threaten ever-escalating tariffs as China, Canada and the European Union retaliate against his provocations. Even former aides who think his maximalist approach is the wrong one say he has a valid point about how China and Europe have treated the United States unfairly when it comes to trade.
He feels that so far the pressure has worked, aides say, citing Mexico’s willingness to stem the flow of undocumented migrants and fentanyl into the United States. Even after Mexico came forward with those measures, Mr. Trump still pushed forward with 25 percent tariffs before pausing their application on a number of items.
One of the biggest differences between the first term and now is that Mr. Trump is far more confident in his instincts and has stocked his team with people who echo them. He rarely hears strong dissenting views about his economic policies.
Mr. Trump received fierce opposition to tariffs in his first term from those who said they would raise costs for consumers and businesses and slow the economy. His team included people Mr. Trump would derisively refer to as “globalists” — like Steven Mnuchin, the treasury secretary at the time, and the economic adviser Gary Cohn, who worked with others to stop tariffs by taking papers from the president’s desk, and showed the president charts and maps to illustrate the benefits of trade. Other aides, like Larry Kudlow, were less confrontational but still skeptical of a protectionist trade policy.
Mr. Trump’s hard-line trade adviser Peter Navarro used to have Oval Office shouting matches against the so-called globalists. Now, returning for a second term, Mr. Navarro’s disputes with other advisers are more nuanced.
Mr. Bessent was a hedge fund executive, and Mr. Lutnick was the chief executive of the Wall Street firm Cantor Fitzgerald. But both have publicly embraced tariffs before they were granted their jobs. And whatever they think about the tariffs privately, nobody is sitting across the Resolute Desk from Mr. Trump, strenuously arguing against his economic ideas. His current team’s arguments revolve around public messaging about the tariffs, as well as exemptions and the scale and timing of the tariffs, but no one is challenging the idea of using them in some form.
Nor is Mr. Trump hearing strong dissent from Capitol Hill. Republican lawmakers are either converts to protectionism or cowed against speaking out. The Wall Street Journal editorial board is the rare right-leaning institution still consistently challenging his approach to trade.
Mr. Lutnick, who is also overseeing the U.S. trade office, receives many calls from unhappy business leaders, along with the White House chief of staff, Susie Wiles, and the agriculture secretary, Brooke Rollins.
On the night of March 13, Mr. Lutnick, Mr. Bessent, Kevin Hassett, who is the National Economic Council director, and a few others met at the Naval Observatory with Vice President JD Vance to discuss having a cohesive public message about the economy, amid complaints from allies about inconsistency, according to four people briefed on the meeting.
White House officials declined to comment on the meeting.
But in a statement provided by the White House, Mr. Navarro described Mr. Trump’s advisers as following his lead, characterizing them as “a diverse group with complementary skill sets and a high level of trust with names like Bessent, Greer, Hassett and Lutnick who debate behind closed doors and emerge as ‘one band, one sound.’”
There have been few exceptions granted. Ms. Rollins heard from farmers who wanted an exemption for potash, an important ingredient for fertilizer. Mr. Trump ultimately agreed to a reduced 10 percent tariff, but was unhappy about the reprieve, according to a person with knowledge of the matter. In a statement, Ms. Rollins said the president’s “reduction of tariffs on potash is a critical step in helping farmers manage and secure key input costs at the height of planting season while reinforcing long-term agricultural trade relations.”
But in many other cases, Mr. Trump has seemed far less willing to offer significant industry exemptions than he was in his first term.
While some industry executives have tried to push back during discussions with the White House, very few have said anything publicly; those who did earned the ire of the Trump administration. Those who have spoken privately have generally sandwiched any criticism of Mr. Trump between lavish praise.
Some companies have been “intimidated” about pushing back on tariffs, wary of becoming some kind of target, Mr. Reinsch said. “Nobody wants to go public,” he said, “because they’re concerned about the consequences.”
But those companies are still counting on policies they favor, such as tax cuts and deregulation.
