When President Donald Trump announced the introduction of comprehensive tariffs, it set off a significant market reaction, prompting numerous text messages to Treasury Secretary Scott Bessent from executives in his previous sector. These communications were from hedge fund managers and finance executives who sought his assistance in influencing Trump’s stance on these tariffs, as reported by sources close to the situation. Given Bessent’s past role as chief investment officer of Soros Fund Management, he was perceived as an ally capable of conveying to the president how severe new tariffs might harm the economy and disrupt the markets. However, Bessent was reportedly not the primary force behind the tariff announcement. Instead, during meetings in the Oval Office, he offered various scenarios regarding market and economic impacts based on different tariff levels, according to someone familiar with the matter.
The tariffs were crafted by a close-knit group within Trump’s inner circle, with essential decisions about their structure being finalized shortly before the announcement. A spokesperson for the Treasury did not provide a comment. With these tariffs, Trump’s objective to reshape the U.S. economy and promote American-made products conflicted with Wall Street’s long-standing belief that international trade fuels global order. Even some Republican lawmakers have voiced their concerns.
In the days following the announcement, Wall Street experienced the anticipated downturn, losing $5.4 trillion in value and bringing the S&P 500 to its lowest in 11 months. Global recession fears escalated. Executives who had supported the Trump administration’s tax cuts and regulatory easing now faced an economic agenda that could disrupt their enterprises. Private equity firms canceled initial public offerings and moderated expectations of a resurgence in deal-making that they hoped would bolster fundraising. Hedge funds deliberated on whether Trump’s next moves were too unpredictable to wager on, while banking executives had to temper growth predictions. Economists at JPMorgan Chase & Co. forecasted a U.S. recession within the year.
The market decline led some of Trump’s staunchest political supporters to foresee broader repercussions. Texas Senator Ted Cruz stated that tariffs could harm domestic employment and the U.S. economy. He warned on his podcast that the measures might render Republicans vulnerable in the 2026 midterm elections.
Despite previously paying close attention to stock market performance, Trump indicated that he would not easily be dissuaded by the tariff-induced market decline. On Friday, he affirmed that the policy would remain and suggested large corporations were not troubled by the tariff plan. Amid the steepest market drop in five years, the president spent time at his West Palm Beach golf club.
Within the administration, there is concern about the market fallout, with officials monitoring whether it extends into another session. Any policy shift would likely need to originate from Trump himself. Trump remains focused on long-term objectives with tariffs, a source indicated, emphasizing the need to bolster U.S. manufacturing, secure supply chains, and reduce reliance on foreign competitors.
White House spokesperson Kush Desai stated that President Trump’s decisions are guided by the interests of the American people, with the administration unified in addressing the challenges posed by recurring trade deficits.
Tariff Roll Out
A Trump advisor outside the administration criticized the rollout of the tariffs and the White House’s communication strategy amid the market turmoil, suggesting that teams of economists, business leaders, and union workers should have publicly explained the plan. In the weeks leading up to the announcement, some Wall Street executives had already started reaching out to the Treasury secretary for assistance, while others voiced their concerns publicly. Citadel founder Ken Griffin criticized the proposed tariffs, arguing they would damage the U.S.’s competitive edge, and Warren Buffett described tariffs as a “form of economic conflict, to some extent.”
Bessent remains a significant figure within Trump’s economic team, according to a government official. However, senior counselor Peter Navarro and Commerce Secretary Howard Lutnick were more influential in the president’s decisions on tariffs, said a source. U.S. Trade Representative Jamieson Greer also played a crucial role.
In a Bloomberg Television interview following the tariff announcement, Bessent stated he had not participated in negotiations with other nations and was concentrating on the administration’s tax policy. The anticipation surrounding Trump’s presidency prompted private equity firms to expect a revival of IPOs and relaxed regulations on acquiring wealthy clients. Instead, the week’s events left them assessing how their portfolio companies would be affected by the tariffs, amid significant declines in stock values. Notably, shares of Apollo and KKR & Co. experienced their largest two-day drops in history.
Dealmakers have noted that some industries, such as domestic manufacturing, could significantly benefit under the Trump administration. However, they voiced concerns in private discussions that prolonged uncertainty and a decreasing market would hinder exiting investments at desired prices. Consequently, companies like Klarna Group Plc and StubHub Holdings Inc. have postponed their IPOs.
Fear of incurring the president’s displeasure has led them to avoid voicing their opinions publicly, opting instead to relay their concerns through intermediaries and lobbyists. Signs of opposition are also emerging among Trump supporters on Capitol Hill. Senator Chuck Grassley, alongside three other Republicans, co-sponsored a bipartisan bill aiming to return tariff authority to Congress, requiring most new tariffs to gain approval within 60 days. Majority Leader John Thune, who has the power to bring the bill to a vote, expressed his intention to review the legislation.
Thune noted there was interest in the proposal and stated that the party was closely observing Wall Street, hoping for quick results from Trump’s strategy. Meanwhile, on Saturday, as Wall Street and American business leaders dealt with market disruption, the White House announced that Trump had advanced to the finals in the Senior Golf Championship at his club in Jupiter, Florida.
This report was originally published on Fortune.com.
