On Wednesday, April 9, 2025, US President Donald Trump addressed a gathering with racing champions on the South Lawn of the White House in Washington, DC.
Chris Kleponis | Bloomberg | Getty Images
According to The Wall Street Journal, President Donald Trump aimed to prevent the economy from slipping into a depression due to his controversial tariff strategy.
Privately, Trump acknowledged that his extensive and aggressive tariffs proposed last week could potentially lead to a recession, but he was determined to avoid a depression, as reported by the paper on Wednesday night, citing sources familiar with his discussions.
Additionally, Trump expressed to his advisors that he was prepared to endure some “pain” as a result of the policy, according to an individual who spoke with him on Monday, as detailed in The Journal.
Economists define a depression as a more extreme and prolonged version of a recession, characterized by significantly higher unemployment. The United States has successfully avoided such events since the Great Depression of the 1930s, when unemployment soared to 25%, largely due to advancements in fiscal and monetary policy, as well as safety programs like FDIC deposit insurance.
While forecasts from many economists started to signal a recession tied to Trump’s elevated tariffs hindering global trade, none indicated that it would result in a depression.
In the days leading up to Trump’s announcement to roll back some of his retaliatory tariffs on Wednesday, bond yields surged while stock prices plummeted. Following his reversal, the stock market experienced a significant rebound, with the S&P 500 marking its best performance in a single day since 2008.
On Thursday, Kevin Hassett, director of the U.S. National Economic Council, informed CNBC that the decline in the bond market was influential in Trump’s decision-making. On the night of Tuesday into Wednesday, the yield on the 10-year Treasury surpassed 4.5% due to speculation that a major foreign holder like Japan or China was liquidating bonds, as prices move inversely to yields.
“Everything was progressing in a systematic way,” Hassett stated on CNBC’s “Squawk Box.” “There’s no doubt that the conditions in the Treasury market made the decision to make a move more urgent than it might have otherwise been. But we were headed that way regardless.”
In his comments made after the decision on Wednesday, Trump also recognized the influence of investor unease.
“I felt that people were reacting a bit excessively,” Trump remarked. “They were becoming a little agitated, a little on edge.”
The White House has yet to respond to CNBC’s request for comment regarding Trump’s reported apprehensions about a depression.
A significant factor in Trump’s strategy adjustments was the increasing influence of Treasury Secretary Scott Bessent in trade policy advising, as reported by WSJ, which cited insiders. The volume of countries in negotiations with the White House also led Trump to reconsider his approach, according to a source who spoke with him.
For the complete report from The Wall Street Journal, click here.
