5 factors behind Trump's piecemeal retreat from tariff war he started

The Trump administration, which was once confident in using tariffs to change global trade, is now starting to pull back. Over the weekend and into Monday, President Donald Trump began to step back from some parts of the tariff war he started, especially those related to car imports. Some people think this is a smart change in strategy, but the pattern of pulling back shows that there are stronger forces pushing on his administration. There are five main reasons for this retreat: a harsh reaction from the markets, clear warnings from major Wall Street firms, the risk of long-term harm to the economy, big drops in public support and ongoing pushback from China. All of these pressures together have caused the White House, which was once very firm, to back down.

1. Market turmoil and investor panic

The financial markets, which often show how people feel about the economy, reacted strongly to Trump’s tariff plans. When the administration pushed ahead with more tariffs—especially on Chinese imports and possible new ones on car parts—markets around the world started to fall. But on Monday, when Trump suggested he might give temporary exemptions on tariffs for vehicles and parts, markets in the US and Europe went up, showing that investors felt relieved. The Dow Jones Industrial Average went up significantly, showing that investors viewed the administration’s softer approach as an important step toward restoring stability.

The tariff threats, especially on industries like automobiles that are closely connected across countries, caused worries about rising costs, supply chain problems, and inflation. Car makers in North America warned that sudden tariffs could badly affect production and raise prices for buyers. Trump’s mention of possible exemptions seemed to answer these concerns, and the markets quickly responded with hope that Washington might start taking a more practical approach.

2. Pressure from Wall Street titans

Aside from the ups and downs of the stock market, people close to Trump and big Wall Street firms started raising serious concerns. Business leaders warned that the tariff plan—first seen as a way to gain an edge in trade talks—was starting to backfire. According to Politico, experts pointed out that China’s response, like stopping important imports such as liquefied natural gas and beef, directly hurt industries in states that support Trump. Because China’s counterattacks were so carefully aimed, Wall Street grew even more worried.

Ben Lilliston from the Institute for Agriculture and Trade Policy explained that while regular tariffs can be passed on through higher prices, China was using other tools—like health rules and licensing rules—that completely blocked trade. These sharp and specific moves from China made people in US financial circles fear that the trade fight wasn’t just a short-term problem anymore, but something that could cause long-term damage. With key areas like natural gas, petrochemicals and farming being hit hard, Wall Street gave a strong warning: pull back or the economy could face serious trouble.

3. Long-term economic consequences

The Trump administration started the tariff war believing that some short-term pain would lead to long-term benefits. But as China increases its actions—like putting limits on rare-earth minerals that are crucial for electronics, electric vehicles and petrochemicals—the risk of lasting harm is becoming more serious.

According to the Times of India, these rare-earth restrictions could badly hurt US industries such as green energy and defence. These minerals are needed to make things like batteries, semiconductors and other high-tech products, and the US doesn’t have enough backup supply sources. ICIS deputy editor Al Greenwood pointed out that even industries that usually support Trump, like petrochemicals, now face big risks in getting what they need. These shortages could do long-term damage to American manufacturing, something the administration can’t afford, especially so early in a new presidential term.

At the same time, farming states are being hit again, with China blocking US poultry and beef by claiming health concerns that many see as questionable. Politico noted that China has used this tactic for years—using rules and regulations as a political weapon. These trade blocks don’t just hurt the economy. They also put pressure on Trump’s political support in important states like Iowa, Nebraska and Texas.

4. Freefall in public approval

One of the most politically damaging things for Trump has been the big drop in public support. A CBS News poll showed that 75 per cent of people think Trump’s tariffs will make prices go up in the short term and nearly half said his policies have made their financial situation worse. Only 22 per cent believed prices would stay the same or go down.

CNN’s Harry Enten said these poll results are the worst Trump has seen in his second term. His approval rating has fallen from +6 in February to -6 now. Enten said that Trump was underwater for the first time with more people disapproving of him than approving. He pointed out that an increasing number of voters were placing the blame for the economic troubles on Trump rather than Biden. This is a big shift. Trump has always presented himself as strong on the economy, but the polls after Liberation Day tell a different story.

5. China’s tactical counteroffensive

Analysts say Trump may have misjudged China’s response to the pressure of tariffs. China’s retaliation has turned Trump’s tariff blitz into a full-fledged trade war. It has blocked US beef and chicken using questionable health rules, stopped buying natural gas and limited exports of rare-earth minerals. These actions have hit the US where it is vulnerable.

In Politico, Darci Vetter, a former agricultural trade negotiator, said that China is using health and safety rules as tools in political negotiations. Marc Busch from Georgetown University added that these tactics give China both a way to deny they’re retaliating and still cause serious damage, making their moves hard to fight back against.

China’s retaliation seems not just to hit back at the US, but apprears to take aim states and sectors that are politically important to Trump. For example, stopping natural gas imports affects an industry that supports him and blocking beef and poultry exports harms rural states that are key to his political base.

By presenting its actions as following regulations instead of as direct retaliation, China looks to keep the pressure on citing global trade rules. And based on its past, China has shown that it’s willing to use trade for political reasons over the long term.