| | | |  | | By Jack Blanchard | | Presented by |  | | | With help from Eli Okun, Garrett Ross and Bethany Irvine
| | | | Good Thursday morning. This is Jack Blanchard, crawling like a broken man toward the end of the week. How the president saw it: “What a day, but more great days coming!!!” Donald Trump posted on Truth Social at 12.45 a.m. this morning. That’s one way of putting it. In today’s Playbook … — Another day, another trade war. — How the deed was (un)done: Why Trump bottled it. — The next crisis: GOP budget rebellion in full swing.
|  | DRIVING THE DAY | | | 
President Donald Trump takes a question from a member of the media during a meeting with Israeli Prime Minister Benjamin Netanyahu in the Oval Office of the White House on April 7, 2025, in Washington. | Kevin Dietsch/Getty Images | THE MORNING AFTER: America wakes up to a trade war this morning — just not the one we’d been promised. Trump’s bond-market-induced case of the yips may have won tariff reprieves for dozens of nations, but don’t be fooled. The trade barriers he’s pressing ahead with today still mark a 100-year high point for U.S. protectionism, and will have huge repercussions for the American and global economies. Most significantly, the world’s two most powerful nations now find themselves in an economic standoff of epic proportions — with experts predicting pain on both sides. Economic warfare: China’s new 84 percent tariff on U.S. imports came into effect at midnight, less than 12 hours after Trump jacked up his own tariff on Chinese goods — the fifth big increase in nine-and-a-half weeks — to 125 percent. Needless to say, this is not small beer. China, with 1.4 billion people, is the world’s second-largest economy and America’s third-biggest trading partner. The U.S. imported nearly $450 billion worth of goods from China last year — around a quarter being smartphones, computers and other consumer electronics. This is going to hurt. And it’s not just the imports: Around 9 percent of U.S. exports went to China and Hong Kong last year, POLITICO’s trade guru Doug Palmer reports in a must-read analysis of the new Sino-American trade war. Among the groups hardest hit will be U.S. farmers, for whom China is one of three main export markets, and there will be plenty of GOP types on the Hill fretting about that. The U.S.-China stand-off also bodes poorly for a TikTok deal, although Trump insisted yesterday that it remains “on the table.” So how will this play out? We have no idea. “We've never lived in a world of anything remotely close to 125 percent tariffs on one of our largest trading partners,” writes Axios’ Felix Salmon, “which means the effects of such things are incredibly hard to model.” Indeed, Trump’s tariffs might be seen as “kind of an embargo on China, like we did in the 1950s and 60s,” when Mao Zedong was in power, former U.S. trade official Ed Gresser tells Doug. Bloomberg reckons these tariffs are now “beyond the level economists say would decimate bilateral trade.” So … time for another quick deal? Big import taxes on Chinese goods carry nothing like the controversy of Trump’s worldwide reciprocal tariffs, but Trump was still keen to play up the prospects of a deal with China yesterday. What’s less clear is whether Chinese President Xi Jinping wants to play ball. Xi’s approach thus far has been to “stand firm, absorb pressure and let Trump overplay his hand,” former State Department official Daniel Russel tells Doug. “Beijing believes Trump sees concessions as a weakness, so giving ground only invites more pressure.” Right on cue: The Chinese foreign ministry was last night tweeting out defiant clips of Chairman Mao. "We are Chinese,” the accompanying post from Chinese Foreign Ministry spox Mao Ning read. “We are not afraid of provocations. We don’t back down.” And there’s more: The trade war with China is only one part of the protectionist wall Trump has erected around America since he first started raising barriers on Feb. 1. We also have a universal 10 percent tariff on almost all imported goods; a 25 percent tariff on automobiles and automobile parts; 25 percent tariffs on imported steel and aluminium; and 25 percent tariffs on certain Canadian and Mexican goods. Despite Trump’s dramatic U-turn, a free trade nirvana this is not. And as for the U.S. economy: "The drag from trade policy is likely to be somewhat less than before [following the U-turn],” JP Morgan’s latest analysis states, “and thus the prospect of a recession is a closer call. However, we still think a contraction in real activity later this year is more likely than not." (h/t WSJ’s Nick Timiraos) But don’t tell any of that to the stock markets … which were as giddy as they’ve ever been yesterday after Trump pulled the plug on his flagship tariff policy, a whopping 13 hours and 17 minutes after it came into effect. (Never mind the Liz Truss lettuce, I’ve seen cut avocado last longer than that.) Yesterday’s S&P 500 and Nasdaq gains were the biggest single-day jumps since the rollercoaster days of 2008. Somebody somewhere just got very rich. So who was it? At 9:37 a.m., Trump posted on Truth Social that it was “a good time to buy.” That has led Dems to throw around accusations of insider trading, and is the type of thing that may well launch a congressional inquiry if the party recaptures the House in 2026. The White House, for its part, rejected the assertion in a statement to NBC News: “Instead of grasping at straws to try landing a punch on President Trump, Democrats should focus on working with the administration to restore American Greatness,” said WH spokesperson Kush Desai.
| | | | A message from Comcast: Universal Epic Universe, the most technologically advanced theme park Comcast has built in the United States, is creating more American jobs and stimulating economic growth across the nation. Learn more about Comcast's multibillion dollar investment in the U.S. with the upcoming opening of Epic Universe. | | | | ANATOMY OF A U-TURN HOW TO SPIN A RETREAT: In the minutes after Trump’s big climbdown yesterday, his surrogates fanned out onto media platforms to explain that no, actually, this had always been the plan. “This was his whole strategy all along,” insisted Treasury Secretary Scott Bessent. “You have been watching the greatest economic master strategy from an American president in history,” White House aide Stephen Miller wrote on X. “Many of you in the media had clearly missed the “Art of the Deal,’” chided White House press secretary Karoline Leavitt. It was quite the display. Erm, no: Sadly, Trump pulled the rug on all three of them an hour or so later when he wandered out into the April sunshine and immediately fessed up to what happened. “I thought that people were jumping a little bit out of line,” he said, when asked to explain the decision. “They were getting a little bit yippy, a little bit afraid." Could he be any more specific? “I was watching the bond market,” Trump confirmed later, per the Atlantic. “The bond market is very tricky … People were getting a little queasy.” Lettuce remind you … Playbook noted yesterday that chaos in the bond markets did in U.K. PM Liz Truss during her own self-induced financial calamity in 2022. And so it proved here. Even the mighty U.S. economy is vulnerable to a certain level of market instability, it seems. Trump “privately acknowledged that his trade policy could trigger a recession,” WSJ’s Annie Linskey and colleagues report in their big read on yesterday’s drama, “but said he wanted to be sure it didn’t cause a depression.” Blimey. BEHIND THE TARIFF TURNAROUND: Yesterday’s decision took most White House staff, allies and advisers by surprise. But it didn’t come out of nowhere, POLITICO’s Dasha Burns tells us in a late-night message. Over the weekend, Bessent spent crucial time with Trump, nudging him to shift his message onto making deals, as POLITICO’s Megan Messerly and Sam Sutton scooped Monday. At that stage, Trump was immovable on policy but open to shifting his message, Dasha says, and talked publicly about negotiations the following day. Markets briefly rallied. But Trump only agreed to a 90-day tariff pause — a policy change — after a cadre of his economic advisers made a two-part pitch, according to a White House official who spoke to Dasha. First, they told the president about their grave concerns over the bond market, which moved rapidly in the wrong direction overnight into Wednesday morning. Second, crucially, they praised Trump’s approach, telling him in effect: “This has already been successful. All these countries are coming to the table. Now we need time to negotiate.” Great Scott! It was Bessent who occupied the critical role in moving the needle Wednesday, two people familiar told Dasha. He played to Trump’s inclinations on China — telling him that going after China is a popular position and urging him to focus on that, while giving the other nations a break while the team negotiates. Vance, too: There’s similar reporting in the NYT’s big read, which notes that Bessent and others — including Vice President JD Vance — had been privately pushing Trump “for a more structured approach to the trade conflict that would focus on isolating China.” The NYT says Bessent was joined by Commerce Secretary Howard Lutnick and the NEC’s Kevin Hassett for the crucial Wednesday crisis meeting on bond yields, “a topic [Trump] understands intimately from his years running a real estate company.” One more big takeaway: It’s Bessent who emerges from all of this as the unlikely power player. The Treasury secretary can be an understated figure in person, and lacks the populist aggression or media doggedness of so many Trump Cabinet picks. But it is he who’s been telling business leaders (and journalists) for weeks that these tariffs were part of a negotiation. It was he who advised U.S. trading partners to hold their nerve. And it was he who got in the president’s ear on Sunday — and again yesterday — telling him to change course. NOW READ THIS: “In Scott We Trust has become the de facto credo for the free trade wing of the Republican Party,” POLITICO’s Jonathan Martin writes in his column this morning. But JMart notes that most GOP types on the Hill have chosen to avert their gaze when confronted with Trump’s protectionist streak. “This is all so agonizing for traditional conservatives,” he writes. “It’s one thing to field panicked calls from donors, home-state trade groups and regular constituents about market upheaval, but it’s even more painful when you can’t defend a policy based on a cocktail napkin formula.” MEANWHILE IN CONGRESS JOHNSON’S BIG BUST: Speaker Mike Johnson pulled the plug on plans for a budget vote last night as it became clear he did not have the votes to get the Senate GOP’s plan through the House. It’s a blow to both his and Trump’s authority, and leaves serious questions about how a divided conference can find a way forward on the president’s agenda. Strikingly, even Trump’s meeting with holdouts this week failed to win enough of them round. The decision followed a dramatic day of wrangling and vote whipping as fiscal hawks demanded further concessions. As POLITICO’s Katherine Tully-McManus, Jennifer Scholtes, and Meredith Lee Hill report, votes were delayed well into dinnertime, with “hard-liners … busy back-channeling with Senate Republicans to sketch out deeper spending cuts.” Lawmakers huddled on the House floor as Johnson worked the holdouts while a vote on an unrelated measure was held open for more than an hour. But the math just ain’t mathing for the speaker, and the conference will today bump up against its self-imposed Easter deadline — with a two-week recess due to begin tonight. And despite days of fractious closed-door talks, some members of the conference still find the Senate’s level of cuts insufficient. Many “fear that if they agree to the Senate’s measure, they will ultimately be forced to accept far smaller spending cuts than they want,”NYT’s Catie Edmondson, Michael Gold and Maya Miller report. So what now? My POLITICO colleagues report in our sister “Inside Congress” newsletter that Johnson is weighing two options — either taking the budget plan back to the Rules Committee this morning and tacking on guarantees of extra cuts, or heading straight to conference and asking House and Senate leaders and committee chairs to hash out the differences between their chambers’ plans. Around 11 p.m. last night, Johnson told reporters he still hadn’t decided his next steps. “We have a pretty well-developed playbook, and it’s got a number of plays in it and I just haven’t made the call on which one it is yet,” Johnson said. He later noted that “if we have to come back next week, then we’ll do that.” Watch this space. NOW READ THIS: THE CRACKS IN TRUMP’S WALL OF POWER — My POLITICO colleague Rachael Bade’s latest “Corridors” column explores how Trump’s reversal on tariffs and his struggle to rally Republicans behind a budget plan have exposed the first real dents in his armor. “It was a striking one-two punch attacking the narrative that has surrounded Trump since November — that he is a political juggernaut able to run roughshod over his party and beyond to get his way,” Rachael writes. “On Wednesday, Trump implicitly acknowledged there are, in fact, checks on his power: the markets and, if you squint, his own party.”
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From 2019-2023, Universal Orlando generated $44 billion in economic impact for the nation. Learn more. | | | | BEST OF THE REST WEAPONIZING THE JUSTICE SYSTEM: Yesterday, Trump announced unprecedented plans to target two former government officials from his first term due to their past criticism of his actions. Two White House directives order the Justice Department to scrutinize Chris Krebs, who ran Trump’s Cybersecurity and Infrastructure Security Agency, and former senior Department of Homeland Security official Miles Taylor. “I think he’s guilty of treason,” Trump said about the latter. Just to remind you: “A president ordering investigations of specific individuals whom he considers to be his political enemies is a remarkable breach of the traditional wall of separation between the White House and the Justice Department,” POLITICO’s Adam Cancryn and Maggie Miller report. Expect to hear plenty more about this one today. An awkward scene: Democratic Michigan Gov. Gretchen Whitmer, who was at the White House earlier for a meeting with Trump, was pulled into the room ahead of Trump signing the orders for the cameras — a scene that immediately made waves on social media. “The governor was surprised that she was brought into the Oval Office during President Trump’s press conference without any notice of the subject matter,” a spokesperson for Whitmer said. “Her presence is not an endorsement of the actions taken or statements made at that event.” FBI FILES: FBI Director Kash Patel is out of his second job as acting director of the Bureau of Alcohol, Tobacco, Firearms and Explosives, with the White House quietly handing the position to Army Secretary Dan Driscoll. NBC’s Ken Dilanian reports the move “stunned ATF officials,” who were given “no explanation for the removal.” The change comes weeks after multiple reports emerged that Patel had been largely absent from the agency since being handed the job. SOCIAL INSECURITY: Elon Musk and DOGE have abandoned a controversial shakeup of the Social Security Administration’s phone support system for beneficiaries after causing weeks of chaos, WaPo’s Hannah Natanson and Lisa Rein report. An internal memo shows the agency’s plan “to force people awarded retirement, disability and Medicare benefits to set up direct-deposit payments online or in person have been canceled after the agency concluded it could vet these transactions for fraud by phone. Those applying for benefits can also continue the process by phone without the need to go online or visit an office in person.” FIRST IN PLAYBOOK: UVA’s Sabato’s Crystal Ball is out with its first House ratings for 2026. Though Democrats are favored to win the House, the ratings are close — with 209 seats considered safe, likely or leaning Democratic, and 207 safe, likely or leaning Republican. The group also identifies 19 toss-up seats. DEEP IN THE HEART: Sen. John Cornyn (R-Texas) is facing one of his toughest electoral challenges yet as he prepares for a primary challenge from Texas AG Ken Paxton in next year’s reelection campaign. Both men are seeking Trump’s endorsement, with the contentious fight underscoring “a decade-plus battle within the Texas GOP that has ousted legislative leaders” and “led to proxy wars up and down the ballot,” NBC News’ Ben Kamisar, Bridget Bowman and Frank Thorp report. Cornyn’s race is also likely to carry a heavy price tag. Yesterday, NRSC head Sen. Tim Scott (R-S.C.) threw his support behind Cornyn in a key bit of backing for the incumbent. CRUZ CONTROL: As Sen. Ted Cruz works to distance himself from the Trump administration on issues like tariffs and going after Big Tech leaders, speculation abounds that the Texas Republican is positioning for a 2028 presidential bid, POLITICO’s Ben Leonard reports. Cruz demurred in an interview yesterday, saying he’s now focused on his work in the Senate and his chairmanship of the Senate Commerce committee. NEW THIS MORNING: Accountable.US has launched Cash in Congress — a website that includes a comprehensive database that tracks Congressional Republicans personal financial stakes in extending the pass-through and estate tax change benefits. TO INFINITY AND BEYOND: Options for a new missile defense system program from the U.S. Space Command, dubbed “Golden Dome,” have been sent to Defense Secretary Pete Hegseth to review, AP’s Tara Copp reports.
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94K jobs created by Universal Orlando just in 2023. Learn more. | | | | | | TALK OF THE TOWN | | H.R. McMaster accidentally received a phone call from Donald Trump that was intended for Henry McMaster, per CBS’ Margaret Brennan and Robert Costa. Donald Trump signed a new water pressure executive order “to take care of my beautiful hair.” Mike Collins ordered Xi Jinping a copy of Trump’s “The Art of the Deal.” OUT AND ABOUT — SPOTTED at a panel and reception moderated at Forbes Tate Partners yesterday with trade experts Tori Smith, Rupert Hammond-Chambers, Juan Mauricio Mora and Chad Rogers and moderated by POLITICO’s Doug Palmer. SPOTTED: Justin Kintz, Liz Reicherts, Jim Creevy, Stephanie McBath, Brent Fisk, Marie Bucko, Timothy Daniels, Chanse Jones, Mattie Stauss, Rachel Miller, Rob Mathias, Michelle Baker, George Cooper. — The Center for Journalism Ethics at the University of Wisconsin–Madison and UW’s School of Journalism and Mass Communications hosted the 2025 ceremony for the Anthony Shadid Award for Journalism Ethics at the National Press Club last night. This year’s award went to The Seattle Times’ Hannah Furfaro, Lauren Frohne and Ivy Ceballo for their work exposing how medical and social service systems are failing teens in Washington. SPOTTED: Jane Mayer, David Maraniss, Nada Bakri, Katie Harbath, Sari Horwitz, David Maraniss, Jonathan O’Connell, Nick Penzenstadler, Aaron Popkey and Owen Ullmann. FIRST IN PLAYBOOK: Alexis Wilkins is joining Second Amendment advocacy group Women for Gun Rights as director of strategic communications, POLITICO’s Sophia Cai writes in. Wilkins, who is in a relationship with FBI Director Kash Patel, is a country singer from Arkansas who previously worked with PragerU and veterans organizations. — Maddy McDaniel is now senior comms strategist at the DSCC. She most recently was comms director for Bob Casey’s Pennsylvania Senate campaign. TRANSITIONS — Julie Ann Schmidt is now chief of staff at DOL’s Mine Safety and Health Administration. She previously was founder and CEO of Lithium Logistics Group. … Michael Reed is now government affairs partner Andreessen Horowitz (a16z). He previously was director of Whip operations and member services for House Democratic Whip Katherine Clark. … Laura Black is now a partner at White & Case. She previously was a senior counsel at Akin Gump. … Third Way has added Lily Cohen as press adviser and Sarah Slavin as digital media adviser. Cohen previously was a comms associate for Kamala Harris’ presidential campaign. Slavin previously was press secretary and digital manager for Rep. Chrissy Houlahan (D-Pa.) HAPPY BIRTHDAY: Agriculture Secretary Brooke Rollins … Del. Kimberlyn King-Hinds (R-Northern Mariana Islands) (5-0)… Jason Miller (5-0) … former Labor Secretary Marty Walsh … Elizabeth Alexander … Tyler Dever of the National Federation of Independent Business … Ann Marie Hauser … Josh Shultz … Antoine Sanfuentes … Carter Yang … Samantha Dravis … Bradley Saull … POLITICO’s Alice Miranda Ollstein, Adam Behsudi and Gigi Ewing … Jon Sallet … BGR Group’s Mark Tavlarides … Ray Zaccaro … Shelley Greenspan … Chris Lydon … Jessica Mackler … NBC’s Gary Grumbach … Howard Gantman … Dale Thorenson of Gordley Associates … Hanna Rosin … Lantern’s Amy Dudley … Jeffrey Frank … Melinda Henneberger … Ann Klenk … RGA’s Kollin Crompton … Areig Elhag … Bridget Mulcahy McAllister Did someone forward this email to you? Sign up here. Send Playbookers tips to playbook@politico.com or text us at 202-556-3307. Playbook couldn’t happen without our deputy editor Zack Stanton and Playbook Daily Briefing producer Callan Tansill-Suddath. Corrections: Yesterday’s Playbook misspelled the names of Ellie Blume and Dave Natonski.
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