Trump was warned of empty shelves and financial turmoil from tariffs and firing Powell. His U-turn pushed stocks higher

President Donald Trump’s unprecedented tariffs, particularly on China, and recent attacks on Federal Reserve Chair Jerome Powell caused alarm among some of his top advisers and America’s biggest CEOs, who warned of financial chaos and store shelves that could go bare, people familiar with the conversations said. The warnings — and the markets’ own volatility this week — seemed to have broken through. Trump backed down Tuesday from his threats to try to remove Powell from the job, telling reporters in the Oval Office: “I have no intention of firing him.” That prompted sighs of relief on Wall Street. A day after markets boomed on comments from Treasury Secretary Scott Bessent that Trump would seek to de-escalate the trade war with China, US markets gained again on Wednesday. Top administration officials were also relieved by Trump’s Oval Office statement on Powell, the people familiar with the matter said. The officials had become unnerved by the heated rhetoric and wary of a prolonged legal battle should Trump attempt to unseat the Fed chair. The Dow closed higher by 420 points, or 1.07%. The broader S&P 500 gained 1.67% and the tech-heavy Nasdaq Composite rose 2.5%. The three major indexes held on to a rally but finished well below their highest levels of the day. The Dow surged nearly 1,200 points in the morning before pulling back: Stocks came off their highest levels after Bessent cautioned that it could take considerable time to rebalance trade between the United States and China. There is a “2 to 3-year timeline for the full rebalancing,” Bessent told a group of reporters on Wednesday after delivering a speech at an event hosted by the Institute of International Finance, a person familiar with the matter confirmed to CNN. The comments, previously reported by Bloomberg News and CNBC, underscore how obstacles remain even as investors are eager for trade agreements and CEOs seek clarity on tariffs. White House press secretary Karoline Leavitt on Wednesday said on Fox News there will be “no unilateral reduction in tariffs against China.” “The president has made it clear China needs to make a deal with the United States of America, and we are optimistic that will happen,” Leavitt said. “And when that continues, it will be up to the president what the tariff rate on China will be.” Trump on Wednesday told reporters that his administration will get a “fair deal” with China on trade, adding more broadly that negotiations with countries “are going very well.” When Trump was asked in an impromptu gaggle outside the White House if he was talking to China actively, he responded: “Actively. Everything’s active.” “Every country wants to partake, even countries that have ripped us off for many, many years. China is an example, but it’s not just China, European Union. They ripped us off for many, many years, and those days are over,” he added. US Treasury bonds initially rallied Wednesday before giving back those gains in a stark reversal. The benchmark 10-year yield fellow below 4.3% in the morning before rising back up to almost 4.39%, just below where it had settled Tuesday. Yields and prices trade in opposite directions. Trump shifts tone after meeting with CEOs Trump’s notable shift in tone toward Powell and China came a day after he met privately in the Oval Office with chief executives of four major US retail companies who conveyed concerns about rising economic fallout from Trump’s tariff policy and the uncertainty it has created for financial markets. The CEOs of Walmart, Target and Home Depot, all of whom delivered a blunt message about interruptions in the supply chain and its effects on consumers, were invited to the White House as part of an ongoing internal campaign to make the case to Trump about the real-world impact of his policies, administration officials said. Trump’s tariffs have placed significant pressure on the retail sector. The business leaders warned that store shelves across America could “soon be empty,” two people familiar with the meeting said, as they presented a dire economic picture that could come into sharper view within weeks. For weeks, White House chief of staff Susie Wiles and other senior advisers have been fielding alarming calls from business leaders about the fallout from Trump’s tariff policies and his ongoing threats to fire the chairman of the Federal Reserve. Taken together, the president’s words have rattled markets and shaken confidence in the administration’s stewardship of the economy. Bessent, who has emerged as one of the leading Cabinet officials whose words have calmed financial markets, played a key role in arranging the meeting of CEOs, officials said, as part of an effort to show Trump how serious the economic challenges facing the administration have become. Doug McMillon, the CEO of Walmart who has developed a cordial relationship with Trump through meetings at Mar-a-Lago and several mutual friends, bluntly told Trump that the trade war with China had already started to disrupt the supply chain, officials said, and would only intensify by summer. Axios first reported the fallout from the president’s meeting with CEOs. Bessent urges caution on Powell Many Trump advisers did not ultimately believe the president would attempt to fire Powell, given the warnings he’d been receiving from his economic team — including Bessent — stretching back several months. And Trump had seemed to absorb the notes of caution. But his amped-up rhetoric over the past week had caused fresh uncertainty about his intentions — in particular, his message on social media Thursday that Powell’s “termination cannot come fast enough!” and his follow-up Monday calling Powell a “major loser.” Trump has argued that the Fed should cut rates soon to speed up the economy, perhaps as a way to counteract the significant economic drag that his massive tariffs are expected to create. But Powell has said repeatedly the Fed will only make a decision to raise or lower rates after careful consideration and would not rush a decision or issue an emergency rate cut before the rate-setting committee’s next scheduled meeting in May. White House press secretary Karoline Leavitt continued Trump’s line of attack Tuesday in a press briefing, in which she defended the president for criticizing the Fed. She suggested that the Fed’s action to lower rates in the late stages of the Biden administration — but not (yet) under Trump — could be political. There is no evidence the independent Fed is taking a political stance, and Powell has vehemently and repeatedly denied suggestions that the Fed plays politics when making its monetary policy decisions. “The president believes they have been making moves and taking action in the name of politics rather than the name of what’s right for the American economy,” Leavitt said prior to Trump’s Oval Office comments. “The president has the right to express his displeasure with the Fed and he has the right to say he believes interest rates should be lower.” Trump’s top economic adviser Kevin Hassett also told reporters the White House was studying whether Trump could fire Powell, and said a potential “new legal analysis” might ease market concerns. That represented a break from Hassett’s prior comments in support of the central bank’s independence. Leavitt said Tuesday that Hassett had recently changed his mind on the Fed after Powell insisted the central bank wouldn’t rush a decision to cut rates. “I also spoke to Kevin Hassett about the Fed as well and he has called into question the Fed’s independence and whether they are actually doing things out of the best interest of the economy or are they doing it for partisan reasons,” she said. But White House officials had long determined that firing Powell would spark legal challenges and market tumult. And if any study was actually underway, Trump suggested Tuesday it wasn’t necessary. He said in the Oval Office he “never did” have any intention of removing Powell from the job. This story has been updated with additional reporting. Correction: An earlier version of this report incorrectly stated which CEOs were in attendance at a recent meeting at the White House. The CEOs of Walmart, Target and the Home Depot were present.