Tariffs introduced, and then temporarily withdrawn, by US president Donald Trump in April actually weakened America’s negotiating power, a senior business executive has told the Bermuda Captive Conference.

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Peter Princi, the managing director and institutional consulting director of Graystone Consulting for Morgan Stanley, said: “Trump’s pivot happened very quickly because the market was going down.”

The S&P 500 fell as much as 10 per cent in two days after Mr Trump announced sweeping tariffs on April 2, “Liberation Day”, with the highest tax reserved for Chinese goods.

“Liberation Day was botched,” Mr Princi said. “What was scarier was that bond markets were reacting negatively. There was a huge yield spike.”

Mr Princi said 2025 started off relatively bullish.

“In the last couple of years inflation has come down,” he said. “There was solid 3 per cent gross domestic product growth earnings in the double digits, and the capital expenditure around artificial intelligence was just amazing.”

He initially expected Mr Trump’s second term in office to lead to lower taxes and deregulation in the US. Instead, the President focused on global trade and tariffs.

“That was a little disappointing because it put everything on hold,” Mr Princi said.

He said the thought process behind Liberation Day was to implement tariffs to increase government revenues by a trillion dollars, and cut spending by a trillion dollars.

He said the government cuts saved about $150 billion.

“America is not even going to get close to a trillion dollars from the tariffs,” he said “Some people are now calling it the ‘taco trade’.” The Taco acronym stands for “Trump always chickens out”.

“The President is showing flexibility around negotiation because he is not willing to pan the economy,” Mr Princi said. “Going into next year with the midterm elections, he wants to continue to control the House and the Senate. There will be a lame duck president if he loses either one.”

Mr Princi said Beijing had the United States in a difficult position because the US needed rare earth metals from China, particularly for the auto industry.

“You want to bring manufacturing back to the United States, but if you can’t get the key components to actually manufacture, you are in a major dilemma,” he said.

Reece Jarvis, group head of fixed income at Butterfield Bank, understood the sentiment behind the tariffs, but thought the execution, with all its flip-flopping, was awful.

“Back when the tariffs were first announced, for about ten minutes, the market was confused and thought everybody had a 10 per cent tariff,” Mr Jarvis said. “The market actually rallied. That tells you that a 10 per cent tariff, across the board, would be easily swallowed by companies and consumers.”

Panel moderator Gregory Cobb, director of insurance solutions, Sage Advisory, said that in America 67 to 70 per cent of the gross domestic product is based upon the consumer.

“That is one of the highest rates in the world,” he said. “America also has one of the lowest savings rates in the world. If you want to get rid of trade deficits, reduce consumption in the United States and increase investment.”