President Donald Trump's tariffs on nearly all U.S. trade partners will drop to 10% for 90 days, but tariffs on China will jump to 125%.
U.S. President Donald Trump's adviser Elon Musk reacts on the day of a rally in support of a conservative state Supreme Court candidate of an April 1 election in Green Bay, Wisconsin, U.S. March 30, 2025.
Vincent Alban | Reuters
U.S. Trade Representative Jamieson Greer attends a Senate Finance Committee hearing to testify on U.S. President Donald Trump's trade policy, on Capitol Hill in Washington, D.C., U.S., April 8, 2025.
Kevin Mohatt | Reuters
Democratic Rep. Steven Horsford grilled Trump's trade representative Jamieson Greer about his knowledge of the tariff pause.
"So the trade representative hasn't spoken to the president of the United States about a global reordering of trade, but yet he announced it on a tweet?" the Nevada Democrat said to Greer during a hearing.
"WTF! Who is in charge?" he added.
"It looks like your boss just pulled out the rug from under you," he added. "This is amateur hour and it needs to stop."
— Erin Doherty
Customers shop at a Walmart store on May 18, 2023 in Chicago, Illinois.
Scott Olson | Getty Images
As tariffs are set to drive up prices for many goods, Walmart may be able to attract new customers and more frequent visits from shoppers, Chief Financial Officer John David Rainey said Wednesday.
At an investor event in Dallas, he said the retail giant sees an opportunity to gain market share.
"If you look back two years ago when we saw inflation, we invited a lot of new customers to Walmart with high prices," he said. "And what we saw over those two years is they stayed with us."
Walmart executives made the comments before Trump said he would temporarily lower tariffs on dozens of trading partners to 10%, and raise duties on Chinese imports to 125%.
Earlier in the day, the retail giant stuck by its full-year forecast yet it scrapped its first-quarter operating income guidance and did not provide an updated range for that metric. In a news release, the discounter said it wants to "maintain flexibility to invest in price as tariffs are implemented."
CEO Doug McMillon said the discounter is committed to keeping prices low.
"We like where our price gaps are. We want to keep them," he said.
He added, "we're not going to let them narrow."
— Melissa Repko
Jakub Porzycki | Nurphoto | Getty Images
Shares of Truth Social operator Trump Media & Technology Group Corp. are rocketing nearly 19% higher, just minutes after the president temporarily backed off his so-called reciprocal tariffs for dozens of countries.
Trump Media ($DJT) stock price.
Bessent says that Trump was always planning to pull back his sweeping tariff plans for dozens of countries just days after announcing it.
"This was his strategy all along," Bessent tells reporters at the White House.
"You might even say he goaded China into a bad position," Bessent says, referring to the fact that China, which imposed retaliatory tariffs, now faces higher U.S. duties while others get a reprieve.
— Kevin Breuninger
U.S. President Donald Trump walks on the south lawn of the White House on April 06, 2025 in Washington, DC.
Chris Kleponis | Afp | Getty Images
Bessent says that Trump wants to be "personally involved" in negotiations over the tariffs, which is why the White House is announcing the 90-day pause.
"Each one of these is going to be a separate, bespoke negotiation," Bessent says.
— Erin Doherty
(L-R) White House Press Secretary Karoline Leavitt and US Secretary of Treasury Scott Bessent speak to the press outside the West Wing of the White House on April 9, 2025, in Washington, DC
Saul Loeb | Afp | Getty Images
The White House is clarifying that Trump's announcement of a 90-day tariff "pause" means that the "tariff level will be brought down to a universal 10% tariff" during that time, while "negotiations are ongoing."
That respite does not apply to China, which will see U.S. tariffs on its goods rise to 125%.
— Kevin Breuninger
US President Donald Trump delivers remarks on reciprocal tariffs as US Secretary of Commerce Howard Lutnick holds a chart during an event in the Rose Garden entitled "Make America Wealthy Again" at the White House in Washington, DC, on April 2, 2025.
Brendan Smialowski | Afp | Getty Images
Commerce Secretary Howard Lutnick says on X that he and Treasury Secretary Scott Bessent "sat with the President while he wrote one of the most extraordinary Truth posts of his Presidency."
"The world is ready to work with President Trump to fix global trade, and China has chosen the opposite direction," Lutnick writes.
— Kevin Breuninger
Ed Bastian, chief executive officer of Delta Air Lines Inc., during an interview in New York, US, on Monday, Nov. 7, 2022. Bastian said that he sees 'strong demand' for flights carrying into 2023.
Jeenah Moon | Bloomberg | Getty Images
Delta Air Lines CEO Ed Bastian said the carrier will defer deliveries of new aircraft if they are hit with tariffs.
The airline is a major customer of European manufacturer Airbus. While the company has been also assembling narrow-body aircraft out of its Mobile, Alabama, factory, tariffs on products from Europe could hit many of the hundreds of components that go into a plane.
"We'll work very closely with Airbus, who are great partners, and they understand our perspective," Bastian said in an earnings call.
Earlier, in an interview with CNBC, Bastian called Trump's tariffs the "wrong approach."
He also noted that the U.S. exports more aerospace products than it brings in.
"That's a really important fact to know and I hope our leaders in Washington are paying attention to that," Bastian said on the earnings call.
— Leslie Josephs
U.S. President Donald Trump looks on during a meeting with Israeli Prime Minister Benjamin Netanyahu (not pictured) in the Oval Office at the White House in Washington, U.S., April 7, 2025.
Kevin Mohatt | Reuters
Trump in a Truth Social post says he is "immediately" raising U.S. tariffs on Chinese imports to 125% "based on the lack of respect that China has shown to the World's Markets."
But Trump in the same post says he has "authorized a 90 day PAUSE" for other countries, pointing to what he says are more than 75 nations who have reached out to negotiate.
That pause, and "a substantially lowered Reciprocal Tariff during this period, of 10%," are both "effective immediately," Trump writes.
Read the full post:
Based on the lack of respect that China has shown to the World's Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately. At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable. Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately. Thank you for your attention to this matter!
— Kevin Breuninger
US President Donald Trump looks on during a meeting with Israeli Prime Minister Benjamin Netanyahu in the Oval Office of the White House in Washington, DC, on April 7, 2025.
Saul Loeb | Afp | Getty Images
Trump's job approval rating fell sharply after the rollout of his sweeping global tariff policy a week ago, a new Economist/YouGov poll shows.
The survey found that 51% of respondents disapprove of the job Trump is doing as president, versus 43% who view his efforts positively.
Trump's disapproval gap widened by five percentage points from the pollster's prior survey, conducted from March 30 to April 1 — a day before he unveiled his so-called reciprocal tariffs.
The new poll found 56% of Americans said that Trump's efforts to slap tariffs on imports have "gone too far." Just 27% say they've "been about right."
Respondents' views of Trump's handling of jobs and the economy also soured: 51% disapprove and 41% approve, according to the poll. That is a drop of seven percentage points from the prior survey.
The poll surveyed 1,741 respondents — most of whom were registered voters — and has a margin of error of 3.1%.
— Kevin Breuninger
Residential homes in Discovery Bay, California, US, on Thursday, Nov. 7, 2024.
David Paul Morris | Bloomberg | Getty Images
The escalating trade war could ultimately dent the U.S. mortgage market — if China, Japan or other foreign nations choose to sell U.S. mortgage-backed securities in response to Trump's tariffs.
At the end of January, more than $1.3 trillion worth of U.S. MBS was held by foreign countries, according to Ginnie Mae. That amounts to 15% of the outstanding total.
Should those countries choose to sell, mortgage rates would rise.
"If China wanted to hit us hard, they could unload treasuries. Is that a threat? Sure it is," said Guy Cecala, executive chair of Inside Mortgage Finance.
— Sara Salinas and Diana Olick
Workers work on a production line manufacturing smart automotive central control navigation products at a factory of Beidou Intelligent Connected Vehicle Technology Co. (BICV) in the High Tech Industrial Development Zone in Suqian, Jiangsu Province, China April 9, 2025.
China Daily | Via Reuters
Chinese imports will generate $1.24 billion in tariffs collected each day after Trump's new duties take full effect, global trade data company ImportGenius estimates.
Imports from Vietnam will generate $94.86 million in tariffs collected each day, according to ImportGenius, which shared its estimates with CNBC.
Tariffs on imports from the European Union will generate $12.2 million in duties collected daily, the company said.
Total annual tariffs collected on imports from China, Vietnam and the EU will top $640 billion, the company estimates.
- Lori Ann LaRocco and Dan Mangan
U.S. Senate Minority Leader Chuck Schumer (D-NY) speaks during a news conference on Senate Republican’s Budget Resolution legislation at the U.S. Capitol on April 4, 2025 in Washington, DC.
Kayla Bartkowski | Getty Images
Senate Minority Leader Chuck Schumer says that a "market crash" spurred by Trump's tariffs is lighting Americans' retirement accounts "on fire."
The plummeting market has "vaporized a whopping $104,000 from the average retirement account," Schumer says from the Senate floor.
"That's when you factor in a 17% drop in the Standard and Poor's 500 since the middle of February," he says.
"That's years, sometimes decades, of people's savings gone in a flash."
For Americans retiring soon, Trump's tariffs are "like a brick over the head," Schumer says.
— Erin Doherty
A cargo ship sits outside of the Port of Elizabeth marine terminal seen from Bayonne, New Jersey, U.S., April 9 2025.
Shannon Stapleton | Reuters
An "on the water clause" will allow cargo entering U.S. ports today or already in transit at sea to avoid being subject to reciprocal tariffs that took effect today and Saturday.
The clause was contained in updated guidance on tariffs of Chinese imports released by U.S. Customs and Border Protection.
The guidance says that cargo already on its way to the U.S. will be subject to a base tariff rate of 10% that Trump announced in more than 180 countries last week — but not to extra, reciprocal rates of varying levels imposed on scores of those countries in recent days.
Any cargo "loaded onto a vessel at the port of loading and in transit on the final mode of transport on or after 12:01 a.m. EDT April 5, 2025, and before 12:01 a.m. EDT April 9, 2025, and (2) are entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. EDT on May 27 2025, are subject to the 10% additional rate in lieu of the country-specific rate of duty," the guidance says.
The May 27 date gives ocean freight sufficient time to arrive in North America once on the water.
— Dan Mangan and Lori Ann LaRocco
Passengers go through the gate at the exit of the East high-speed railway station in Huai'an city, in China's Jiangsu province, July 12, 2024.
Nurphoto | Nurphoto | Getty Images
China issued an alert warning its citizens and students of the potential risk of traveling in the U.S. and attending schools there.
"Recently, due to the deterioration of China-US economic and trade relations and the domestic security situation in the United States, the Ministry of Culture and Tourism reminds Chinese tourists to fully assess the risks of traveling to the United States and be cautious," the ministry said in an alert.
China's Education Ministry issued a similar alert to students studying in the U.S.
In 2024, approximately 1.6 million Chinese tourists visited the United States and more than 250,000 students enrolled in U.S. schools.
— Dan Mangan
Thomas Kurian, chief executive officer of cloud services at Google LLC, speaks during the Google Cloud Next '19 event in San Francisco, California, April 9, 2019.
Michael Short | Bloomberg | Getty Images
Google is trying to determine its response to tariffs that will increase the cost of goods imported to the U.S., the search engine company's cloud CEO, Thomas Kurian, said in an interview with CNBC's Deirdre Bosa on Tuesday.
"The tariff side is so fluid," he said. "I don't want to comment on it, because it's changing by the minute. We're working similar to every other company to look at what we should do."
Google has taken steps to lower the cost of sending requests to its artificial intelligence models, Kurian said. In addition to renting out Nvidia graphics processing units, the company also offers its own Tensor Processing Units.
"We co-engineer the model and the infrastructure," he said. "We're able to do an exceptional job with quality and cost and latency, and the customers who use it love it."
— Jordan Novet
Pharmaceutical stocks are reeling after Trump reiterated that he is planning to impose "major" tariffs on drug imports with the stated goal of bringing more manufacturing back to the U.S.
Amgen and Merck shares were down about 2%, while AbbVie shed 3%.
Trump's remarks at an event in Washington did not provide many details on how these levies would be structured, but Bank of America analyst Tim Anderson speculates Trump will use a "Section 232 Investigation."
If this is true, Anderson said it could take some time to execute, based on past examples. With this strategy, an investigation is launched to determine if importing specific goods is a threat to national security. If it is, then action can be taken.
Medical products were excluded from the "reciprocal" tariffs announced April 2. This was in keeping with long-standing trade agreements that have exempted drugs from tariffs.
— Christina Cheddar Berk
A car hauler truck makes its way to the Ambassador Bridge to cross into the United States at Detroit on April 1, 2025 in Windsor, Canada.
Bill Pugliano | Getty Images
Canada's 25% auto tariffs took effect on U.S.-produced vehicles and many parts in American cars and trucks.
The new levies differ in important ways from Trump's tariffs implemented last week.
Canadian officials purposely carved out individual auto parts from the tariffs and are taking into account the United States-Canada-Mexico Agreement, or USMCA, trade deal with the new levies. There's also a remissions process that could allow companies some relief from the duties, according to Canadian officials.
Canada's response includes 25% tariffs on vehicles from the U.S. that are not compliant with USMCA — or CUSMA, as Canada refers to it — as well as non-Canadian and non-Mexican content of USMCA-compliant fully assembled vehicles imported into Canada from the U.S.
Canadian Prime Minister Mark Carney said Canada's new levies are expected to generate 8 billion Canadian dollars ($5.6 billion), which will be used to help workers and companies affected by Trump's tariffs. Vehicle imports from the U.S. totaled CA$35.6 billion in 2024, according to the Department of Finance Canada.
— Michael Wayland
European Commission President Ursula von der Leyen looks on as she meets with Iceland's Prime Minister Kristrun Frostadottir (not pictured), in Brussels, Belgium April 9, 2025.
Yves Herman | Reuters
The European Union voted to approve retaliatory countermeasures against 25% tariffs imposed by the U.S. on steel and aluminum.
The European Commission, the bloc's executive arm, said collection on the duties would start April 15.
The tariffs were set to target a wide range of goods, including poultry, grains, clothing and metals, according to a draft document seen by CNBC in March.
The EU has not released a final list of affected products and declined to comment when asked what it would include.
The EU also faces tariffs of 20% on almost all U.S. imports.
— Jenni Reid
Omar Marques | Lightrocket | Getty Images
Trump Media shares popped on the heels of Trump using his initials — DJT — at the end of a social media post telling people, "THIS IS A GREAT TIME TO BUY!!!"
DJT is also the stock ticker symbol for Trump Media, which owns the Truth Social app that the president uses.
Trump often signs his Truth Social posts "DJT" when the topic of those posts does not relate to stocks or the market.
— Dan Mangan
President Donald Trump listens to a reporter's question during a meeting with Israeli Prime Minister Benjamin Netanyahu in the Oval Office of the White House, in Washington, April 7, 2025.
Kevin Dietsch | Getty Images News | Getty Images
Trump is urging people to relax as trading restarts after four straight days of U.S. stock market declines.
"BE COOL! Everything is going to work out well," Trump wrote on Truth Social three minutes after markets opened in the red, again.
"The USA will be bigger and better than ever before!" he wrote.
In a follow-up post, he insisted, "THIS IS A GREAT TIME TO BUY!!!"
— Kevin Breuninger
U.S. President Donald Trump speaks, on the day he signs energy-related executive orders at the White House in Washington, D.C., U.S., April 8, 2025.
Leah Millis | Reuters
Trump is pressuring House Republicans to immediately pass a massive reconciliation bill that enshrines the president's campaign wish list of tax breaks and spending cuts.
"It is IMPERATIVE that Republicans in the House pass the Tax Cut Bill, NOW!" Trump wrote on Truth Social.
"Our Country Will Boom!!!" he wrote.
Trump has repeatedly urged Congress to pass what he calls a single "big, beautiful bill," claiming it is essential to the success of his economic agenda.
Senate Republicans over the weekend approved a framework for the bill.
— Kevin Breuninger
An employee makes Christmas products at Goosh toy factory in Yiwu, Zhejiang province, China, Nov. 10, 2021.
Aly Song | Reuters
Trump's tariffs on China are already hampering Christmas sales.
About 87% of Christmas items sold in the U.S. were imported from China in 2024, amounting to roughly $4 billion in goods, Reuters reports.
Orders for those year-end items typically get finalized by mid-April, producers told the news service. This year, the U.S. orders aren't coming in.
"So far this year, none of my American customers have placed any orders," Qun Ying, who runs an artificial Christmas tree factory in China, told Reuters. "Of course it's about the tariffs."
Read the full report by Reuters.
— Sara Salinas
Michigan Governor Gretchen Whitmer discusses the U.S. economy, and domestic and foreign policy priorities during a speech in Washington, D.C., U.S., April 9, 2025.
Elizabeth Frantz | Reuters
Michigan Gov. Gretchen Whitmer says her state is already hurting from Trump's tariff regime, even as she expresses support for the president's goal of reshoring U.S. manufacturing jobs.
"I'm not going to sugarcoat it: These last few days have been really tough for Michigan," the Democratic governor said in a speech on the economy.
The Great Lakes State is highly dependent on the steady flow of goods from trading partners that fuel its auto industry, which comprises 20% of the state's economy, she said.
Whitmer described a cascade of economic consequences as a result of Trump's tariffs, as carmakers stockpile parts, suppliers face higher costs and dealerships raise prices.
"It really is a triple whammy: Higher costs, fewer jobs and more uncertainty," she said.
Whitmer has been discussed as a possible contender for the 2028 presidential cycle.
— Kevin Breuninger
Sen. Elizabeth Warren moved to force a vote on a resolution to repeal Trump's tariffs by canceling the emergency declaration used to justify them.
"By putting across-the-board tariffs with virtually every nation, on virtually every product, with no planning and no rhyme or reason to the numbers, is just creating economic chaos," she said on CNBC's "Squawk Box."
Warren said the emergency law was designed for far greater scenarios, calling for more Republicans to join in the bipartisan legislation.
"I think tariffs are a very important tool in our economic toolbox, but they have to be used in a way that is targeted," Warren said.
Warren added that her most serious concern about tariffs is price increases and inflation, creating an environment for businesses to raise costs.
– Laya Neelakandan
Jamie Dimon, CEO of JPMorgan Chase, speaks on CNBC's "Squawk Box" outside the World Economic Forum in Davos, Switzerland, Jan. 22, 2025.
Gerry Miller | CNBC
JPMorgan Chase CEO Jamie Dimon says a recession in the U.S. is "a likely outcome" of the Trump tariffs.
He was asked by Fox Business News' Maria Bartiromo whether he personally expects a recession.
"I think probably that's a likely outcome," he replied.
— Erin Doherty
Air France-KLM CEO Ben Smith said the company currently sees demand holding up, despite tariff uncertainty.
"We would like more certainty, more clarity, for sure," Smith said on CNBC's Squawk Box. "So far, we're not seeing anything at this point."
The company will report earnings on April 30 and has thus far not lowered its forecasted guidance, Smith added.
Airline stocks dipped after Delta said the company won't expand flying in the second half of the year because of the shifting trade policies.
– Laya Neelakandan
Walmart pulled its first-quarter operating income outlook to help it "maintain flexibility to invest in price as tariffs are implemented."
"Clearly, our environment has changed, so that makes this really exciting for us," Walmart CEO Doug McMillon said ahead of an investor presentation in Dallas. The remark drew a laugh from the room of investors, bankers and reporters.
"It's clearly a fluid environment," he said. "And while we don't know everything that's going to happen, of course, we do know what our priorities are, and we know what our purpose is, and we'll be focused on keeping prices as low as we can. We'll be focused on managing our inventory and our expenses well."
"We've learned how to manage through turbulent periods," he said.
— Jacob Pramuk and Melissa Repko
Rep. Don Bacon, R-Neb., talks with reporters after a meeting of the House Republican Conference in the U.S. Capitol on Tuesday, November 14, 2023.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
Rep. Don Bacon, R-Neb., says that the tariffs are a "high risk move" by Trump that should have congressional oversight.
"I'm not anti-tariff across the board," he just said on CNBC, noting that China and other nations with adversarial trade relationships with the U.S. should have tariffs.
"But I don't really think a trade war with the world is a smart way forward," he says.
Bacon has introduced a bipartisan bill to curb the president's authority over tariffs. He says that he likely has the support of a "handful of Republicans" in the House on the measure.
"I'm not trying to tell the president how to negotiate, but he has to come to Congress and request approval, when he wants to do tariffs," he says.
— Erin Doherty
Treasury Secretary Scott Bessent arrives for a meeting on the House side of the U.S. Capitol on Tuesday, April 8, 2025.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Bessent is calling for China to come to the negotiating table over tariffs, singling out the fentanyl issue as a potential basis for reciprocity.
"I think it's unfortunate that the Chinese actually don't want to come and negotiate, because they are the worst offenders in the international trading system," Bessent told Fox Business.
"They have the most imbalanced economy in the history of the modern world, and I can tell you that this escalation is a loser for them."
Bessent said Trump and Chinese President Xi Jinping have "a very good personal relationship, and I am confident that this will be resolved at the highest level."
"A very good start would be for them to make a gesture on the precursor fentanyl, because distributing drugs in China is punishable by death. Why don't they apply the same standards to the people who are exporting these chemicals to the US?" Bessent said.
—Jeff Cox
Ed Bastian, CEO of Delta Airlines, speaking on CNBC's Power Lunch on Dec. 17th, 2024.
Adam Jeffery | CNBC
Delta Air Lines CEO Ed Bastian said Trump's shifting trade policy is the "wrong approach" and is hurting domestic leisure and corporate bookings alike.
The carrier said it is too early to update its 2025 forecast, which Bastian in early January said was going to be the airline's "best financial year in our history."
Bastian's comments are a stark change from the optimism many CEOs had before the Trump administration took office. Bastian said in November the Trump administration's approach to regulation would likely be a "breath of fresh air."
In addition to market turmoil, concerns about higher prices from tariffs and mass government layoffs, airline CEOs have noted they're seeing declining international travel demand into the U.S., particularly from Canada, which threatens to drive up the $50 billion deficit in international tourism spending.
— Leslie Josephs
President Donald Trump answers a reporters question during a meeting with Israeli Prime Minister Benjamin in the Oval Office of the White House on April 7, 2025 in Washington, DC.
Kevin Dietsch | Getty Images News | Getty Images
Trump is urging CEOs to move their businesses to the U.S.
"This is a GREAT time to move your COMPANY into the United States of America, like Apple, and so many others, in record numbers, are doing," Trump posted on social media.
"ZERO TARIFFS, and almost immediate Electrical/Energy hook ups and approvals. No Environmental Delays. DON'T WAIT, DO IT NOW!"
— Christina Wilkie
Read the original article
Comments
"It’s the T-bills wot dun it."
That’s my read on why the U.S. just paused the global tariff hike to 10%.
From the beginning, I’ve believed the executive branch's real goal was to push down the yield on the 10-year Treasury. Why? Because Uncle Sam has to refinance a mountain of debt this year, and the cost of that depends heavily on Treasury yields — especially the 10-year. That’s the rate that sets the tone for everything from mortgages to corporate borrowing.
So they tried to spook markets. Introduce global tariffs. Stir up uncertainty. And it worked—at first. Yields dipped. Traders moved to Treasuries as a typical flight-to-safety.
But then something flipped.
Instead of being seen as a safe haven, U.S. debt itself started to look shaky. Maybe it was the deficit outlook, maybe the global response to tariffs — but whatever it was, yields started climbing. Fast.
At that point, the strategy backfired. The executive branch had no choice but to walk it back. So they paused the tariffs.
Because when your national budget depends on cheap debt, you can't afford a crisis of confidence in your bonds.
> Instead of being seen as a safe haven, U.S. debt itself started to look shaky
There's also a more basic answer to why US debt got more expensive. There is no such thing as a "trade deficit". You cannot import something without exporting something else. That something else, in almost 100% of the situations, is dollars. What do you do with dollars, if there's nothing you want to buy? You buy debt. So, every trade deficit ultimately tends to export debt. We have long known that government debt is proportional to trade deficits.
The problem with tariffs, in this context, is that they are being used as a signal that we don't want to sell people dollars anymore, explicitly saying "no more trade deficits". In doing so we are choking off the supply of dollars used to buy debt (rather abruptly), so that US debt is chasing fewer dollars and has to give a bigger yield as a result.
What's worse, is that because we are signalling that the tariffs are meant to be permanent, and we're seeing reciprocal tariffs as a result. When that happens, it means that using dollars in the future will purchase fewer US goods, so the time discount of money has gone up too. Further driving up yields to make bonds attractive enough to sell.
US debt was mostly being bought because "safe". The US being seen as politically and economically stable and the center of the world. Right now that argument is much harder to make.
And meanwhile there is always a lot of US debt that needs to be rolled over (i.e. re-issued to a willing buyer.)
Except for the data point of today's 10-Year Treasury Auction which had a normal, usual result.
Why do people keep repeating this nonsense? 2008? Every "recession" for the last 50 years? Nobody was under the impression that the US was economically stable. Go press max on the 10 year bond yields and tell me what you see. The "crash" puts it to where it was not even a year ago. For 10-year bonds.
By collinmanderson 2025-04-1023:47 The main point is during every recession for the last 50 years, the US government has never missed a loan payment on its debt, even during recessions. It has a near perfect credit score.
Compared to literally every other economy in the planet, the US is economically stable.
By insane_dreamer 2025-04-0921:44 > We have long known that government debt is proportional to trade deficits.
And so far we've been cool with that because it:
- continues to make the USD the dominant global reserve currency, strengthening our economic and political clout
- allows us to borrow cheaply to finance our military and whatever else we're spending $ on
By lawlessone 2025-04-0920:373 reply isn't this also kinda opposed to having the dollar as the dominant world currency?
Lots of countries settle trades between each other using dollars.
Making it harder to get those dollars will leave them seeking to use something else to trade.
By ashoeafoot 2025-04-0921:552 reply Leaving the euro! Authoritarian currency is as good as their word.
By matheusmoreira 2025-04-102:081 reply BRICs were making plans to introduce their own reserve currency as an alternative to the USD. Trump once threatened 100% tariffs if they did.
https://www.msn.com/en-us/money/markets/aggressive-tariffs-f...
https://www.msn.com/en-us/money/markets/trump-threatens-100-...
https://www.bloomberg.com/news/articles/2024-12-02/south-afr...
These developments are going to be interesting.
By magicreadu 2025-04-0920:584 reply Having dollar being the worlds currency is not necessarily a good thing. Yes, you can borrow at low interests rate for a while. But guess what? Those are still debts. And eventually rates rise due to inflation. Now you have hollowed out your industrial base and you are stuck with tons of debts.
Even if dollar gets weaker, better to have less debts and more industrialization
You are exporting services. Vast amounts of highly profitable services.
By ashoeafoot 2025-04-1011:39 They really did and then they didn't
This is all correct, but it's a first principles explanation that doesn't explain why US bonds, and in particular the 10-year note, spiked today. Yes, eventually excessive tariffs would have that result. They literally hadn't even taken effect yet. So this doesn't explain the bond motion today.
Someone was dumping, we don't know who or why. But the answer to that question is a lot (a lot) more important than people realize, and certainly more so than the immediate market motion or tariff policy.
Honestly if the answer was "The PRC was unloading bonds to send a message" that's sort of the best option, as they have limited wiggle room to continue to do so without wrecking their own financial situation.
If it's "The market as a whole lost confidence in US debt", then we're fucked no matter what Trump does next.
By ladyanita22 2025-04-109:59 It's heavily rumored it was Japan.
https://x.com/Nihonpolitics/status/1910096159835594786?t=RWB...
By sdenton4 2025-04-104:57 "someone"... Or lots of people looking at US stupidity and deciding that their long term bonds were suddenly looking like a bad investment.
By disgruntledphd2 2025-04-106:22 The FT reported that lots of hedge funds were unwinding a bunch of trades as they needed liquidity.
Hmm.
The problem is that China holds only 2.6% of US Debt as of February 2025. Can they leverage that small a percentage to make a market move like that? Especially assuming they didn't dedicate all of their holdings to that action?
By gehwartzen 2025-04-1011:47 I think it’s largely irrelevant now. The cats out of the bag and any country holding large amounts of t-notes and facing hostility from the US will dump them to get Trump to back off.
By JumpCrisscross 2025-04-105:36 > we are choking off the supply of dollars used to buy debt (rather abruptly), so that US debt is chasing fewer dollars and has to give a bigger yield as a result
Well, also, the holders of our debt now need liquidity. So they sell this famously-liquid asset we've been selling them for decades.
By skybrian 2025-04-101:46 It's usually not "dollars." It could be any investment or service that could be bought using dollars. And calling foreign investment an "export" is just confusing.
By PaulDavisThe1st 2025-04-0920:581 reply > You cannot import something without exporting something else.
This is incorrect when your national currency happens to be the global reserve currency. All it requires is for the other country to be willing to accept dollars in payment.
[ EDIT: even that's wrong. All it requires is someone being willing to accept dollars, either in payment or as part of a currency exchange. ]
Exporting dollars is exporting something. Combine a constantly depreciating dollar with constant rates of trade and you could end up in a steady state.
However, we define trade deficits to exclude financial transactions for various reasons.
By PaulDavisThe1st 2025-04-0921:574 reply If by "exporting something else" you include dollars then fine, but I don't believe that was what the GP was saying.
By ToucanLoucan 2025-04-0921:363 reply The real issue is people are still treating this reactionary buffoonery as if it's a trade policy that warrants critique. It isn't. Trump is a fucking idiot and he has surrounded himself with other fucking idiots and they and the reactionary base of fucking idiots they've created are cheering him on for doing fucking idiot things.
A journalist successfully reverse-engineered the likely formula used to arrive at the figures for each nation, and it's not only implemented stupidly, it's also wrong from first principles. It's the same thing an actual school child might come up with if you asked them to. This is the same kind of "economic policy" cooked up by dumbasses on reddit who sincerely believe they are qualified to "fix US trade."
If our congress wasn't also packed full of ineffectual liberals and other fucking idiots, he'd be impeached by now for sheer incompetence.
It's the same issue we had in the last Trump admin. This nonsense is elevated to undue credibility by serious people discussing it seriously. It shouldn't be debated, it should be mocked, relentlessly, mercilessly, cruelly. As should Trump himself, as should his supporters, as should his sycophantic followers. Mock, belittle, make fun of, bully, parody, just continuously until every single one of these people refuses to approach a microphone.
It's especially such a farce because what do they expect? If trump said the sky is green and the ocean is red, you'd find scores of these useless faux-intellectuals trying to "prove" the truth, and each data point of evidence would simply be met with various forms of "no it isn't! The sky is green! The ocean is red!"
In their world, any "evidence" to the contrary must be manipulated or misinterpreted, because as we all know the sky is green, the ocean is -- oh, he said it's yellow now? And the sky is red? Hah, of course! We knew it all along, it was the plan, stupid!
And meanwhile...
Most of the democrats' tiny minds struggle to operate outside of a context of rigid rules and procedures. A context of arguing a point and getting at least some degree of fair debate in return.
But this is another age of populism. It doesn't matter what you argue, on either side. Debate transforms, serving only to transmit your message to your side, ideally while inspiring them and demoralizing the enemy. It matters that you seem confident and powerful while you say whatever you're saying. It matters that you seem invincible and indefatigable.
Their world won't be back for quite some time, assuming something at all like it sticks around. They'll keep operating like robots, not understanding why an excellent diss or crude mockery matters more than 1000 additional volumes of "proof" about something in contention.
Literally the funniest thing about it is that LLMs conjure this "solution" when asked to deal with trade deficits using tariffs. It perfectly possible that one of Trump's people just asked ChatGPT and they implemented the answer.
Also the love affair with tariffs comes from a guy that wrote a book with his ideas and in that book he made up economic expert to support his views. (Ron Cara)
By matwood 2025-04-100:36 Bravo!
By kamaal 2025-04-104:45 >>You cannot import something without exporting something else. That something else, in almost 100% of the situations, is dollars.
If you want the world to trade using your currency. You have to give them dollars. That is buy something from them. That is, imports.
All of this comes a section of US politics not being able to understand why the dollar standard even exists.
By mindslight 2025-04-1019:07 Yep, and despite the dwindling numbers they just keep on coming up with new ways of fucking it. "When you're a star they just let you do it"
By drumdance 2025-04-1113:02 Sadly, this go-round it's Gen X more than Boomers. We voted for Trump disproportionately compared to other age cohorts. I'm embarrassed on behalf of my idiot friends from high school.
Incompetence is way more dangerous than people realize.
These tariffs are China's Four Pests campaign. Mao, a very trump like figure, decided to protect Chinese crops by destroying sparrows that were picking at them. Killing sparrows killed a predator of insects which did more damage to crops. This coupled with reality denying policies and ignoring experts led to one of the most devastating famines the world has ever experienced.
Hand waiving away this policy that denies reality and hurts America as a rational plan that went wrong is absolutely dangerous. Killing sparrows was "rational" in the same way these tariffs are. Authoritarians believe in power over reason. They do not like submitting to the authority of those who have studied problems because it is an attack on their own supremacy, so they fail to predict second order effects, which were likely obvious.
The damage this administration is doing to trust will be felt for generations. An agreement with America will have no value. No world leader will care what we say, they will only look at what we do. They will see power we have not as potentially being used for their own defense, but as a potential attack on their own sovereignty and they will wish to see us weakened so that they can spend less resources trying to determine our intentions.
By woooooo 2025-04-0923:25 If we're going full Mao, we'd be remiss if we didn't note that their plan for industry during the cultural revolution was "the proletariat will own small smelting operations next to their house". It checks out ideologically, workers controlling the means of production.. it just didn't work in reality.
Reminds me a lot of the thought process around having more manufacturing in the US by slapping tariffs around.
There is absolutely a Cultural Revolution feel to the communication by and around the president. See e.g. Bill Ackman's fully-prostrated worshipful response on Twitter this morning. The guy is a successful billionaire! And he needs to sound like a literal cult member in public lest he lose influence.
Yes, project 2025[1] is our own cultural revolution/great leap forward.
The authors said: "We are in the process of the second American Revolution, which will remain bloodless if the left allows it to be."[2]
[1]https://en.wikipedia.org/wiki/Project_2025 [2] https://www.washingtonpost.com/politics/2024/07/03/heritage-...
By georgemcbay 2025-04-101:31 The obeying in advance and reflexive glazing is scary in a Twilight Zone or slow-start-of-a-zombie-movie sort of way, but the fact that Trump is playing very fast and loose with due process, talking seriously about "deporting" American citizens and is actively applying economic death penalties to people on his bad side (like the EO stripping security clearance not only from Chris Krebs, but everyone who happens to work at his current employer) is scary in a "is the US as we know it actually going to survive this?" kind of way.
And I'm just pulling a few things off the top of Many Very Worrying Things here for brevity.
By sinuhe69 2025-04-105:47 And don’t forget the Jan 6 types. They are the Red Guards of Trump and he used them on Jan 6 as an experiment. Pray we don’t have to witness a new culture revolution in our time!
By spacemadness 2025-04-0920:476 reply People are so desperate for this to be rational. Which itself is entirely irrational given the information at hand.
By steveBK123 2025-04-0923:121 reply Smart Trumpers are the worst of the bunch. Continuously inventing PHD 5D chess rationalizations for his actions that he immediately invalidates with his next erratic action. Better to just be along for the vibes than to pretend its a strategic, well thought out, well executed plan.
By BeFlatXIII 2025-04-0922:00 "very stable genius," indeed
It could be a very straightforward dump and pump scam, as well. We know this admin isn’t above petty monetary graft.
It seems to be the simplest possible explanation, too. Then again, never attribute to malice…
By bauolo 2025-04-0922:38 [flagged]
By makeitdouble 2025-04-101:45 I genuinely think it's rational.
Not clever, or justified, or well though out, or based on any solid evidence. But there's probably a rationale behind it.
Now, ideally, we shouldn't have to care what the rationale was if there was any way of just getting back to "normal", but the same way Mao wasn't a flash in the pan, I assume we're looking at a few decades of it for the US as well.
Or this is like the long history of American tariffs which gave it world class industry. We are in the midst of a 4th industrial revolution and all this insane manufacturing tech being developed just gets shipped over to china because nobody in the US wants to touch it for fear of failing.
For every four pests Mao had 100 successful projects that nobody talks about. Harm reduction is not an optimal strategy for any game.
By hayst4ck 2025-04-109:52 https://en.wikipedia.org/wiki/Great_Chinese_Famine
The Great Chinese Famine was a famine that occurred between 1959 and 1961 in the People's Republic of China (PRC). It is widely regarded as the deadliest famine and one of the greatest man-made disasters in human history, with an estimated death toll due to starvation that ranges in the tens of millions (15 to 55 million).
That's 3% to 10% of China's population starved to death at the time.
By lazide 2025-04-1011:36 Name a couple of those ‘100 successful projects’ eh?
By boringg 2025-04-102:27 Correction. Mao is Mao like. And you could call Trump a Mao like person, not the other way around.
By j4dmebbe 2025-04-100:15 [dead]
By magicreadu 2025-04-0920:4612 reply Both you and OP are not looking at this from the right angle. The goal here is to decouple US from China. In the meantime, tariffs are raised on every country to gauge which side they are on. Once US knows who the allies are, they will negotiate to have those allies put up massive tariffs on China as well to prevent transshipping.
US wants nothing to do with China. As the biggest consumer economy in the world, the have that right.
And China has shown that agreement with them has no value. Remember that China promised trump in term 1 to massively import US goods and reduce fentanyl, in part to slow trumps tariff down. They did neither of those things. Trump hasn’t forgotten that.
Decoupling from China will lead to China annex Taiwan sooner. China will have the USA and the world by the balls then, so not sure we want that to happen quicker.
And I don't think anyone is calling themselves allies of the USA right now. The whole world is looking to decouple from the USA. Europe is completely over the USA, they can't rely on them for leadership, protection or for trade.
From a tech perspective, expect Europe to decouple from the USA from an economic and cultural perspective in the next decade. Smartest thing Europe can do is to create alternatives to US services, build its own defense industry and stop looking at the USA for any leadership.
By wonderwonder 2025-04-101:061 reply "The goal here is to decouple US from China. In the meantime, tariffs are raised on every country to gauge which side they are on. Once US knows who the allies are, they will negotiate to have those allies put up massive tariffs on China as well to prevent transshipping." You literally made this up. There has been no announcement about this from the admin. Its all just speculation.
By feyman_r 2025-04-101:16 >>> US wants nothing to do with China. As the biggest consumer economy in the world, the have that right.
Yes, they have the right, but it doesn’t mean this is the right way. Consumers don’t suddenly stop consuming, and factories in the world don’t immediately start producing. This is like a slow flywheel; had we been almost spinning and ready to jump, it would make sense. This is not that.
Also, China is a super power which controls more than factories today. I agree they need to be checked, but sudden changes are not the way. I wish we did it by building trust with allies and then pushing China. Right now, even our allies are wary of us.
By timeon 2025-04-0922:37 Isn't this bit naive? Because in order to decouple, one would expect that there would be policies to actually prepare for production inside US and then apply tariffs. Not other way around.
If the goal was to decouple from China then tarrifs would only be on China and we would encourage trade to move from China to other countries. The administrations actions have the opposite effect. It says the US is untrustworthy even to it's allies and maybe siding with China is not so bad. Note I don't like or trust the Chinese government and don't think other governments should try to get closer to them but Trump's actions make such moves much more likely
By tail_exchange 2025-04-103:011 reply > In the meantime, tariffs are raised on every country to gauge which side they are on
Why on earth would you be on the side of a country like this? Why we should be an ally of the US right now, if Trump can't even uphold agreements he signed himself 5 years ago? What guarantees do we have that, as soon as we decouple from China, the US won't treat us as a vassal because we gave up our only alternative? The only rational choice is to either be neutral or ally with China.
> In the meantime, tariffs are raised on every country to gauge which side they are on
Tariffs were raised on Australia, UK, New Zealand and Canada.
It's asinine to say that you can trust these countries with your most secret intelligence (Five Eyes) but not enough to say treat them as allies.
By defrost 2025-04-101:25 > Remember that China promised trump in term 1 to massively import US goods and reduce fentanyl
China stopped selling unlicensed fentanyl to the USofA, it later stopped supplying fentanyl to both Mexico and Canada.
The problem was that criminals in the USofA and Mexico purchased precursor chemicals in bulk and made their own fentanyl. Restricting precursors led to pre-precursors being purchased in bulk for drug labs to make their own precursors in order to make fentanyl.
The fentanyl problem continued under Trump and rapidly grew in size during his first term.
~ https://www.nytimes.com/2025/03/18/opinion/trump-china-trade...In 2021, Mr. Biden issued an executive order imposing sanctions on individuals and companies engaged in the illicit opioid trade. His Treasury Department put sanctions on more than 300 individuals and entities, freezing entire networks of fentanyl suppliers and traffickers out of the international financial system. In 2023 and 2024 he identified China as a major illicit drug-producing country for its role in the synthetic opioid trade — a blow to the reputation of China’s chemical industry. Simultaneously, the Biden administration pushed U.S. law enforcement agencies to conduct aggressive investigations and build indictments against dozens of Chinese citizens and companies that were trafficking fentanyl precursor chemicals into the United States. [..] Biden secured a personal commitment from President Xi Jinping to restart counternarcotics cooperation in November 2023 [..] And we made progress. International fentanyl supply chains showed signs of disruption, forcing traffickers to change sources and tactics. Together with other diplomatic initiatives and an expansive public health campaign, the number of lethal fentanyl overdoses in the United States has dropped. In the 12 months ending September 2024, overdose deaths were down an estimated 24 percent from the year prior.What has Trump done now he's back in office? Destroyed any cooperation with China on counternarcotics cooperation.
Tariffs alone will not push China’s government to help reduce drug overdose deaths in the United States. In fact, with Beijing already imposing retaliatory tariffs and proclaiming that it’s “ready to fight till the end,” Mr. Trump’s blunt-force tactics might drive China to cooperate less on fentanyl, not more. With the stakes as high as they are, American communities cannot afford a miscalculation.By wqaatwt 2025-04-104:34 > And China has shown that agreement with them has no value
Unfortunately they still have much more value than agreements with the US and Trump specifically. Which Canada and Mexico found out the hard way.
Of course the probability that Trump actually forgot that he was the one who no signed USMCA and none of his “advisors” dared to tell him is not insignificant..
By throw16180339 2025-04-0920:521 reply [flagged]
My opinion on this is that the damage has already been done. Successive administrations have already loaded up debt massively and participated in a Ponzi scheme with the Fed to pretend asset valuations in the US make sense. Sooner or later the chickens will come home to roost, and valuation multiples in the US will come to resemble those that have existed throughout history, and those which exist in all other parts of the world currently.
When this happens, there will be a big recession, and that is exactly the moment companies will start deploying AI in earnest to save money. This will create a downward spiral.
Yes, the Trump administration is incompetent. But, if you insist on blaming an administration, I would propose Obama and Biden as more reasonable culprits. It was Obama who presided over the massive Fed intervention into markets that enabled unbridled government spending increases. It was Biden who presided over the most problematic parts of the Covid response. Trump is just an idiot. Obama and Biden are actually bad guys.
> that is exactly the moment companies will start deploying AI in earnest to save money.
Companies are already deploying AI everywhere they possibly can as quickly as they possibly can. They aren't waiting for anything. AI just isn't up to the task of replacing most workers just yet. It's still unclear if it ever will be, but they're shoving AI into everything they can to see how it holds up, to see what it breaks, and to give it more data to work with so that it can hopefully be improved.
By reubenswartz 2025-04-101:19 The Fed intervention was under Bush. The vast majority of the "COVID response" was under Trump. If you look at deficit spending by administration, you will also see that you have things backwards.
By paulryanrogers 2025-04-0923:551 reply Trump 1 increased the debt more than Biden, and Trump 1 wasn't even mitigating a train wreck of COVID inaction left over from his predecessor.
By drumdance 2025-04-1113:03 Budget deficits are not the same as trade deficits. Trump barely even mentions the debt and clearly does not care about it one bit.
That doesn't pass muster. If they had much interest in balancing the books, they wouldn't be ripping huge holes in revenue collection.
By alabastervlog 2025-04-0920:232 reply These "here's the actual reason they're doing this!" things rarely hold up under any amount of scrutiny.
Then again, they're tempting because the things they're doing are also really bad ways to accomplish Trump's stated goals.
By teamonkey 2025-04-0922:20 Humans struggle to find meaning where there is none to find.
By miltonlost 2025-04-0920:501 reply The "actual reason" always seems to be virtuous in the end. Like "omg Trump had such good intentions!!! He just made a lil implementation booboo". It's always giving mountains of good faith to people who have lied for decades and lie today. Nothing about the clear market manipulation or greed of the party.
By dan_quixote 2025-04-0923:51 Agreed - that's a huge indicator that they don't care about fixing the deficit. But they also don't want to be seen making it vastly worse.
By marcosdumay 2025-04-101:20 I don't think the GP argued they want to balance the books.
In fact, if they wanted to balance the books, they wouldn't care about the interest rate. The only reason to bet your economy into reducing the interest is if you want to go deeply negative on the books.
> If they had much interest in balancing the books, they wouldn't be ripping huge holes in revenue collection
That can be explained by the fact that the cabal also doesn't like paying taxes.
By toomuchtodo 2025-04-0919:46 And that they’d use tariffs as a regressive tax to replace income tax increases.
By overfeed 2025-04-0921:54 2 step challenge to die downvoters:
1. Find instances where Trump or the billionaires backing him and/or in his cabinet are open to increasing tax as a solution to the deficit
2. Explain why the the administration and it's members are deadset against an effective IRS & Biden's effort to increase staffing at the IRS.
> That doesn't pass muster. If they had much interest in balancing the books, they wouldn't be ripping huge holes in revenue collection.
It's not about balancing the books. It's about not making a problem far worse.
You remember the global financial crisis of 2008? The reason most of the bailed out countries requested bailouts was their bonds spiraling out of control when they had to refinance their debt. That was the primary reason they reached out to the likes of IMF and had to undergo austerity programs.
The Trump administration put the US on that path with their global tarrifs and provoking their main trading partners, specially China.
By satellite2 2025-04-1011:29 While I agree on the direction I don't think the specific argument completely holds.
The countries in this situation in 2008 where European countries that forfeited their central banks. Having relatively recently switched to the Euro made this situation relatively novel and those governments not used to not have access to this last resort tool. There was also a lack of legislation at the European level to give the central bank authority to intervene. And culturally some countries where much more scared by their recent history by the inflation risk. Which led to push backs and delays in the face or urgency. It's now probably roughly sorted at the EU level.
The USA don't have and never had this issue. The position of the FED is very clear: it will never let the US govt default. So the only risk for US bond holders is inflation (and price if they want to exit early).
By throwaway48476 2025-04-0919:221 reply If they wanted to balance the books they'd print money and distribute it to US citizens.
That's fair but I suggest that they are actually deficit hawks for the long term. In the short term, they've got financing troubles hence they care about the yield.
What if (and I realize this is an extremely pessimistic take) their plan is to just default on the debt and rely on military blackmail? Sure, there's a Constitutional prohibition on questioning the validity of USA debt, but the administration shrugs at the Constitution on a weekly basis. The endless whining about how 'unfairly' other nations are treating the US, 'ripping us off', 'laughing at us' etc is a precursor for aggressive action, and I think it's quite likely that at some point they'll come out and say 'we don't have to pay debts to countries that have been scamming us the whole time.' About one quarter of the population will support MAGA no matter what, and if things get bad enough the administration can just announce they've been 'forced' to take over Greenland and Canada.
A flashing negative warning sign of this would be issue of new kinds of Treasury securities with new complex rules.
By Hikikomori 2025-04-0919:393 reply Didn't they just announce a 1 trillion budget for defense?
Deficit hawks would not lower taxes for richest segment, which were sure money in exchange of maybe money. Nor would they slash IDS
No, they are nor deficit hawks. They don't care about deficit, except when trying to blame it on someone else.
Gotta be honest, I think it's more likely that Trump just has a strange fixation on tariffs. I don't really think there was a whole lot of planning around them other than "I want them".
How he's deployed them and spoken/written about them makes me think he thinks it's a good way to strong arm countries and he wanted to strong arm everyone.
By seanhunter 2025-04-1011:33 Everyone’s a deficit hawk in the long term. It’s easy to talk tough on reducing dept at some non-specific time in the distant future probably after you leave office.
By csomar 2025-04-0920:17 If your rate is 0% fixed (just a hypothetical), you can roll-over your bonds indefinitely for free. This means, in practical terms, your debt is 0.
By gsanderson 2025-04-0919:504 reply Donald is weak. He was always going to fold. Once China and the EU called his bluff and retaliated, he was done. Lasted less than 24 hours.
Sir, the tariff on china has just increased to 125%.
I don't know why he held off on the other countries, but choose to go to "war" with China.
By gsanderson 2025-04-0920:05 I assume because of Peter Navarro (and of course Ron Vara).
By qingcharles 2025-04-100:59 They said they were going to war with China over the Panama Canal too, yesterday. Using the "most lethal fighting force", apparently.
By blitzar 2025-04-0920:22 14d chess of course.
The tariffs that he kept on would be nothing to sneeze at in more… civilized times. The market overreacted, as was priced in the vix at 50+. We are not out of the woods yet.
By kalleboo 2025-04-101:59 He didn't even know that the EU had put in tariffs until a journalist asked him at the press conference after he announced the pause.
The EU actually executed some strategy. First they said they would love 0/0 tariffs, which sounds fair to pretty much anyone. And when that didn't fly they put on selective reciprocal 25% tariffs. What Trump did looks even more like a clown show.
By bitshiftfaced 2025-04-0920:141 reply They floated 0/0 tariffs before the reciprocal tariffs (and again after), and their tariffs this morning was in retaliation for the steel and aluminum tariffs, not for the reciprocal tariffs.
By shawn-butler 2025-04-0920:591 reply [flagged]
James Carville in the 90s: “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.”
I agree. The bond markets are the ultimate heavy hitter. They have government level impact. See also: The French Revolution.
By toomuchtodo 2025-04-0919:47 By notahacker 2025-04-0922:00 Or Liz Truss, the shortest serving Prime Minister in British history less than 3 years ago...
By rcarr 2025-04-0923:31 The name's Bond, Market Bond.
By digianarchist 2025-04-0920:263 reply The T-Bill auction today went off without issue and that was before this announcement.
https://www.barrons.com/articles/treasury-bond-auction-today...
By sethammons 2025-04-0921:14 so the uncertainty in the market drove investors to T-Bills, driving up their price and lowering their yield, effectively making servicing the national debt marginally cheaper. By 0.03%, which I imagine stacks up with trillions of dollars compounding.
By JumpCrisscross 2025-04-105:38 > T-Bill auction today went off without issue and that was before this announcement
We're nowhere near the primary auctions failing. That would literally require a full financial crisis.
By magicloop 2025-04-0920:35 That's a great data point. Thanks!
This makes some sense... but they didn't pause the tariffs. There's still a 10% tariff on everybody (including on top of Mexico and Canada, who were previously exempted from the tariffs announced last week) and the tariff on China continues to rise to preposterous proportions.
By greatpatton 2025-04-0920:27 exactly and I think it's shocking that everyone is just repeating lies without putting them in context.
By matt-p 2025-04-0920:00 Would it have been too inflationary/recessionary to impose these crazy tarrifs on 'rest of world' AND increase china to 125% at the same time so he simply had to sacrifice one to do the other?
By keepamovin 2025-04-0923:23 Sounds like a sage take (where do I study economics?), but why do people doubt the meaning is as straightforward as the messaging: during campaigning trump said he would rectify the unfair tariffs, and in the lead-up and since election he has talked lovingly about tariffs, with the goal being (as almost everything trump) domestic fortification through jobs, industry, and generating revenue from those who have abused the US largesse to enrich themselves - and now balk at a just correction.
I think there is a backdrop/larger picture (probably nuanced and multifaceted levers against all other parties negotiating), but the main I think is to shake up the global economic landscape to make it easier to improve it. Reset.
I see a lot of complex takes on here that require quite a lot of sophisticated theories...and while I enjoy the complexity and the perspectives (and - wish I had studied economics to really grok them), I think it's really just as simple as they say. And what they say they're doing makes sense.
Maybe the truth is no one really knows what will happen, and so it's a bold move but we'll see. But I believe they're doing what they think is right for America to strengthen the country, just as they say - not some 3 degree removed chess strategy, just simple.
Genuinely wondering why so many people are still giving the Trump administration this much benefit of the doubt that their moves are strategically sound? We're really still doing the whole "3D chess" thing with this guy after he has shown over and over again that he mostly just acts on impulse and the primary qualification for his advisors is loyalty over any type of intelligence or expertise?
By gsanderson 2025-04-0920:01 Baffles me too. His ignorance is astonishing.
By marcosdumay 2025-04-101:281 reply I dunno. Somebody literally wrote a guidebook for him to follow, but I haven't even glanced over it.
The stuff I've seen people quote from the book have all been stupid, but the kind of stupidity seems to be a "do X, so you'll get Y" where "Y" is really bad and the author thinks it's good. So I guess I do expect some kind of coherence from him.
That said, I don't remember anybody claiming Project 25 talks about tariffs.
By probably_wrong 2025-04-0923:36 I don't think that Trump himself is competent, but I'm not be so sure about the people around him. The effort it took to put him above the law was at least a decade in the making, so clearly someone knows what they're doing.
I don't think it's a coincidence, for instance, that Steve Banon's strategy of "flooding the zone" looks exactly as the type of chaos currently coming from the White House.
> Genuinely wondering why so many people are still giving the Trump administration this much benefit of the doubt that their moves are strategically sound?
Since I'm one of 'those people' who's been willing to grant Trump some benefit of the doubt in the past, I'll respond with my take. tl;dr Trump's handling of the tariffs have been such disaster, there's simply no possibility it was based on a strategically sound plan. So, in answer to your question, this episode has caused me to substantially foreclose my prior willingness to grant Trump some benefit of the doubt.
To be clear, while I've tried to remain open-minded re: Trump I've never felt that he's especially smart and certainly not someone I'd ever personally like or hang out with but I'm also one of those contrarians who doesn't think every politician or public figure needs to be someone I personally like or approve of in a moral sense. I've also been willing to concede that some things done by the executive branch during his first term were generally positive (whether because of or in spite of Trump isn't clear). I also think his policies and statements have been subject to an unprecedented degree of negative spin in the media - sometimes well-deserved but always hyped overwhelmingly to the negative. So I made an effort to look past the constant headlines of, essentially, "orange man bad in all possible ways." I also decided to ignore Trump's own bizarrely extreme pronouncements and focus only on what he really put into practice and, most importantly, the tangible real-world impact of those actions on the broad population and economy over time (not the extrapolated predictions in the media).
However, even to me, how he's handled this tariff thing has been a complete shit show. I've spent a fair bit of time trying to understand the various explanations, contextualizations and even 'hidden grand plan' theories proposed by some and they simply aren't plausible. It's not a 'master negotiator strategy' because he asked for concessions but never made any concrete proposals of quid pro quo. There was no attempt at serious negotiation with most major trading partners (according to the WSJ) and thus no possibility of meaningful deals.
Now suddenly (somewhat) reversing course like this a few days after going so extreme and then publicly doubling down on his long-term commitment to the 'grand strategy' is unbelievably damaging to any remaining shred of credibility his administration may have had. It nukes any possibility that he was doing a 'crazy guy on the subway' strategy of punching his adversaries in the face and making them believe he was so nuts he'd saw off his own arm just to keep beating them over the head with it - all to cleverly convince them to make meaningful concessions they'd never make any other way. Yeah, well now that he blinked in less than a week, nothing he can do will ever make them believe that. I mean, if that was the plan, it was a terrible plan and poorly executed to boot, but flipping like this is even worse.
All I can figure is that it was a 'crazy guy' plan but that he intended to keep it going for several months and then, when his opponents were bloodied enough he'd open negotiations and "win" in a master stroke. Except he completely miscalculated the degree of economic destruction he'd cause in U.S. markets and has now had to not only fold but reveal he was playing a weak bluff all along. I'm struggling to come up with any way this could have been worse for the U.S. and Trump's interests. After this, it's hard to imagine any trading partner negotiating in good faith, or perhaps, at all with Trump over tariffs in the next 90 days. The only rational strategy for them is to play along and gather info while conceding nothing meaningful and simply wait and see what Trump's ultimately going to do long term.
As far as I'm concerned, I bent over backward to grant Trump some benefit of the doubt and give him a chance to prove himself but the tariffs have been so bungled they're impossible to put it in any positive light. So far, it appears to be an epic disaster of hubris and naive miscalculation.
Is it possible that Trump is just a stupid person? That he genuinely believes the tariffs will be good, that he's being influenced by stupid people (Navarro) that believe this, and that the reaction of bond markets that didn't follow his overly simplistic model made him hit the brakes?
A lot of this stuff is on a YouTube education level, not even a degree. I would be shocked if the US does not have a bunch of economic advisors who tell them what problems there are and what should be done. They've probably mapped out all the next steps. Most US presidents are Harvard-level smart, but the White House has been around long enough to find a way to deliver reports to the simpler ones.
There's a lot of obvious big problems - confidence in the USD, debt rising faster than GDP can catch up, military overextension, China's rise outpacing US, inequality, inaccessible education and health care, opioid crisis, etc.
Trump has a good eye for identifying this - that's why he won the election despite all his weaknesses. It's clear he knows some of this but doesn't understand it - his comments on a BRICS currency, for example. Yes, a "BRICS currency" would threaten Pax Americana but it's on literally nobody's mind.
I feel like, if anything, he's an overplanner. A smarter leader would think, these moves will have unplanned side effects. Trump makes a lot of roundabout moves like DOGE. These moves have a target, but he hasn't thought about the side effects. And when a crisis like COVID hits, it disrupts the complex plans, which is why he reacts so poorly to them.
By iugtmkbdfil834 2025-04-0920:57 << I would be shocked if the US does not have a bunch of economic advisors who tell them
Oh, US does have its share of economic advisors[1] of all stripes. And, I would love to be corrected on this, when SHTF, they immediately argue for NOT the very thing they normally argue for. They can tell what should be done for sure.. just not when it comes to their money..
(edit)Therein lies the issue or at least a part of the it.
[1]https://www.forbes.com/sites/mattnovak/2023/03/12/larry-summ...
By shigawire 2025-04-0920:49 >I feel like, if anything, he's an overplanner.
Trump is famous for ad libbing and making up whatever he wants in the moment. His first administration was not prepared to govern. I'm not sure how this is seen as over planning.
This just reads like pure fantasy to me. Have you not seen the account from numerous former Cabinet and White House officials about how lazy and incurious he is or how difficult it is to get him to read the reports put in front of him? Have you missed the way he has forced countless career officials out of the government through layoffs, firings, or pushing people to resign in protest? I don’t even know what to say to the idea that Trump is an “overplanner”, you even literally said “he hasn't thought about the side effects” a few sentences later. That’s “overplanning”?
By zzzeek 2025-04-100:09 that assumes a massive amount of economic understanding and intelligence on the part of the President that has simply been completely unobserved for his entire career.
occam's razor provides much better explanations here. He's an idiot obsessed with dominance games and thinks a tariff on a country means that country pays a tax to the US. He thinks trade deficits are bad, just like if I buy a toaster from Target, now I have a "trade deficit" with Target and I need to find something they'll buy from me.
He's a total dangerous moron and these attempts to come up with 11-dimensional chess rationalizations are misguided.
By SubiculumCode 2025-04-0921:15 Being boring is profitable.
You want to do tariffs for national security reasons? Okay. I get it. Now get congress to pass a bill levying the tariff, have that bill be smart, encourage not just on-shoring, but also near-shoring (Mexico, Canada) of key manufacturing and minerals, apply the tariffs more strongly against the key geopolitical rivals (China), implemented in a graded, predictable manner. Do not piss of every ally in the world, in general pursuing this hierarchy U.S. > Mexico, Canada > European, African, and Pacific Allies > China, Russia. Finally, for key , and highly specific strategic industries, provide subsidies.
By johnnyanmac 2025-04-0919:41 >Because when your national budget depends on cheap debt, you can't afford a crisis of confidence in your bonds.
Well the US is still having a dick measuring contest with its largest importer, so no worries. We'll still get plenty of crisis from that alone.
By reverendsteveii 2025-04-0921:30 I'd believe you if he hadn't already flipflopped on tariffs recently. I think it's much simpler than that: he's pulling whatever levers he has to squeeze everyone and then letting up the pressure on people who do what he wants. He already did this with Canada and Mexico, using tariffs to get them to make a show of border secy=urity.
By justin66 2025-04-0920:17 > Instead of being seen as a safe haven, U.S. debt itself started to look shaky.
Owning US debt is also simply less relevant to countries that are going to be trading less with the US. Countries which are ratcheting up tariffs with the US, for example.
By mizzao 2025-04-101:04 What about the insider trading that this facilitated? A few parties made HUGE profits with last-minute option trades today.
By Andaith 2025-04-100:47 This makes too much sense to be the real reason, if you ask me.
I think it’s being reversed because it cratered global oil prices and that would be a terrible horrible very bad thing _for Russia_.
im not an economist, I have no valid opinion on if this is right or not.
BUT, I actually started looking at moving more of the stable bond/treasury holding bit of my portfolio to foreign funds recently (in addition to moving more of the stock/mutual fund balance to international stuff).
If I'm thinking about that as an individual private citizen of the US, I can't imagine what actual professionals are thinking about.
By greenavocado 2025-04-101:101 reply Most foreign mutual funds and ETFs are classified as Passive Foreign Investment Companies (PFICs). PFIC investments face complex and often punitive tax treatment. Gains may be taxed at the highest marginal ordinary income tax rate (not the lower capital gains rate). Additional interest charges may apply. Annual filing requirements via Form 8621 for each PFIC
By rsynnott 2025-04-1010:05 They likely mean US-domiciled ETFs which hold foreign shares. The big providers (BlackRock, Vanguard and friends) typically have copies of their big funds domiciled in, at least, the US and Ireland (or sometimes Luxembourg); the European versions are UCITS-compliant, and often offered in an accumulating variant (not tax efficient in the US, but it is in some European counties), but otherwise basically the same thing.
For instance, here are two BlackRock ETFs tracking the MSCI emerging markets index, one US-domiciled and one Ireland-domiciled: https://www.ishares.com/us/products/239637/ishares-msci-emer... , https://www.ishares.com/uk/individual/en/products/251857/ish...
They are for practical purposes the same thing.
By intended 2025-04-105:28 This again sees more logic in this than there exists.
America doesn’t have ANY issue refinancing that debt. US treasury is the risk free rate. It’s the basis of an infinite number of financial models as the baseline level of risk people will tolerate. Every single analyst from here to China works on that basis.
This idea that you can’t refinance debt is nonsense. American firms are wildly profitable, and America used to be the safest bet to set up a new firm, or do ground breaking research.
If you wanted to make more money, increase taxes, and you can refinance debt even faster than this. Shifting the yields is … how does that apply to new bonds which would be auctioned??? The face value and rate are set anyway.
By derangedHorse 2025-04-0921:11 I don’t think this checks out. They didn’t walk any tariffs back until after the auction saw strong demand. It went opposite the way one would think setting the fall in bond prices the previous night.
By mfitton 2025-04-0920:32 I think this would be expected though, no? Sure, there's flight to safety, but you're also reducing exports to the US, reducing the number of dollars flowing to foreign nationals, which reduces the demand for treasury bills, which an excess of dollars would often be used to buy to have an inflation-"proof" store for your dollars without currency risk. You would also expect devaluation of the dollar from tariffs / trade-war, which I would also expect to cause selling of t-bills in favor of local currencies
By seo-speedwagon 2025-04-0920:052 reply Trump's obsession with tariffs dates back to 1988 when he lost an auction for the piano from the movie Casablanca to a Japanese buyer. Afterwards, he started complaining about how all these other countries are ripping America off, and here we are.
By kenjackson 2025-04-0922:31 "From the beginning, I’ve believed the executive branch's real goal was to push down the yield on the 10-year Treasury. Why?"
None of leaked conversations or prior discussions indicate anything like this. Peter Navarro has no even slightly nuanced agenda. He's been on record for years about this. I think their position was much more that they'd drive foreign tariffs down and would be able to make other demands against other countries, and they underestimated the tolerance even their base would have.
I find the most consistent explanation for Donald Trump is he does whatever is going to keep himself the top news story in the media. I don't think there's any deeply held belief other than if he doesn't think people are talking about him that's bad
By grvdrm 2025-04-109:40 I start with this explanation too.
In his interview yesterday he mentioned that he won his weekend golf tournament. Of course he did, otherwise it wouldn’t be newsworthy (still isn’t, but oh well).
Then he asked the reporter if she saw that he won. I think he asked twice.
I look at that simple interaction as the most accurate model of his behavior. Are people talking about me? Good. Why aren’t people talking about me? I need to do something to make sure they do. He may very well have actual intelligence but it doesn’t seem obvious that it is the catalyst of anything he does.
By macspoofing 2025-04-0919:351 reply >From the beginning, I’ve believed the executive branch's real goal was to push down the yield on the 10-year Treasury
You're making it seem that there's a plan ... but what if this is just regular incompetence coupled with capricious behavior from a chaos agent?
I'm watching various officials give interviews and all of them are non-committal as it pertains to expectations. Why? Because none of them actually know!!! Trump has arbitrarily and capriciously changed "the plan" many times.
I'd like to expand out why I hold this belief.
The political cohort behind the president is roughly in two halves. The first half are the original MAGA crowd (looking out for the working class, pro-liberty, anti-woke, etc.). The second half are the billionaire crowd.
The second group are active on pod casts, on Twitter/X, and are partly represented in government (directly or as advisors). An easy way to follow up on these people is to watch the All In Podcast or their related social media connections.
What these folks have said for a long time is that if USA stay on the same path, the USA goes broke after 10 years. So if you have long term investment in the USA, you lose your fortune in 10+ years.
This is the key motivation for their involvement in the current executive branch of government. This is why the DOGE program is so well supported by them.
If you lose the battle to reduce the 10-year Treasury yield, you lose the billionaires because they stand to make meaningful losses on a 10 year horizon.
I recognize the plight of the common citizen here; they are the plurality. But the big political levers come from these billionaires (absent a grass roots supported leader in the wings).
By zopa 2025-04-0922:14 If the goal to drive the yield on T-notes down, then cut spending and raise taxes. Get the budget into something like balance and the Fed will cut rates, and borrowing costs will fall. You don't need some 3D chess with a manufactured financial crisis.
When your rational explanation involves people shooting themselves in the head to cure a headache, something's off. There's nothing to explain here besides a weak and incompetent leader with a deep need for attention, surrounded by lots of enablers.
By rat87 2025-04-0922:44 I think only thing likely to make US go broke is Trump's actions.
DOGE doesn't save any money. Not only because it's created many legal messes that will take forever to work out in court but because most of those jobs are important and will eventually need to be replaced at great cost and with worse results. Also some of those jobs are for auditing inefficiency and prosecuting corruption resulting in more money spent. And on top of it all they'll be using these non existent savings to justify much larger tax cuts for the rich.
The reason it looks stupid is because it is. It's not that Trump is purely dumb he's just intellectually lazy and doesn't care about policy. He long ago decided he likes tarrifs on instinct so he put massive tarrifs despite the warnings that they would be disastrous
By jjgreen 2025-04-0920:49 I wonder who of those will prevail, a second Röhm purge maybe?
By notahacker 2025-04-0922:161 reply This belief seems to disregard the fact that the billionaire crowd hates markets being spooked far more than it cares about 10 year Treasury yields (which in any case went up precisely because markets were spooked; if you wanted to do something about reducing long term bond yields, committing to just about any other economic policy would be more credible). Even some of the most sycophantic billionaires were evidently furious about the tariff policy.
Also, Trump has been obsessed with the idea of tariffs since the 1980s.
By twixfel 2025-04-106:38 They could just raise taxes. Detonating a bomb under the global financial system just to avoid raising taxes is still stupid. Trump is stupid.
> But then something flipped.
The bond market is always the adult in the room. The UK PM lasted like 44 days when the bond market pushed her out [1]. In this case, the flip was that all the chaos led to people leaving behind the USD completely. Trumps view of the US/World is ~30+ years out of date. There are other stable places to put money now where it used to only be USD.
[1] https://www.cnbc.com/2022/10/20/uk-prime-minister-liz-truss-...
By sschueller 2025-04-0920:091 reply The cabbage outlasted her...
https://x.com/jaayjayAT/status/1908793907976040839?t=aP60h4w...
>something flipped.
China dumped 500B in treasuries and the basis trade blew up is what happened
Tariff deals were still going to happen regardless. The pause is a stop gap for the basis trade (20+x levered), of which an uncontrolled unwinding threatens the entire financial system. Fed already had a bailout facility ready as a plan B. Too big to fail and all that
By greenavocado 2025-04-101:081 reply It's okay, the Fed has been insolvent at least two years now https://thehill.com/opinion/finance/3955889-the-fed-is-bankr...
By TeaBrain 2025-04-1015:40 Calling the Fed bankrupt isn't a close to accurate description of what was described in the column. The post describes a unhealthy balance sheet, but the Fed can't go "bankrupt" in the common sense, as it banks itself, with the assets held on it's ledgers purchased and backed by the hypothetically infinite monetary supply. All that was described in the column wasn't bankruptcy as they put it, but how the Fed organizes assets by their quality.
By ZeroGravitas 2025-04-0919:45 It's scary to think he's just not got a clue and doing whatever he thinks of in the moment isn't it?
I mean the guy who doesn't understand tariffs, at all, but has publicly loved tariffs for 40 years in charge of tariff policy. That's disturbing to contemplate head on.
Much better to invent some comforting fantasy of secret plots being carried out semi-competently to achieve nebulous but vaguely noble goals.
By throwaway20174 2025-04-0919:571 reply The refinance is a real issue, but it doesn't matter too much cause the Fed can (and will) always intervene. They can soak up any supply to push the 10 year down.
Same reason why it doesn't matter if China etc.. wants our treasuries. Fed is always there to buy them.
I'm not an economist but I believe this is only the case so long as USD is the global reserve currency. If that ceases to be the case, the Fed has a lot less power to print money and inflate debt away. I believe this is the case Ray Dalio has been making for some time now:
By refurb 2025-04-100:45 Every country has the ability to print money and buy its own debt. Japan has printed billions and bought equities.
Being a global reserve currency only increases the extent of that printing, not the ability itself.
By jmyeet 2025-04-0920:50 Uncertainty is a massive problem and may itself bring on a recession more than any tariffs. It's a huge factor in the oil market crash that's currently going on. I've seen one oil expert say that Obama was the best president for the oil industry because he did... nothing. There were no kneejerk policy changes on a weekly basis. And anything requiring large capital investments thrives on certainty.
As for Treasury yields spiking, that was no accident. As part of China's (justified) retaliation to the tariffs, they started selling off 10 year Treasuries intentaionlly to spike the rates because that's one thing the Trump administration seemed to care about.
I still don't know what the endgame is/was here. Some seem to think devaluing the dollar was the goal to boost exports but also to effectively devalue US soverieng debt. There's precedent for this eg FDR's sovereign devaluation of the dollar and Reagan's Plaza Accord.
By KoolKat23 2025-04-100:02 This makes a lot of sense, although I wouldn't give them the credit of being so coherent in their understanding/targeting of what they were doing.
In my opinion the reason it backfired, what they proposed wouldn't merely cause a confidence in crisis, but also implied a fundamental shift in the market and the way it worked, this would also have to be priced in, hence the drop. There was no longer necessarily a "buy the dip, the market will go up at some point".
By eigart 2025-04-0919:25 It remains to be seen to what extent this restores confidence.
By ctrlp 2025-04-0923:28 The T-bill strategy wasn't a secret. Why they walked it back could also be attributed to bringing trade partners to heel at a point of maximum leverage. Or a lack of resolve in leadership. Or messaging and opportunism.
Will it pay off? Who knows. If it does, it will go down as one of the greatest gambits in modern history. If not, perhaps the end of dollar hegemony? End of the Global American Empire? Or nothing at all?
No. This isn't an economic policy.
It’s time to stop bending over backwards pretending that Trump’s tariff threats are part of a coherent economic strategy. They’re not.
When you drop the economic lens and view tariffs as a political tool for consolidating power, everything suddenly makes sense.
Here’s how it works: - Tariffs hurt corporations. They jack up costs, raise costs. Executives know this. The markets know this. - But there’s a loophole: carve-outs. Trump has the power to exempt individual companies or industries from these tariffs. That means if you’re a CEO and your business is on the line, your only option is to go to Trump and ask for mercy. - That’s not policy. It’s leverage. It creates a system where corporate leaders must show loyalty to get relief. Not because it’s good for the economy, but because it’s good for Trump. Maybe it's public support for his initiatives, attacks on his enemies. Whatever it is, it gives him political power.
This mirrors the playbook used by authoritarian leaders throughout history. Look at Putin. His use of tariffs wasn’t about growing Russia’s economy—it was about punishing enemies, rewarding loyalty, and projecting control. Tariffs became a way to rewire power dynamics.
By MVissers 2025-04-0921:07 Also, this trade war pushes the USA close to a war with China over Taiwan and maybe Panama Canal, which is exactly what you want as an authoritarian to stay on longer. Find an enemy and use emergency powers to maintain control.
By Ar-Curunir 2025-04-0920:32 You are assigning too much rationality to this group of people. The cruelty is the point, not some hare-brained scheme to push down yield or whatever.
By AnimalMuppet 2025-04-0919:41 I'm not saying you're wrong. But 10-year yields are up for the day, so if he was trying to calm the bond markets, it didn't work.
By neilwilson 2025-04-0919:251 reply The only aggregate alternative to holding T-bills is to hold dollar bank accounts. At which point the bank holds the T-bills instead or the Fed does as balancing assets to the account liability.
It could all be refinanced to three month bills without any issue at all.
Ultimately balance sheets have to balance. In a floating exchange rate system there is no aggregate out.
By magicloop 2025-04-0919:40 You are correct on the mechanism here. But my point is adjacent to that. Whilst you always get a buyer for the debt (here the bank), it is the yield that matters as the re-financing cost cannot be escaped irrespective of the owner.
By wk_end 2025-04-0919:23 Trump has been on Team Tariff for 40 years. “There is no 3D chess, he’s just eating the pieces.”
By mixologist 2025-04-108:00 Or maybe investors didn't buy treasuries because they were in on the scam all along. They wanted to stay liquid because the plan was always to crash the markets and spook foreign investors while US investors are informed to wait for the tweet about the 90 day delay and buy cheap stocks.
By throwaway2037 2025-04-116:18
In the last 75 years (post WW2), has there every been a crisis of confidence for US gov't debt? I cannot think of any instances.> you can't afford a crisis of confidence in your bondsBy addicted 2025-04-0922:45 Yeah but the damage is done.
A safe haven isn’t much of a safe haven if that’s where the fire has started.
By watwut 2025-04-0920:17 Trump floating the idea of defaulting on debt on purpose certainly did not helped.
Generally the president acting like an insane maniac about to become dictatoe makes bonds look less trustworthy.
By insane_dreamer 2025-04-0921:41 > Because when your national budget depends on cheap debt, you can't afford a crisis of confidence in your bonds.
True. The odd thing is that the previous tariffs announcements on supposed allies, plus all the other sabre-rattling that Trump has been doing, NATO-bashing, flipping on Ukraine, etc., had already triggered a crisis of confidence. So what did they expect? That unexpectedly unleashing of wildly unreasonable and poorly-calculated tariffs would inspire _more_ confidence? If getting investors to flock to T-bills was the goal, it was always bound to fail. (It only worked in the short term because T-bills are the default in a time of market uncertainty; but when it became clear that the uncertainty was caused not by the market, but by the government's behavior, well then T-bills don't look so good anymore).
By cjohnson318 2025-04-102:35 > Maybe it was the deficit outlook, maybe the global response to tariffs
Maybe it was the idea of 4 more years of shenanigans like this that freaked everyone out.
Yeah, the bond market started saying firmly "stop fucking around" and an adult seemingly appeared in the room
By pixelpoet 2025-04-0920:21 I realise I'm asking for an imagined scenario but- who would this adult be, that somehow escaped the purge of competence and oversight in favour of sycophants, and how would they broach the topic with Trump (who of course wants to be the Big Boy and loves supplication)?
By buss_jan 2025-04-1010:00 Interesting theory. China might have seen through this ploy and that's why they dumped treasuries.
By rurp 2025-04-0921:40 I am extremely skeptical that a president and a party that massively increase the national debt every time they hold unified control, and whose single legislative goal this year is to do exactly that once again, is engaging in a sophisticated conspiracy to lower interest payments. If Trump and the GOP actually cared about the debt payments they wouldn't be arguing about how many trillions of dollars to add to it this year.
The much more likely scenario is that this is exactly what it looks like: an incompetent and corrupt president flailing around. Tariffs are an excellent tool for soliciting bribes since there are any number of ways various groups can be exempted, and this type of abuse has often happened historically. The ham-fisted way they have been implemented has done a great job of getting Trump attention. I've never seen anything to make me think that Trump cares more about the long term health of the country over getting bribes and attention for himself.
By louthy 2025-04-0920:42 > Maybe it was the deficit outlook, maybe the global response to tariffs
Or, maybe, and hear me out on this, maybe it was Donald Trump literally saying he might default on US debt.
Maybe.
By IAmGraydon 2025-04-144:06 >Instead of being seen as a safe haven, U.S. debt itself started to look shaky. Maybe it was the deficit outlook, maybe the global response to tariffs — but whatever it was, yields started climbing. Fast.
Seems pretty simple to me - bond yields moved up sharply because they follow inflation expectations. Bond holders take on inflation risk, so when future inflation is expected to increase, yields go up to compensate. Out of control tariffs equals out of control inflation, which equals rocketing bond yields. The fact that Trump's team didn't realize this would happen is both hilarious and frightening. This is Econ 101 stuff.
Just four hours before the U.S. administration announcement, posts here were already calling the surge in U.S. bond yields a "non-event." ( and being flagged..)
https://news.ycombinator.com/item?id=43630672
It was indeed about T-bills. Something Trump probably doesn't even know what it is. There’s no strategy, no objective, just sheer, unfiltered incompetence.
The stock market’s reprieve will be short-lived. In just eight days, this administration erased $5 trillion in market value, insulted its primary trading partner using language deeply offensive in Asian cultures, and made it clear to investors that it has zero credibility.
Futures are already negative, which is exactly what you'd expect. The market is responding. And let’s be honest: the claim about 75 countries eager to negotiate is a pure lie. The EU has publicly stated the U.S. administration was not even returning their calls.
By belter 2025-04-1012:06 "Trump economic advisor says bond market added ‘a little more urgency’ to tariff decision" - https://www.cnbc.com/2025/04/10/china-trump-tariffs-live-upd...
By anigbrowl 2025-04-0921:54 Correct. It seems to me the increased bond yields payments will significantly exceed revenue raised from tariffs. This is imho a bad long-term signal. I very much doubt the markets will just return to normal after the extreme volatility of the last few days - the huge tariffs on China will cause a lot of economic pain within weeks, and the administration's bellicosity toward Canada and NATO do not project stability and rational decision-making.
Besides the financial uncertainty, I doubt businesses want to make huge capital investments within the US to re/build factories in such a febrile environment. Will they be 'encouraged' to make 'donations' or purchase Trump golf club memberships? Will their foreign management staff be abruptly deported if someone in the administration sours on their country of origin? Will they wake up one day to find they've been denounced by conservative influencers?
By csomar 2025-04-0920:14 Yeah... if that was their reasoning then they are as dumb as a sack of rocks. The rates went up further after the tariffs pause today.
> Instead of being seen as a safe haven, U.S. debt itself started to look shaky.
No shit. Having an inconsistent policy because of clear incompetence (xx Dimensional chess) is a very bad sign for the world largest economy. At some point this will hit the bonds which is the foundation of this economy.
By tim333 2025-04-1011:20 That seems to be confirmed by el presidente:
Bessent said the decision had nothing to do with the markets.
“This was driven by the president’s strategy,” he told reporters outside the West Wing. “He and I had a long talk on Sunday, and this was his strategy all along."
Trump later contradicted Bessent.
“I was watching the bond market," he said. “That bond market is very tricky.”
(https://www.yahoo.com/news/week-trump-pushed-global-economy-...)
By straydusk 2025-04-0922:42 The idea that Trump had a goal as sophisticated as that is just hilarious.
By mempko 2025-04-0923:25 This sounds sensible but that's not what happened. The government debt is not an issue. Trump is more concerned about the stock market, and the market sent him a clear message.
By throw0101d 2025-04-1010:56 > From the beginning, I’ve believed the executive branch's real goal was to push down the yield on the 10-year Treasury.
The "executive branch" is Trump. Everyone else is just running around making up excuses for whatever his last decision was.
The "goal" is whether Trump feels like (not) having tariffs and whatever value he feels they should be.
There is no "they": it's just Trump (or maybe whomever he last spoke to that could change mind).
By caycep 2025-04-0923:00 this seems like an awfully convoluted and self defeating way to drive down bond yields....
By partiallypro 2025-04-0923:34 I honestly don't think this was their overall goal (it doesn't logically make sense, given tax receipts dip during recessions and governments often take on even more debt,) but I do think that is why they blinked.
By TomK32 2025-04-105:23 > But then something flipped. > Instead of being seen as a safe haven, U.S. debt itself started to look shaky. Maybe it was the deficit outlook, maybe the global response to tariffs — but whatever it was, yields started climbing. Fast.
So, it's not this unstable president, his insult-spewing vice-president and his buddy the hyperactive billionaire manipulating a social network for Russia and China that makes the rest world want to avoid the USA for the next few years?
By cavisne 2025-04-0923:38 These complex 4D chess strategies never really pan out. Maybe someone in the administration thinks that was the goal but not Trump.
During the campaign Trump said he wanted 10 percent tariffs on the world and 60 percent tariffs on China. After all the noise we are now at… 10 percent tariffs with the world and 125 percent tariffs on China (pending negotiation with China).
By fhub 2025-04-100:34 Trump has been in love with tariffs since at least 1988. See https://www.wita.org/trade-news/trumps-love-for-tariffs-bega....
By ruph123 2025-04-1015:09 Can someone ELI5 this?
By lossolo 2025-04-0923:08 Yeah, that seems accurate.
"Alarm inside the Treasury Department over signs of distress in the US government bond market played a key role President Donald Trump’s decision to hit pause on his “reciprocal” tariff regime, according to three people familiar with the matter.
Treasury Secretary Scott Bessent raised those concerns directly to Trump in their meeting that preceded the announcement, underscoring the concerns shared by White House economic officials who had briefed the president on the accelerating selloff in the US Treasury market earlier in the day.
The market turmoil has rattled administration officials and market participants because it’s the exact opposite of what historically occurs in moments of global economic crisis or volatility. US Treasuries are considered the safest corner of the market. It’s the place investors across the globe flee toward with the assurance that the dominant US role in the global financial system will ensure asset safety.
But at the same moment Trump’s tariffs were causing foreign leaders to question the durability of longstanding US security and economic alliances, the rapid selloff of safe-haven assets raised concern that financial markets have similar concerns.
Trump acknowledged he’d been watching the bond market, telling reporters after the announcement the market is “very tricky.”
A spike in yields in the 10-year benchmark was of particular concern for Treasury officials. When the yields rise, US consumers face higher costs on things like mortgage rates for homes and financing costs for businesses."
https://www.cnn.com/politics/live-news/trump-tariffs-cnn-tow...
By maxerickson 2025-04-0920:36 The yield really isn't that big a deal. It's hundreds of billions of dollars over decades if it moves by 1 percent. Compare that to tax cuts leading to trillion dollar annual deficits.
I mean, it could well be that they are risking the stability of the US economy to save money on refinancing the debt, but that would be a stupid thing to be doing.
By _DeadFred_ 2025-04-1017:34 Trump formulated his ideas on tariffs in the 1980s. He talked about them with Oprah in another ero. He didn't do this in preparation for some realization of the bond situation in 2025.
By marcosdumay 2025-04-100:58 > But then something flipped.
All those long 8 weeks that people spent complaining about soft power, and the US government spent trying to gaslight people saying that they don't even use the power... The people complaining were talking about something real.
By confidantlake 2025-04-0922:45 Why is this weird conspiratorial 5d chess theory voted to the top?
By varjag 2025-04-1018:52 You read too much into it. Trump is manipulating the market for personal enrichment, in the most mundane manner.
By energy123 2025-04-100:35 Most upvoted comment is AI generated slop.
By monero-xmr 2025-04-0919:202 reply I disagree. Trump has been threatening tariffs since 2016. Each step he gets closer to significant tariffs. This time he stepped back after they seemed real.
Now businesses know he really, super means it this time, so they get another reprieve. But next time it would be hard to claim Trump didn’t warn them.
By magicloop 2025-04-0919:33 I agree it's classic brinksmanship and the tariff views he has are genuine and long held. But his numerous signals to the Fed to ask to lower interest rates and the commitment to DOGE (which has the effect of lowering yields) is another strand in his thinking. The two are in conflict causing the flip-flop effect in short term policy.
By shaky-carrousel 2025-04-0919:38 Trump has been talking about tariffs since the eighties.
By roland35 2025-04-0919:42 I have a feeling the real reason is just that trump is a moron. I think a lot of people are reading it like poop sneered on the bathroom wall.
By Spooky23 2025-04-0920:42 I think you’re projecting more advanced thinking here than you can give them credit for. The administration doesn’t have military guys keeping discipline.
You have Trump who has an instinctive affinity for tariffs, and a wack pack of various characters doing whatever. I’d guess they thought the Chinese would roll over rather that start dumping bonds.
By vkou 2025-04-0923:59 If your goal is 'lower the rate at which you'll refinance a bit of debt by a quarter of a percentage point', blowing up your export economy, import and tourism industry, and introducing a national 40% sales tax seems like a really weird way to achieve it.
Given that all of those things would torpedo your ability to actually service debt, both new and old.
But what do I know? /s
The 10% apparently also apply to Canada and Mexico now, which they didn’t before:
> In a strange turn of events, the president seems to have added another 10 percent tariff to Canada and Mexico. Asked earlier if the 10 percent tariff extended to those countries, Scott Bessent, the Treasury secretary, said that it did. And a White House official clarified for me just now that that was the case. Previously, Canada and Mexico had been exempted from this round of “reciprocal” tariffs, though they still faced a 25 percent tariff that the president imposed last month on many of their goods.
https://www.nytimes.com/live/2025/04/08/business/trump-tarif...
Also china has 125% tarriff but the reason that they couldn't originally give 10% to Vietnam was trans-shipment of Chinese goods.
If it wasn't happening before, it certainly will be now.
What's actually wrong with them.
> What's actually wrong with them.
Market manipulation. 1. Sell. 2. Threaten tariffs. 3. Buy. 4. Walk back tariffs threats. 5. Repeat.
With the secret step 0: Pay enough of an Indulgence to get in the loop of when those are going to happen, and to stay in their good graces so the DoJ doesn't hit you for insider trading.
By dataviz1000 2025-04-100:01 "Gutsy Traders Make $1.5 Billion Triple-Leveraged Bet on Nasdaq 100" [0]
This was Monday morning when it was trading ~$40. It is at $53 now. What is 20% increase on $1.5 Billion? $300,000,000.
[0] https://www.msn.com/en-us/money/markets/gutsy-traders-make-1...
By natebc 2025-04-1011:35 I wonder how many executive branch staffers and their kin and kind bought the dip?
It's a pretty gross thing to think about.
That doesn’t make sense to me.
Money is not an end. It’s a (one) tool to get there. To the ends you want. To some sort of change in the world you want to achieve.
On that front this is incoherent. I vote incompetence.
By alpha_squared 2025-04-0920:092 reply I'm coming to the conclusion that the tariffs are a distraction. The 10% across the board appears more like a tax hike without calling it one while the focus on China is just the same old trade war from the first term with louder chest-beating.
I believe at this point it's a simple game of leverage. Look how much damage I can inflict. Now let's negotiate.
But a distraction from what? There doesn't seem to be any kind of obvious other thing they're trying to do with the cover. They're not exactly being secretive with ICE arrests, the mass layoffs from the federal government, or their weird campaign against DEI that the administration seems to have all but forgotten about.
By munificent 2025-04-0921:25 Trump thinks of himself as a powerful, insightful deal-maker. He pathologically needs to feel like he is doing something and his comfort zone for what kinds of things to do is "stuff that feels like business deals".
He knows very little about government and policy, but tariffs and dollars and percentages feels familiar to him. He's got a lever, and he can't resist yanking on it to show that he's in charge.
Whether yanking on the lever actually benefits the country or him is entirely besides the point. He's a narcissist and narcissists can't let go.
By magicreadu 2025-04-0920:142 reply The reason they have reduced all tariffs back down to 10% even for the countries that were obviously transshipping (Vietnam, Myanmar, Thailand, Cambodia) is that they need time to negotiate with those countries, to make sure these countries now put similarly high tariffs (100%+) on China, so that transshipping is reduced to nothing
By CobrastanJorji 2025-04-0920:25 Idiots, all. This feels like the sort of mistake I'd make. As in, me, myself, without a team of people planning and reviewing who could comfortably doublecheck when they thought I was getting something a little wrong in my orders. Which suggests to me that this is being done by one or two guys who do not have such a team. Which is insane.
Seems they reversed course on that. Or, they don’t know what they’re doing.
> It's been a confusing day.
> As Verity said, it turns out Canada and Mexico are not getting a new 10 per cent tariff after all.
> The White House reversed its earlier announcement in a new statement just now. Here's the bottom line: No new developments for Canada and Mexico today.
> That means there are still worldwide 25 per cent tariffs on steel and aluminum, on some auto parts in North America, and on some goods traded within North America outside the rules of the Canada-U.S.-Mexico Agreement on trade (CUSMA).
> The bottom line here: Trump is starting an economic war on China, and U.S. allies are all taking some friendly fire. But a large swath of Canadian trade is spared.
https://www.cbc.ca/news/world/livestory/trump-pauses-most-gl...
By ilamont 2025-04-0921:18 > Or, they don’t know what they’re doing.
Occam's Razor.
By magicreadu 2025-04-0920:322 reply They know what they are doing. The goal is decoupling from China. They raised tariffs on everyone to see which countries stood with US and which stood with China. Once each country has made their allegiance clear, they delay the deadline to give more time for negotiation. They likely want every ally to raise their tariffs on China to be very very high, to avoid any more transshipping from China.
By beloch 2025-04-0921:30 The U.S. ambassador to Canada has since informed the government that this is not the case, and the tariff's currently in place will remain unchanged for now[1].
However, with this administration, who really knows?
Perhaps Trump is staying quiet to avoid aiding Carney in the election. Perhaps he'll announce harsher tariff's on Canada tomorrow. Canada did retaliate and hasn't been hit with retaliation for retaliating, which gives the lie to Trump's statements that countries should refrain from retaliating if they don't want to be treated even worse.
There is not one whit of consistency or logic on display here.
[1]https://www.theglobeandmail.com/politics/article-canada-will...
Like when an LLM does a tiny coding error that isn't too noticeable though.
By neogodless 2025-04-0920:08 "Oh! Well this is not a mundane detail, Michael!"
By parliament32 2025-04-0920:32 This seems to have been clarified to not be the case, as of 30m ago -- no change to Canada/Mexico:
>There’s no change to Canada and Mexico tariffs, indicating that their levies aren’t going down to the 10% baseline. Recall that Trump initially threatened a 25% surtax on each of them. That morphed over time to affect non-USMCA compliant goods -- and it’s not crystal-clear exactly what proportion of Canadian and Mexican shipments that then affects. Canadian energy products also got a smaller rate.
https://www.bloomberg.com/news/live-blog/2025-04-08/trump-ta...
Possibly because lawsuits challenging the power of the President to impose tariffs under the Emergency Economic Powers Act are underway.[1] GOP support for Congress taking back control of tariffs is building.[2] At some point, Congress or the courts will take his toys away.
[1] https://www.newsweek.com/trump-tariffs-hit-lawsuit-group-his...
[2] https://thehill.com/homenews/senate/5236142-congress-tariff-...
I've seen relatively little discussion about these lawsuits, but I do think there is a pretty good chance that SCOTUS will rule these tariffs unconstitutional. (It's certainly more likely than Congress rescinding the powers they've ceded to the presidency.)
Constitutionally, the power to set tariffs resides with the Legislative branch, not the Executive branch. Congress has delegated some authority to set tariffs under certain conditions (namely, emergencies and matters related to national security). But the Court is clear that one branch cannot delegate all of its powers to another. The Court is pretty deferential to the Executive branch, especially in matters of national security. But no matter how much you squint, it's hard to see how setting broad based tariffs on all goods from every foreign countries qualifies under the Emergency Economic Powers Act.
It is a sound analysis but I think there are other non-legal factors at play.
If the president tries to do X, then the lawyers block X, then in political game theory the president "wins" in the eyes of the electorate because the president can argue "my plan was perfect, the execution failed due to the opposition, so I am not accountable to what has now happened".
The left might want to see a disaster play out to capitalize in the mid-term elections, laying the accountability directly on the president. The right might not have freedom of action because they fear a well-funded challenger for their seat.
In am interested in other people's opinions and ideas in this area. I agree it is too little discussed and analyzed. Please share your insights!
It can be more sinister.
If judiciary blocks X, then trump will say "these are the real bad guys, they are as worse as the dems, lets remove them". And BAM ! You have a dictator.
The sad part is that one of the most powerful nation in the world is filled with idiots who will lap up the above argument.
I would say that all this current situation is because of corporate greed, leading to a skewed distribution of wealth, leading to the evolution of a class of voters who are desperate, gullible and mis-informed.
The people on the left who want to see a disaster play out are mostly accelerationists. I think most on the left would worry more about the harm that economic disaster would be inflicted on people.
And more pragmatically, I think that Trump is so committed to causing disasters that he's likely to succeed at enough of his attempts that there should be pushback to as much of it as possible.
> I do think there is a pretty good chance that SCOTUS will rule these tariffs unconstitutional.
Unlikely. SCOTUS is cowed, as shown by the latest batch of rulings (https://www.npr.org/2025/04/08/nx-s1-5351799/scotus-probatio...). They want to avoid his ire, and interference.
Possibly, they are saving dry powder for a bigger fight.
By stogot 2025-04-109:56 They have each independently, on different cases, voted against the administration. Except one I think, but it’s also only been three months. And John Robert’s just rebuked trump. It seems they have enough backbone to not care about his ire, and have their own independent minds. Thankfully more than congress does.
By matthewdgreen 2025-04-0923:351 reply The Supreme Court, in a 5-4 shadow docket decision, just enabled the Trump administration to deport people under the Alien Enemies Act -- a law that requires a declared war or an "invasion or predatory incursion...by a foreign nation or government." So I wouldn't get too excited about the idea that they're going to make a big stand on tariffs.
By AnimalMuppet 2025-04-100:512 reply The Supreme Court, on its shadow docket, did not decide any such thing. It stated very clearly that it was not rendering an opinion on that subject. What it did decide was that due process applies, even to illegal aliens, even under the Alien Enemies Act.
By paulddraper 2025-04-100:442 reply I think that is true, strictly speaking.
But how do you justify all of the other trade deals made by other presidents?
Were those also unconstitutional? Or just Trump's because they went up not down.
By AnimalMuppet 2025-04-100:521 reply Were they negotiated by the president, and then ratified by the Senate? Then no problem.
Are there any examples pre-Trump that were not ratified by Congress?
By antognini 2025-04-1017:24 The past tariffs (including from Trump's first term) were targeted at specific industries like steel or aluminum so you could make a case that it was necessary for national security. Other trade deals that set a broad set of tariffs (like NAFTA) were ratified by the Senate.
By hello_computer 2025-04-0919:094 reply Seems kinda crazy that so much power was ever vested in the president.
How to handle emergency authority in a democracy has been a hard problem back to the Roman Empire. Read up on Roman dictators.[1]
By MrMember 2025-04-0922:28 Roman dictators have always fascinated me. It worked (for a while at least) because both sides agreed it was necessary and temporary. The people who appointed the dictator knew extreme measures were needed to navigate them through some crisis. The dictator knew if they tried to hold on to power longer than was necessary they would simply be removed or killed, their supreme power only extended through the crisis in which they were needed.
By tshaddox 2025-04-0920:57 I mean, it may not be a completely solved problem, but you don't have to be too clever to think that perhaps rules similar to the War Powers Act ought to also apply to the President's authority to apply tariffs.
By stevage 2025-04-0922:27 It's interesting to see it as an answer to the question, how long does it take to turn a well regulated democracy with a powerless head of state into an autocracy.
By rurp 2025-04-0921:54 We've all been learning just how much of the US system runs on assumption of there being some baseline level of competence and good faith. It hasn't been a pretty lesson.
I'm honestly not sure there is another way since laws can't cover all possible future edge cases with effective enforcement mechanisms. The simpler fix is to not elect blatantly corrupt and incompetent leaders, but voters failed that task and now the country is paying the price.
I'm starting to subscribe to the idea this was blatant market manipulation.
Trump is only out to make money, the guy never had any other thought in life since money gives him status, fame, and power.
It's a grift, as any other of his grifts, but now he can manipulate the whole stock market with his power.
There's nothing else that I can rationally come up with to explain this absurdity.
By hn_acc1 2025-04-0921:06 There's your problem - the word "rationally". NOTHING about MAGA / Trump is rational - it's all based on feelings.
By usefulcat 2025-04-0923:30 > Trump is only out to make money
Nope. Not even close. He's all about power, and the appearance of strength. It's no coincidence that he looks up to Putin.
Money is almost always a means to an end, and this is no exception.
