Trump Caves on 'Retaliatory Tariffs' After Bond Market Spooked

Chris Menahan
InformationLiberation
Apr. 09, 2025

President Trump on Wednesday caved on his plan to launch "retaliatory tariffs" against dozens of foreign nations after investors started dumping US treasury bonds.



From CBS News, "Trump pauses reciprocal tariffs for 90 days, increases China tariffs to 125%":
President Trump on Wednesday announced a 90-day pause on most of his new tariffs, and a lowering of the "reciprocal tariff" rate to 10%, effective immediately, he said on Truth Social.

The U.S. stock market surged immediately after the president's announcement. At the same time, the president said he's increasing the tariff rate on goods imported from China to 125%.

"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," he wrote.

Treasury Secretary Scott Bessent and White House press secretary Karoline Leavitt clarified to reporters moments later that the universal tariff rate for the next 90 days will be 10% for virtually all countries, with the exception of China.


From BBC, "Trump tariffs spark US government debt sell-off":
Confidence in the US economy is plummeting as investors dumped government debt amid growing concerns over the impact of Donald Trump's tariffs.

Governments sell bonds - essentially an IOU - to raise money from financial markets for public spending and in return they pay interest.

The US does not normally see high interest rates on its debt as its bonds are viewed as a safe investment, but on Wednesday rates spiked sharply to touch 4.5%.

[...] the sale of bonds in the US poses a major problem for the world's biggest economy.

The interest rate - or yield - for US government borrowing over 10 years has spiked sharply in the past couple of days from 3.9% to 4.5%, the highest level since February.

The rise has spooked economists because US bonds are traditionally seen as a so-called safe haven for investors to put their money in times of financial turmoil.

"Rising bond yields mean higher costs for companies to borrow, and of course governments too," said Laith Khalaf, head of investment analysis at AJ Bell.

"Bonds should do well in times of turmoil as investors flee to safety, but Trump's trade war is now undermining the US debt market," he added.
While interest rates on US government debt rose, the price of the bonds themselves fell as demand weakened due to investors offloading them.

Mohammed El Erian, chief economic advisor at Allianz and former boss of the biggest bond manager Pimco, said one reason US borrowing costs had shot up was because there had been an "erosion" of bonds being seen as a safe haven.

He added concerns over the impact of tariffs on inflation and US government budgets were also reasons.
Fox Business's Charlie Gasparino told it like it is:



I saw MAGA champions (who learned nothing from Trump's first term) all over my timeline the past week acting like Trump was formalizing a new America First trade policy with these tariffs and was prepared to face the consequences but it turns out he was just bluffing once again.

Unfortunately for Trump -- and America -- he got called on his bluff by the bond market (possibly China dumping US treasuries).


The announcement of additional tariffs on China were likely just a face-saving measure which he will cave on too.

We can only hope Trump is also bluffing about his threat to start a war with Iran.

If Trump handles war with Iran like he's handled tariffs, he will start the war and then surrender and claim victory once he realizes he doesn't actually "have the cards."

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