by Ben Whedon
The cost of uncertainty: Even with several of America’s key trade partners offering concessions or seeking agreements, markets remain highly volatile and Treasury yields are rising, potentially forecasting longer-term liquidity issues for the country.
President Donald Trump on Wednesday hit the "hold" button on the imposition of sweeping reciprocal tariffs across the globe. Those tariffs sparked mixed reactions on the international stage, and spurred uproarious economic anxieties at home.
Even with several of America’s key trade partners offering concessions or seeking agreements, markets remain highly volatile, and Treasury yields are rising, potentially forecasting longer-term liquidity issues for the country. The public, moreover, appear increasingly concerned about their personal finances, even as data suggests that Trump’s own approval remains somewhat stable.
Key Trump allies further publicly disagreed with the president — and each other — over the matter and financial analysts increasingly warned of a possible recession should the trade war escalate or persist. Markets rallied after he announced a 90-day pause on tariffs for nations that did not retaliate.
The state of the market
After precipitous drops on Thursday and Friday, the market defied expectations of a “Black Monday” and has largely leveled off. Wednesday witnessed a low open that saw major indices rebound within the first hour of trading and the market closed up significantly after Trump announced a 90-day pause on tariffs for most countries, excluding China, upon which he imposed a 125% tariff. The Dow Jones Industrial Index (DJIA) closed up 7.87%, while the NASDAQ closed up 12.16%, and the S&P 500 closed up 9.52%.
“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,” Trump posted on Truth Social.
To be clear, Trump’s China tariffs remain substantially higher than pre-”Liberation Day” levels and the 10% tariffs that will remain in place will take effect and are hoped to contribute both to federal revenue and the broader goal of rebalancing trade. In the meantime, several nations, including Japan, Vietnam and South Korea, appear eager to strike favorable trade deals with Washington.
Potentially complicating the long-term situation for the Trump administration is the apparent rise in 10-year Treasury bond yields, which will make it more expensive for the government to refinance its debt. The yield on Wednesday stood at 4.332%, up significantly from the 3.991% on April 4.
While Trump himself has not explicitly stated that he hoped to lower yield rates to refinance the debt at a lower rate, he appeared to lend a tacit endorsement to the notion when he shared a video on Truth Social asserting that he aimed to do so.
“So why is he doing this? To push cash into treasuries, which forces the Fed to slash interest rates in May, and those lower rates give the Fed the ability to refinance trillions of debt very inexpensively,” the narrator explained. The rise in yields, however, appears to be going against his plans and could result in a significant additional cost for the government.
Ackman: "Brilliantly executed"
The tariff row has members of Trump’s own Cabinet taking swipes at each other in public while some of his high-profile supporters in the financial sector urge him to reverse course as the market rides a rollercoaster.
“Our stock market is down. Bond yields are up and the dollar is declining. These are not the markers of successful policy,” Bill Ackman posted. Ackman is an influential billionaire hedge fund manager.
“I am receiving an increasing number of emails and texts from small business people I do business with or have invested in, expressing fear that they will not be able to pass on their increased costs to their customers and will suffer severely negative consequences," he said.
Then, Ackman rather abruptly and publicly made an about-face after Trump issued the 90-day pause, saying it was “brilliantly executed” and “Textbook, Art of the Deal.” He opined that the short-term tariffs gave favorable parties a taste of what failure to cut a deal would look like and advised China to back down.
Department of Government Efficiency (DOGE) chief Elon Musk, moreover, has publicly taken aim at White House economic advisor Peter Navarro, one of the more vocal tariff supporters in the administration. Musk has dubbed Navarro “Peter Retarrdo” and called him a “moron.”
White House press secretary Karoline Leavitt downplayed the severity of the public rift between the two, pointing to it as evidence that Trump considered opposing viewpoints and has a transparent administration. She then brushed off the behavior, saying “boys will be boys.”
Polling data as unpredictable as the market
It isn’t just the high-profile investors questioning the Trump approach to trade, however. A recent Napolitan News survey showed that 41% of registered voters believe the U.S. economy is currently in a recession, marking a 7% hike to the figure from the prior week.
Only eight percent of registered voters, moreover, rated the economy as excellent, while 16% deemed it good. Thirty-four percent said the economy was fair, while 42% called it poor and one percent were unsure. Only 27% indicated a belief that the economy was improving, compared to 56% who said it was getting worse. The poll was conducted April 7-8, and the survey questioned 1,000 registered voters with a margin of sampling error of +/- 3.1%.
A separate DailyMail.com/J.L. Partners survey released this week found that Trump’s approval had increased in the wake of the tariff announcement, rising to 53% from the prior week’s 49%.
Ben Whedon
Source: https://justthenews.com/politics-policy/thutariff-pressures-prompt-trump-reversal-leave-china-cold
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