This way today, that way tomorrow. The U.S. president’s policy has cost himself, and his country, more than it has given.
On Wednesday, U.S. President Donald Trump announced a 90-day tariff pause. This applies to all countries that have requested negotiations with him. Trump relishes this role. Standing at the lectern at the National Republican Congressional Committee dinner in Washington, he emphasized how the affected states were begging for a deal. “I’m telling you, these countries are calling us up, kissing my ass. They are. They are dying to make a deal,”Trump said. That’s how he likes to be seen. His facial expression and wry grin speak volumes.
A 90-day pause allows time for negotiations. That may sound like a good explanation, and it fits into the drama Trump has staged. But the reality is different. So far, Trump has gone against everything that his experts have advised him to do. It’s possible he has underestimated the global chaos brought about by his erratic tariff announcements.
Bond Markets Are the Key
America has already lost a lot of confidence because of Trump. Investors have clearly shown this through the slump in the stock market. However, it is more important is to look at the bond markets, the assets with which America finances itself on the international market.
Under Trump, investors had already demanded higher interest rates for buying government bonds. But as long as the U.S. was a world power and the dollar was the main currency, people still believed in the country. It is now clear that with his erratic policies, Trump has done more harm than good to his own country and economy. At the start of the trading day on Wednesday, not only stock prices, but also U.S. government bond prices, had slumped.
Increased Risk
This is unusual, as bonds normally react in the opposite way as stocks. However, if bond prices go down, yields on U.S. government bonds will rise significantly, especially on those with long maturities. This means that America has to pay its lenders even more. It is a risk premium that investors are demanding because the customs chaos has increased the risk of the U.S. itself falling into recession, and investors are being compensated for the increased risk. According to experts, this also reflects the fear that the U.S. could no longer service its national debt in the long term.
“The market has lost confidence in U.S. assets,” George Saravelos, currency expert at Deutsche Bank, said*. Only signaling a de-escalation from the White House could slow down the sell-off, Samy Chaar, chief investment strategist at Lombard Odier, explained Wednesday. Those signals were given as well, because the pressure on the U.S. had become too great.
Many Unanswered Questions
After Trump backtracked, the mood on the stock market and on the U.S. bond market turned. The investment bank Goldman Sachs officially withdrew its recession forecast for the U.S. Is everything OK now? No, because Trump has also shown that responsible policies are not possible with him. Like his “best buddy” Elon Musk, he drives into systems and makes threats. No politician in the world acts like that.
“I thought that people were jumping a little bit out of line. They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid,” Trump said at an event outside the White House when asked the question about his motives for the recent change in trade policy. The question is, how nervous has he become?
What’s more, Trump had previously announced his tariff rollback on his social media platform Truth Social and advised people to buy stocks. This smells like insider trading. Trump may have given the world a break for a few days, but he has created new problems for himself.
*Editor’s Note: This quote, accurately translated, has not been independently verified.
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