Most Americans never think about their country’s currency. They do not. The US dollar (DX = F) was a global standard for decades, giving unique advantages to those lucky enough to live in its environmental system.
However, President Trump disrupts everything and anything, the US -Falcon dollar once appears to be an unintended victim. If this is the case, this means that millions of Americans may end up losing privileges such as low interest rates from the average, stability for a long time for a long time, and the economy that everyone wanted one day to be part of it.
The problem started – prepared for that – with Trump’s tariff. The introductory play book changes almost every day, but it seems that it has settled in a giant trade war with China and less skirmishes with the rest of the world. The war now requires a huge tariff of 145 % on most Chinese goods, along with a 25 % tariff on imported cars, auto parts, steel and aluminum. There is also a 10 % new “foundation” tariff on most imports that are not covered by these other definitions. China has a tariff of 125 % on imports from the United States and other borders on American goods.
Read more: What does Trump’s tariff mean for the economy and your wallet?
In general, the average import tax on imported goods will increase of $ 3 trillion from 2.5 % when Trump took office to about 27 %, according to Yale’s budget laboratory. Trump’s Chinese tariff will greatly attract costs for some American companies and hundreds of daily products.
These costs added to companies and consumers will harm companies’ profits, pay inflation up, and may cause stagnation with high unemployment. For this reason, there was a huge sale, as investors tried to pricing corporate profits and economic damage represented in stagnation or stagnation.
But something worse was happening. It seems that global investors are throwing all US assets denominated in dollars and transferring their money to other parts of the world or to gold. This appears in some strange and disturbing market developments.
When stocks decrease, investors usually put more money in safer bonds, especially US securities. When the demand for the cabinet rises, the price also works, and interest rates decreased because borrowers who export bonds can pay a lower return when the demand for bonds becomes stronger.
What started to happen in the Trump sale process is that the stocks are decreased, but the long -term interest rates, which will usually decrease, were rising instead. Since April 2, for example, the S&P 500 (^GSPC) has decreased by 5.5 %. During the same time, the closet rate increased for 10 years (^TNX) by three tenths. This may seem a simple change, but in the middle of a “journey to safety”, where investors seek to obtain safe havens for their money, this is nothing but.
Meanwhile, the dollar has lost more than 4 % of its value against the currency basket since April 1, which is also the opposite of what usually happens when investors feel panic. “These moves are very short for a long time,” said economist Rebecca Patterson of the Foreign Relations Council on April 10. “It is amazing that we see twice the dollar against many major currencies.”
The bond market does not explain itself in the actual time, and investors who traded are not necessarily accumulated or outside the category of certain assets for the same reason. But what appears to be a wide sale of US -in -sedimentary assets in dollars, including stocks and bonds, at the same time.
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If this trend continues or gets worse, the effects of it are arduous. The Ministry of Treasury Securities is the deepest in the world because Washington exports a lot of debts to start. Federal debt as a percentage of GDP is already in unprecedented levels of peace time and only increases with Trump that follows a huge package of funded tax cuts. If global investors start losing interest in the cabinet, the prices will rise – as they were – which leads to an increase in financing costs for the United States government and every borrower in America. This may happen with the weakening of the economy and the high unemployment, which is “stagnation” or what is worse.
Read more: What is the recession, and how does it affect you?
“All this adds up to a risky and very opponent situation,” said Evercore ISI in an April 11 analysis. “At least, this means high financing costs throughout the government and the private sector, low stock prices, and the least flexibility of fiscal policy in the face of any economic shrinkage. If the real driving force is a lack of confidence in the United States, so it may not be sufficient to save the feelings of investors.”
Treasury Secretary Scott Bessin speaks to journalists outside the western wing of the White House, on Wednesday, April 9, 2025, in Washington, with the White House press secretary Caroline Levit. (AP Photo/EVAN VUCCI) ·Associated Press
Wall Street now wonders if Trump will get the message and curb a trade war that has become a catastrophic speed. Trump planted a little on April 9, when “mutual” definitions were delayed against dozens of countries that would have raised prices sharply for many things that Americans buy. Political analysts have indicated that Trumporlds Paths Peter Navarro and Hard Lutnik quietly as the most mild cabinet minister, Scott Bessin, climbed to explain the president’s thinking.
However, while delaying the “mutual” definitions, Trump pushed the customs tariff rate on Chinese imports to 145 % ridiculous, which is so high that some trade experts believe that Chinese shipping ships will sit in lethargy until something changes. With the rate of effective tariffs on $ 3 trillion of imports by 27 %, this means that taxes increase 700 billion dollars on American companies and consumers. The bond rates continued to rise after Trump abandoned mutual definitions, indicating that the move did not reassure the markets at all.
Trump may believe that he can connect the markets with Draconian tariff ads, then back down and back away from damage if it becomes very severe. Bond Bond Investors recently is to get sick of this and America is not the only game in the city. The war with investors Bond is certainly that Trump cannot win.
Rick Newman is a big column writer Yahoo financing. Follow it Blouse and x: @Rickjnewman.
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