“The bond market is very tricky. I was watching it. But if you look at it now, it’s beautiful.” These were the words with which President Donald Trump accompanied his surprising decision on April 9 to “pause” the previously announced “reciprocal tariffs” for ninety days. Instead of the spuriously calculated rates on imports from surplus trading partners, most goods, including previously exempt goods from Canada and Mexico compliant with the United States-Mexico-Canada Agreement, would be subject to a 10 percent base rate until further notice.
The notable exception was trade with China, on which Trump raised tariffs to 145 percent. This meant that despite the pause, a greater share of global trade value is now subject to the tariffs. On Friday, however, the White House announced a set of temporary exemptions that applied to much of China’s vital electronics sector (smartphones, appliances, semiconductors, AI servers). Together, they totaled around 20 to 25 percent of total imports from China to the United States.
In short, Trump blinked. Surprisingly, perhaps, he does not seem to have been motivated by the immediate domestic impacts that his tariff policy was having. Instead, the pressure to back down came from abroad and was transmitted through a key pillar of US power: the global Treasury market, which is the heart of the world’s financial system, where the dollar is the primary currency for trade invoicing, foreign exchange reserves, and wholesale funding between financial market actors.
Trump’s lurch toward protectionism and the…
Auteur: Dominik A. Leusder
