Amidst bond market turmoil, Kevin Hassett, director of the U.S. National Economic Council, stated that the volatility in the bond market did not directly prompt the Trump tariff pause but likely added “a little more urgency” to the decision. The 10-year Treasury yield rose above 4.5%, resulting in bond prices plummeting. Traders speculated that Japan and China may have been dumping U.S. government bonds, raising concerns for the White House administration. Long-term Treasury yields have since lowered following the tariff pause announcement, signifying some stability.
Chinese Foreign Ministry spokesperson Lin Jian declared that China does not seek a trade war but will not back down if tariff hostilities escalate. The ongoing tariffs between China and the U.S. have ignited fears of a trade war between the two largest economies globally, with China filing complaints against the U.S. for WTO violations. Meanwhile, the European Union has decided to pause the adoption of retaliatory trade countermeasures against U.S. goods for 90 days in light of the White House tariff reprieve.
HSBC’s chief Asian economist, Fred Neumann, warned that U.S. tariffs could reduce China’s GDP growth and that China’s 5% GDP target is at risk. Germany’s economic institutes project that U.S. tariffs will impact the country’s GDP growth in 2025 and 2026. Indonesian Finance Minister Sri Mulyani Indrawati noted that planned U.S. tariffs could dent Indonesia’s GDP. Amid these trade tensions, New Zealand’s Prime Minister Christopher Luxon emphasized the importance of free trade agreements. Polish Finance Minister Andrzej Domanski welcomed the U.S. tariff suspension as a step toward de-escalation. European markets surged at opening bell following the tariff pause. ASEAN vowed no trade retaliation against the U.S., while billionaire investor Bill Ackman stated that China is becoming isolated. South Korea aims to lower tariff rates in negotiations with the U.S. as Chinese tariffs of 84% on U.S. imports went into effect.
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