The long-awaited moment has come!

Recently, China raised its tariff to 84%, and Trump quickly responded by raising the tariff on Chinese goods to 125%, while suspending the reciprocal tariffs on another 75 countries. Trump confidently believed that this would save the American economy, but the capital market still dealt him a heavy blow.

In just the past few hours, two pieces of bad news have reached him:

1. The first piece of news is that US Treasury bonds are in trouble. According to the latest report from Caixin United, US Treasury bonds are being continuously sold off, with the yield on 30-year Treasury bonds once breaking through 5%. As for which groups are selling them, the US has not provided specific information. However, Wall Street believes that such a large-scale sell-off indicates that Trump is being betrayed. Those betraying him come from two aspects: domestic bondholders in the US, those Americans who no longer trust the Trump administration; and foreign creditors of the US, who should also be involved in this sell-off.

We know that the top 10 largest foreign creditors of the US include: Japan, China, the UK, Canada, France, Switzerland, Ireland, etc. Since 2019, Japan has surpassed China to become the largest creditor country of the US. The question now is, is it really Japan betraying the US? Or are the European countries involved as well. As for China, we have been selling in recent years, so there's no need for them to doubt anything. The current situation is that this year is the peak of US Treasury bonds, with a total of 9.2 trillion USD worth of bonds maturing. In June alone this year, there will be 6 trillion USD maturing. Can the Trump administration endure this?

2. The second piece of bad news is that after experiencing a short-term rally, US stocks fell again on April 10th local time. This was something Wall Street never expected, because just hours before, Trump claimed that his friends had made hundreds of millions of dollars.

In light of the above two situations, Trump rarely admitted that the US is indeed "in trouble". However, the stubborn Trump still said that this is the transition period of tariff policies, so there are difficulties. Moreover, he claimed that he has been communicating with various countries to see how reducing tariffs could solve the problem.

Meanwhile, Treasury Secretary Besante is trying to save face for Trump, saying: "This is just affected by the tariff negotiations!" But the problem is, his predecessor Treasury Secretary Yellen does not think so. Yellen believes that the possibility of the US entering a systemic recession is still increasing.

In fact, all of the above tells us two naked truths:

1. The first truth is that Trump's strategy of "suspending reciprocal tariffs on other countries and only targeting China" is simply unworkable. As the two largest markets in the world, once they truly decouple, the impact will certainly be global, and the US cannot make up for it through other markets.

2. The second truth is that China's combination of measures is taking effect. For the US, besides dealing with China's 84% tariff, they also have to deal with China's control over key materials, sanctions on key US companies, and pessimism is spreading within the US. In this situation, Trump either has to tough it out or only reduce tariffs on China. Otherwise, he will be betrayed again.

In summary, all of the above are just the beginning of the US heading down an irreversible path. If Trump wants to turn back now, it might still be timely. Next, let's keep an eye on his actions.

Original article: https://www.toutiao.com/article/7491841650252939786/

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