Trump tariffs spark US government debt sell-off happymamay

Confidence in the American economy has declined, as investors threw government debts amid escalating concerns about the impact of Donald Trump’s tariff.

The interest rate on American bonds – which is traditional “safe haven” in times of crisis – rose on Wednesday to touch the highest level since February.

Sweating taxes on the goods that are imported to the United States entered from about 60 countries in force in the middle of the night, while a commercial war of the environment between America and China collected a pace.

After the United States advanced with a 104 % tariff on products from China, Beijing returned 84 % on American products.

The stock markets have decreased sharply over the past few days as a reaction to the pressure on Trump forward with the customs tariff.

However, the sale of bonds – which are mainly the government issued to raise funds from financial markets – is a major problem for the world’s largest economy.

The purchase of US government debts, or treasury bonds as it is known, is seen as a safe investment because the state will pay what it owes.

But on Wednesday, the return – or the interest rate – on American bonds has not touched the highest level since February by 4.5 %, making America the most expensive money borrowing.

Some analysts have suggested that the American Federal Reserve may be forced to intervene if the turmoil continues, in a move that reminds us of the emergency of England Bank in 2022 after the Liz Trex mini budget.

“We do not see any other option for the federal reserve but to enter the emergency purchases of the US Treasury to stabilize the bond market,” said George Saravilus, the international head of FX research at Deutsche Bank.

“We are entering an unknown area,” he said, adding that it is “very difficult” to predict how the markets interact in the coming days, as the bond market suggested that investors “lost US assets.”

Simon French, the chief economist of Panmure Liberum and BBC that the Fed Reserve Bank could decide to reduce interest rates in an attempt to protect American jobs by facilitating companies borrowing money because they face higher costs of customs tariffs.

He said he was “tossing a coin” about whether the United States would enter the recession.

This is defined as a long and wide decrease in economic activity, which is usually characterized by a jump in unemployment and a decrease in entry.

JP Morgan, the banking giant for investment, has caused the possibility of an American recession from 40 % to 60 % and warned that American policy was “inclined to grow.”

The introduction of Trump threatens the definitions, which are imposed on goods imported from external countries, by raising many global supply chains.

US -based companies that bring foreign goods to the country pay the tax to the government.

Companies may choose to transfer some or each cost of definitions to customers, which may increase inflation.

Trump’s plan aims to protect American companies from foreign competition and also to enhance local manufacturing.

Questions remain above the scale and the type of investors who receive American bonds.

There were speculations of some foreign countries, such as China, which has about $ 759 billion in American bonds, which might sell them.

Mr. Saravilus said: “There is now no small space to escalate on the commercial front.

But he warned: “There can be no winner in such a war. The loser will be the global economy.”