The events of the past week have clearly demonstrated the greatness, soundness, prudence, and wisdom of American economic policy. The Great Trade War, which Trump launched in the hope of gaining the glory of the invincible father of the nation, and indeed of the world, went completely wrong and not where he planned and wanted. It was not possible to take over the whole world in a “three-day” attack, and now we have to backtrack. And why is that?This is a quick review from Ivan Kompan, Edinburgh Business School analyst.
According to most economists and investors—aside from those supporting Trump’s “strong leadership”—this tariff war is a pointless effort likely to bring only losses and disappointment to the U.S. and the world.
Experts argue Trump ignores basic principles of global economics. He believes in re-industrializing America and blames free trade for the country’s problems—despite the fact that free trade made the U.S. the richest country on Earth.
In just one week, Trump and his administration managed to:
display ignorance and vanity;
alienate both allies and rivals;
push countries into forming unexpected trade alliances;
damage both U.S. and global economies;
fuel inflation;
“help” investors lose trillions of dollars;
hand propaganda victories to dictators;
and plunge the world into deeper uncertainty.
Investors hate chaos. Trump’s erratic behavior—U-turns, delays, threats—undermines confidence. As a result, we’re unlikely to see an investment surge into a country offering nothing but shock and risk.
The immediate trigger for postponing the tariffs? A major sell-off of U.S. government bonds drove yields to historic highs—10-year notes hit 4.5%, the biggest weekly jump since 2001; 30-year yields hit 4.9%, a high not seen since 1982. Treasury Secretary Scott Bessent, a hedge fund veteran, managed to explain the looming crisis. Disaster was averted, but now the U.S. must borrow at much higher costs.
Finally, despite Trump’s self-image as a supreme leader, he now answers to a ruthless, all-powerful master: the U.S. bond market. That’s where the real control lies. And for us, ordinary investors, there’s now a new forecasting tool: bond yields rise — Trump backs down — stocks rally. Yields fall — Trump charges ahead — markets drop. So, keep your eyes on the bond market and brace for impact.
*And finally, we would like to remind you that the information you have just listened to is not an investment advisory. Remember – investments in the stock market are always tied up with financial risks. So be careful and cautious.
