this post was submitted on 26 May 2025
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[–] N0t_5ure@lemmy.world 26 points 2 days ago* (last edited 2 days ago) (9 children)

One good explanation is that Trump is using the tariffs to profit.

  • Step 1: Announce a massive tariff, causing the markets to plummet.

  • Step 2: With stock prices down, Trump and his minions scoop up cheap stocks.

  • Step 3: Announce a temporary roll-back of the tariffs, causing the markets to rally.

  • Step 4: Trump and his minions sell stocks and take their profits.

  • Step 5: Rinse, repeat.

An alternative explanation is that Trump has poor impulse control and has a deep-seated need for attention, so he throws out massive numbers for tariffs. Then, stocks plummet and bond yields rise, raising grave concerns about the financial stability of the U.S.. Anyone in his administration with any inkling about economics panic, warn him of the potential for financial collapse and the end of his regime. Fearing for his own future, he then walks back the tariffs in an effort to attempt to mitigate the harm he has caused.

Honestly, I don't know which it is, but what I do know is that this tariff merry-go-round is not sustainable, and eventually the U.S. will lose all credibility and the money pulsing through our markets will seek saner grounds elsewhere.

[–] Steve@startrek.website 3 points 2 days ago (1 children)

Except the bond yields also tank because everyone can see that we’re maxing out the credit cards

[–] N0t_5ure@lemmy.world 6 points 2 days ago* (last edited 2 days ago) (1 children)

The yield is the interest rate paid on the bonds issued. As the U.S. becomes a worse credit risk, investors demand additional interest to compensate for the risk. Existing bond values tank, because they were issued at a lower rate, and accordingly are paying less than bonds currently issued. Here is an archive link to a recent Economist article discussing the issue.

[–] CheeseNoodle@lemmy.world 1 points 2 days ago

But those bonds also prop up the value of the dollar so if existing investors decide the bonds are no longer worth holding onto...

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