Trump Links Tariffs Suspension to Fears of Recession
14 April 2025 · Uncategorized ·
Source: · https://finance.technews.tw/2025/04/10/trump-says-he-did-tariff-pause-because-of-yippy-reaction/
US President Donald Trump has abruptly suspended reciprocal tariffs for a period of ninety days, despite previously raising Chinese tariffs to 12.5%. According to his own statement, this decision was prompted by concerns that people were “scared” and "afraid." However, Treasury Secretary Scott Bessent denies that a bond market collapse triggered the policy shift.
On September 9th, President Trump announced the ninety-day suspension of reciprocal tariffs while speaking with reporters. He stated it was because individuals are becoming increasingly apprehensive and expressed satisfaction with this decision, hoping for a return to conditions from four weeks prior if progress continues as planned. Trump emphasized that negotiations were ongoing and asserted his actions demonstrated leadership. He also highlighted interest in trade agreements from numerous countries, including China, which remains subject to high tariffs.
He stated, "China wants an agreement," suggesting the nation is considering its approach toward dealing with the United States.
The Wall Street Journal reported on September 9th that Trump was influenced by stock market volatility and persistent concerns voiced by business leaders regarding tariffs. He reportedly told advisors he would accept any resulting consequences. Privately, however, he acknowledged his trade policies could potentially lead to a recession but expressed hope they wouldn't result in an economic depression.
In contrast, Bessent refuted the notion that bond market instability stemming from hedge fund deleveraging compelled Trump’s tariff suspension during a White House press conference on September 9th. When questioned about whether declining Treasury yields and liquidity issues had softened his stance, he asserted these developments were part of President's strategy.
Addressing rumors surrounding large-scale unwinding of "basis trades" by hedge funds, Bessent told Fox Business that similar situations have occurred throughout his career as a fund manager.
Bessent explained: “The market now sees a wave of deleveraging shockwaves,” noting this phenomenon is currently impacting fixed income markets and forcing highly leveraged institutions to reduce their exposure.
According to Barron’s, basis trading involves hedge funds exploiting arbitrage opportunities between spot prices and futures contracts when significant discrepancies exist—a strategy that inherently carries high risk due to its reliance on leverage which can reach 50-100 times the initial investment.
On September 9th, President Trump announced the ninety-day suspension of reciprocal tariffs while speaking with reporters. He stated it was because individuals are becoming increasingly apprehensive and expressed satisfaction with this decision, hoping for a return to conditions from four weeks prior if progress continues as planned. Trump emphasized that negotiations were ongoing and asserted his actions demonstrated leadership. He also highlighted interest in trade agreements from numerous countries, including China, which remains subject to high tariffs.
He stated, "China wants an agreement," suggesting the nation is considering its approach toward dealing with the United States.
The Wall Street Journal reported on September 9th that Trump was influenced by stock market volatility and persistent concerns voiced by business leaders regarding tariffs. He reportedly told advisors he would accept any resulting consequences. Privately, however, he acknowledged his trade policies could potentially lead to a recession but expressed hope they wouldn't result in an economic depression.
In contrast, Bessent refuted the notion that bond market instability stemming from hedge fund deleveraging compelled Trump’s tariff suspension during a White House press conference on September 9th. When questioned about whether declining Treasury yields and liquidity issues had softened his stance, he asserted these developments were part of President's strategy.
Addressing rumors surrounding large-scale unwinding of "basis trades" by hedge funds, Bessent told Fox Business that similar situations have occurred throughout his career as a fund manager.
Bessent explained: “The market now sees a wave of deleveraging shockwaves,” noting this phenomenon is currently impacting fixed income markets and forcing highly leveraged institutions to reduce their exposure.
According to Barron’s, basis trading involves hedge funds exploiting arbitrage opportunities between spot prices and futures contracts when significant discrepancies exist—a strategy that inherently carries high risk due to its reliance on leverage which can reach 50-100 times the initial investment.