The anticipation has gripped markets for weeks. Now President Donald Trump's sweeping global tariffs have kicked in -- and the bond market is rattled.

Reciprocal levies on almost 100 countries, including 104% tariffs on Chinese goods, went live at midnight. Long-term Treasury yields, which rise when bond prices fall, spiked shortly after -- the 30-year yield hit 5% at one point before falling back to around 4.8%. It's still on track for its largest three-day gain since 1982, according to Dow Jones Market Data.

That historic move is concerning for global markets and casts further doubt over U.S. Treasuries" status as a haven asset. It's also reminiscent of the sharp bond selling during the Covid-19 pandemic in March 2020, when investors sold stocks and bond in a 'dash for cash' amid heightened market stress.

Yields typically fall in times of turmoil so the rise is notable -- it also undermines the Trump administration's effort to lower borrowing costs. The jump might be down to the unwinding of ' the basis trade', a popular hedge fund strategy that seeks to profit from the difference in prices of government bonds and futures. China and other countries may also be selling U.S. bonds in response to the tariffs.

Beijing did settle some nerves Wednesday as it appeared to offer an olive branch -- calling for dialogue and cooperation with the U.S. over trade and economic issues. In the high-stakes standoff between the world's two-largest countries China may be blinking first.

However, there's a big difference between China wanting to talk and a deal being reached to lower tariffs. Trump said it's other countries that are eager to negotiate, not the U.S. "We don't necessarily want to make a deal with them. We're happy the way we are, taking our $2 billion a day," he said at a dinner with House Republicans late Tuesday.

With Trump also signaling an imminent announcement of levies on pharmaceutical products, there's little prospect of any pain relief ahead.

-- Callum Keown

***

Beijing Bides Time as Nations Race for Trade Deals

The White House insisted that President Donald Trump wasn't considering a delay or extension to the broad set of tariffs kicking in today, though the messaging indicated he was willing to negotiate on an individual level as more than 70 nations lined up to do a deal.

   -- White House press secretary Karoline Leavitt noted that the additional 
      50% tariffs for China were slated to take effect just after midnight for 
      a total of 104% tariffs on Chinese imports. This is after China wouldn't 
      back down from its threat to impose an additional 34% on U.S. imports 
      starting Thursday. 
 
   -- A bipartisan group of lawmakers led by Sens. Ron Wyden (D, Ore.) and Rand 
      Paul (R, Ken.) want to rescind the national emergency Trump declared to 
      justify imposing his global tariffs of up to 49% on imported goods. They 
      aim to reclaim Congress' power to impose tariffs. 
 
   -- Trump said his tariffs already are bringing in almost $2 billion a day. 
      This includes the baseline 10% tariffs that took effect on Saturday on 
      imports from around the world, plus other tariffs on things like steel 
      and aluminum. Leaders from Japan and South Korea are traveling to D.C. 
      for trade talks. 
 
   -- China's situation is murkier. A lack of back-channel negotiations makes 
      it harder to see a resolution to the escalating drama between Washington 
      and Beijing. Trump said on social media that he was waiting for a call 
      from China, which he says wants a deal but doesn't know how to start. 

What's Next: There have been no senior-level U.S.-China discussions recently, people familiar with the situation said. Chinese officials have little confidence in U.S. negotiations, assuming a wait-and-see approach. The view in China is the more push back Trump gets, the better positioned they will be.

-- Anita Hamilton, Janet H. Cho, and Reshma Kapadia

***

Trade War Raises the GOP's Stakes in Budget Battle

Debt hawks always faced an uphill battle in their effort to require spending cuts as part of a deal extending President Donald Trump's 2017 tax law. His tariffs, which are now roiling the global economy, make it even more likely that deficit reduction moves to the back burner.

   -- House lawmakers will vote on a budget resolution that kick-starts the 
      process of writing the tax bill. At least 10 GOP lawmakers oppose it, 
      which could sink the effort. That puts pressure on Trump and Speaker Mike 
      Johnson (R., La.) just as Congress prepares for a two-week recess. 
 
   -- Extending the tax law would add $4.5 trillion to the national debt over 
      the next decade, according to the Center for a Responsible Federal Budget, 
      a nonpartisan watchdog. Trump also wants tax cuts for some companies and 
      to end taxes on tips, overtime pay, and Social Security payments. 
 
   -- But extending the tax cuts without spending reductions is a nonstarter 
      for some in the right-wing House Freedom Caucus. The House approved a tax 
      bill requiring at least $1.5 trillion in spending cuts. The Senate's bill 
      has only $4 billion in required cuts. Trump endorsed the Senate version. 
 
   -- Trump met with lawmakers, including some of the holdouts, on Tuesday. 
      House Freedom Caucus Chairman Andy Harris (R., Md.) told reporters he 
      wouldn't attend and predicted Trump wouldn't be able to sway enough 
      holdouts to proceed. Other caucus members reiterated their objections to 
      the Senate plan. 

What's Next: Beacon Policy Advisors managing partner Stephen Myrow said tariffs have raised pressure on the GOP to show progress on tax cuts. Markets could remain rocky if the holdouts push the resolution vote until after the recess. Hard questions about the deficit will likely be pushed to later in the year.

-- Joe Light

***

President Wants to Revive the Ailing Coal Industry

President Donald Trump has designated coal as a "critical mineral" for national security, similar to minerals like uranium, which could boost outlooks for coal producers such as Peabody Energy and Core Natural Resources. Trump has previously authorized expanded mining for minerals on federal land.

   -- Trump says coal is needed to meet surging electricity demand, which tech 
      giants need to power artificial intelligence data centers. Companies such 
      as Alphabet's Google and Microsoft have environmental goals that include 
      transitioning away from dirty energy sources and are pursuing nuclear 
      energy instead. 
 
   -- The White House wants to boost coal in steelmaking and export more coal 
      to other countries. But that doesn't change the fact that coal-fired 
      power plants are old, expensive to run, and unlikely to operate very 
      often or for many more years, says Rob Gramlich, president of power 
      consultancy Grid Strategies. 
 
   -- Resources for the Future said operating a large coal plant could cost 
      taxpayers $100 million in subsidies a year, and that coal-fired power 
      plants kill one American for every three coal-mining jobs they support. 
      State and federal regulations have aimed to curb coal use, given its 
      health and environmental effects. 
 
   -- Particulate matter emitted by coal has been linked to heart attacks and 
      lung diseases. But Trump's order directs government agencies to remove 
      environmental regulations against soot and other byproducts. The Sierra 
      Club called the plan reckless and ill-conceived. 

What's Next: Coal has been replaced by natural gas, which is abundant and cheap in the U.S., and more recently by renewable electricity, which has gotten much cheaper. It's on the downswing in Europe, too. Elsewhere, in countries such as China and India, coal has stuck around longer than expected.

-- Avi Salzman and Janet H. Cho

***

Walmart, Costco Will Offer Insight Into Consumer Spending

Walmart and Costco Wholesale, two of the U.S.'s biggest retailers, will shed light today on how consumers are responding to the Trump administration's aggressive trade stance. Walmart will broadcast its investor meeting this morning, and Costco will report March sales after the close.

   -- Investors are eager to hear how Walmart plans to navigate a higher-tariff 
      world, or how it expects consumers will respond. Few companies have been 
      able to lay out a playbook even for the administration's additional 10% 
      tariff in China in March, Barclays analyst Seth Sigman wrote. 
 
   -- Levi Strauss, the first retailer to report earnings since the tariffs 
      were announced, said its full-year forecasts did not factor in the 
      tariffs. "We recognize this is a quickly evolving macro situation, and we 
      have to see where the dust settles," CFO Harmit Singh said. 
 
   -- Because Walmart is such a big importer, Wall Street hopes management can 
      give more insight about how the tariffs will affect its business and 
      outlook. They want to know if the company plans to forego some profit to 
      keep prices low, or if it will raise prices to preserve margins. 
 
   -- Like Walmart, Costco has been outperforming its peers, steadily 
      increasing sales even as other retailers have slowed down. If its March 
      results worsen starkly, that would be a negative sign for the whole 
      sector. The SPDR S&P Retail exchange-traded fund is down 17% this year. 

What's Next: With economists warning that the new levies could dampen consumer demand, what Walmart's executives say could have repercussions for the broader sector, especially if they are more cautious. "Seems unlikely they will say 'it will be fine,'" wrote Carey Kaufman, U.S. consumer strategist at Jefferies.

-- Sabrina Escobar and Janet H. Cho

***

Dear Quentin,

I need advice, and I want to avoid political arguments. I think the current administration's tariffs will eventually lead to a massive recession, if not worse, over the coming year. About four months ago, I moved the bulk of my retirement funds into international stocks and blue-chip funds. So far, I have made a 5% positive return this calendar year.

I have invested most of it in dividend-paying stocks and gold. That has been roughly flat this year. With retirement only about five years off, what do you recommend to achieve a roughly 3% or more positive return at this point? Some companies may bring money back to the U.S., which will stabilize the dollar for a bit, but I'm worried about the long term.

-- Nearing Retirement

Read the Moneyist's response here.

-- Quentin Fottrell

***

-- Newsletter edited by Liz Moyer, Patrick O'Donnell, Rupert Steiner

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 09, 2025 06:51 ET (10:51 GMT)

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