“Trump launched his grand trade war hoping to be crowned the unstoppable father of the nation — scratch that, the whole world,” Kompan wrote. “But it’s gone in an entirely different direction than he planned. He thought he’d take the world by storm in three days, but now he’s forced to retreat.”
Kompan argues that most economists and investors — excluding those "developing theories under the 'strong leadership' of Trump" — see the tariff war as a “senseless” exercise that will bring little more than disappointment and losses.
“The president’s actions stem from a deep misunderstanding of how the global economy works,” he said. “Trump believes reindustrializing America and creating new factory jobs is a realistic goal — and that free trade made the U.S. poor. In reality, it’s the opposite: free trade helped make America the richest nation in the world.”
A market slap to the White House
What forced Trump to pump the brakes on new tariffs wasn’t diplomacy — it was panic in the bond market.
Kompan noted that in early April, global investors, including some of the world’s largest central banks, began dumping U.S. Treasury bonds. The result: yields on 10-year Treasurys surged to 4.5%, the biggest weekly jump since 2001. Yields on 30-year Treasurys hit 4.9%, a high not seen since 1982.
“A bit more Trump-style stubbornness, and panic could’ve spread through the world’s largest financial market — U.S. government debt,” Kompan warned.
He credited Treasury Secretary Scott Bessent — a former hedge fund manager with a deep understanding of market mechanics — for explaining the potential fallout to Trump and convincing him to pause.
Still, the damage is done: the U.S. will now have to borrow at significantly higher rates than just a week earlier.
“Trump, for all his grandiosity, has a boss — and it’s not Congress or the courts,” Kompan said. “It’s the ruthless, all-powerful U.S. debt market. And from now on, every decision he makes will be shaped by bond prices and yields.”
A simple formula for investors
“This week, we got a great forecasting tool,” Kompan added. “When bond yields rise, Trump backs off — stocks go up. When yields fall, Trump grabs his saber — stocks drop.”
Kompan’s analysis comes as the Trump administration battles trade blows with nearly the entire world.
On April 2, 2025, Trump imposed a new wave of “reciprocal” tariffs affecting roughly 185 countries. The minimum rate was 10%, including on Ukrainian imports. China was hit with a 34% tariff — on top of an earlier 20% hike in March tied to its alleged role in fentanyl trafficking — bringing the effective rate to 54%.
In response, China fired back on April 4 with 34% tariffs on all U.S. goods and announced export controls on seven types of rare earth metals critical to producing semiconductors and other high-tech components. Among them: gadolinium and yttrium.
Trump called China’s move a “mistake” and retaliated on April 9 with a staggering 104% tariff hike. Hours later, Beijing hit back with its own increase — raising tariffs to 84% on U.S. goods.
The tit-for-tat escalated even further as Trump then slapped China with a 145% tariff “for disrespecting global trade,” while offering a 90-day delay on new tariffs for other countries.
China responded in kind, raising tariffs on U.S. goods to 125%.