A sell-off in global bonds is accelerating as Moody’s downgrade of U.S. credit rating and President Donald Trump’s tax bill has brought to fore investors’ fiscal concerns globally. Events such as credit rating downgrades or budgets that risk expanding deficits tend to bring fiscal concerns front and center of investors’ minds, forcing them to reprice long-end risk, said Rong Ren Goh, Portfolio Manager, Fixed Income, Eastspring Investments. While Trump was unable to sway GOP dissenters to support his broad tax bill that could drive U.S. debt higher by a projected $3 trillion to $5 trillion, it appears to have triggered a global bond rout. “Markets do not find Trump’s “big, beautiful tax bill” beautiful at all,” said Vishnu Varathan, a managing director at Mizuho Securities. “USTs were beaten up in an ugly sell-off.” The U.S. 30-year Treasury yield broke above the key 5% mark for the second straight day, breaching the level last reached in November 2023. It is currently holding at 5.088%. The benchmark 10-year Treasury yield has climbed over 15 basis points since the start of the week. The sell-off in Treasurys comes on the back of the exodus in American assets in April, and is largely owed to investors’ declining confidence in U.S. assets, said market watchers. When investors dumped U.S. Treasuries last month, they turned to bonds in Japan and Germany. This time, the Treasury sell-off is accompanied by investors exiting bonds across several major markets. Contagion effect — and more The sell-off in long-duration bonds in each market has been driven by distinct factors, with the common thread being a growing unease with worsening fiscal trajectories. “These concerns are prompting a reassessment of the term premium required to hold longer-dated bonds,” said Goh. Japan’s 40-year government bond yield hit a record high of 3.689% Thursday. The country’s 30-year government bond yield has also been hovering near all-time highs at 3.187%. The yield on Japan’s benchmark 10-year government bond has climbed 9 basis points to 1.57% so far this week. The rapid steepening of Japan’s government bond yield curve is owed to several reasons, but the key one is structural. Japanese life insurance companies, who used to buy long-term bonds in droves to comply with certain solvency regulations are no longer doing that, as they have largely met the regulatory criteria, according to Bank of America. Additionally, the Bank of Japan’s inclination to tighten its monetary policy, which collides with the Asian nation’s fiscal woes, also have a hand in fueling the bond sell-off, said Varathan. The sell-off in Japanese government bonds poses a bigger problem for U.S. sovereign debt. “By making Japanese assets an attractive alternative for local investors, it encourages further divestment from the U.S.,” George Saravelos, Deutsche Bank’s global head of FX strategy wrote in a note. German government bonds — known as bunds — are also being dumped. Yield on 30-year German debt are up over 12 basis points, while the 10-year yield is up over 6 basis points. “The removal of the German debt brake in tandem with continental re-armament, alluding to an end of Europe’s pro-austerity bias and a revival of regional growth prospects were, arguably, the catalyst for the process [bond sell-off],” said Philip McNicholas, Asia strategist of the global macro fixed income team at Robeco. German bunds are also pressured by wider deficits, which are likely to be structural, Mizuho Securities’ Varathan said. The 30-year Europe government bond yields have climbed over 12 basis points this week, and the 10-year yields are up about 7 basis points. “Investors don’t really have much love for long duration bonds right now,” Steve Sosnick, chief strategist at Interactive Brokers told CNBC. Concerns about global inflation are also a “killer” for longer bonds, said Sosnick, adding that shorter duration bonds are typically influenced by central bank policy, while longer duration debt is influenced more by investor expectations about the future of the economy. Bonds in some emerging market have bucked the wider trend though, with their yields dropping. India and China’s 10-year bond yields have slipped, largely as they are more domestically-oriented markets, and in part because of their capital controls, said McNicholas. India’s 10-year government bond yield inched lower by about 2 basis points since Monday, while China’s 10-year yield also slipped marginally. “Foreign investors and global factors are far less relevant determinants for their respective yield curves,” he said.

Stock futures inched higher early Thursday following a sizable sell-off on Wall Street as worries about a ballooning deficit deepened. S&P 500 futures and Nasdaq 100 futures added 0.14% and 0.18% respectively. Futures on the Dow Jones Industrial Average were flat. In regular trading, the blue-chip Dow slid more than 800 points, while the S&P 500 finished the day 1.6% lower. Equities were pressured by a sharp spike in Treasury yields amid concerns that a new U.S. budget bill would put even more stress on the country’s already large deficit. The rocky negotiations on Capitol Hill over tax and federal budget changes have become a fresh worry for investors after tariff headlines subsided. The massive budget bill in the House of Representatives hit a road block Tuesday when blue-state Republicans signaled they would not support the bill without a larger deduction for state and local taxes, often referred to as “SALT.” Opposition to the bill threatens to derail the tax legislation, which Trump and House Speaker Mike Johnson, R-La., hope to see passed before Memorial Day weekend. The bill could increase the U.S. government’s debt by trillions and raise the deficit at a time when fears of a flare-up in inflation due to Trump tariffs are already weighing on bond prices and boosting yields. The 30-year Treasury bond yield jumped again Wednesday to hit 5.09%, touching the highest level going back to October 2023. The benchmark 10-year Treasury note yield traded at 4.59%. “I think it really speaks to the impact from the rate of change of yields versus just that drift higher,” Kevin Gordon, Charles Schwab senior investment strategist, said on CNBC’s “Closing Bell.” “It’s driven by inflation concerns that are tied to the budget deficit that are then tied to the potential path of the dollar.” Investors will monitor weekly jobless claims data, set to be released Thursday morning, for clues about the labor market.

Replacing Nvidia is a tall order. While Chinese competitors are years behind the company’s cutting-edge technology, many analysts and insiders warn they are catching up, thanks to U.S. export restrictions. U.S. chip restrictions on the sale of advanced semiconductor technology, especially those used in artificial intelligence, have been rolled out over several years, with the initial aim of curbing China’s military advancement and protecting US dominance in the AI industry. However, according to Nvidia CEO Jensen Huang, U.S. semiconductor export controls on China have been “a failure,” causing more harm to American businesses than to China. While the goals of cutting back the Chinese military’s access to advanced U.S. technology and maintaining U.S. leadership in AI appear to have had some success on paper, loopholes and existing semiconductor stockpiles in China have complicated these aims, said Ray Wang, an independent tech and chip analyst with a focus on U.S.-China competition. “That’s partly why we are seeing a closing of the gap between Chinese and U.S. AI capabilities,” added Wang. A self-inflicted wound? Leaders of Nvidia and other American chip designers have long lobbied against chip controls as they worry about losing lucrative business deals. Huang said at the annual Computex technology trade show in Taipei that Nvidia’s GPU market share in China fell to 50% from 95% over the past four years. Indeed, chip experts say that the curbs create more harm than good for the U.S. “The effects of the controls are twofold. They have the impact of reducing the ability of U.S. companies to access the China market and, in turn, have accelerated the efforts of the domestic industry to pursue greater innovation,” said Paul Triolo, Partner and Senior VP for China at DGA Group. “You create competitors to your leading companies at the same time you’re cutting them off from a massive market in China,” he added. While Washington’s most comprehensive export controls were passed during former U.S. President Joe Biden’s term in the White House, curbs on Huawei and SMIC, China’s largest chipmaker, go back to Donald Trump’s first term in office. On April 15, Nvidia disclosed that new controls, which restricted sales of its H20 graphics processing units to China, had led to a $5.5 billion charge against its revenue. Counter-intuitive curbs The restrictions are expected to be a boon for the demand and development of local Nvidia alternatives like Huawei, which is working on its own AI chips. They also come against the background of Beijing mobilizing billions as part of its chip self-sufficiency campaign. “The bottom line is, the controls have incentivized China to become self-sufficient across these supply chains in a way they never would have contemplated before,” Triolo said. Chinese AI-related achievements, such as DeepSeek’s R1 model and news of Huawei chip progress, have led observers to question the effectiveness of chip controls. According Wang, the independent analyst, China’s semiconductor and AI space has seen an acceleration of startups, market opportunities, and AI talent alongside the restrictions, which has clearly resulted in domestic innovations. “I think the arguments that export controls accelerate innovation is quite valid,” Wang said. Nivida’s Haung also noted these trends in April, telling lawmakers in Washington that the country has made enormous progress in the last several years and is right behind the U.S. Moving goal posts? Nvidia’s H20 chip was designed specifically to comply with existing chip controls prior to the clampdown on exports. “We are not just talking about one export control, we are talking about a series of export controls that originate from all the way back in 2019,” said Wang, noting that the evolving policies have had a couple of different objectives. Meanwhile, in what DGA’s Paul Trilio calls a “moving of the goalposts,” it seems that the aims of the restrictions have shifted to an intention to slow down and contain Chinese AI and semiconductor developments. “The continued expansion of the controls, and the lack of an articulation of what the clear end game here is, has really created a lot of issues, and created a lot of collateral damage,” Trilio said, adding that it has led more people to question the policy. In a statement earlier this month, the Information Technology & Innovation Foundation, a U.S. think tank which has received funding from various technology companies, said in a post that “the Biden administration’s export control policy for AI chips has largely been a failure since day one. Yet, year after year, it has doubled down, attempting to plug various loopholes.” “While [the U.S. government] is certainly right to prevent U.S. companies from selling advanced AI technology to the Chinese military, cutting U.S. companies off from the entire commercial Chinese market is a cure worse than the disease,” Stephen Ezell of ITIF told CNBC in an email. “U.S. export controls have cost NVIDIA at least $15 billion in sales, and those are revenues the company needs to be able to earn to invest in future generations of innovation.”

Two staff members of Israel’s embassy in Washington, D.C., were shot dead outside the district’s Capital Jewish Museum on Wednesday night, officials said. The suspect shouted “Free, free Palestine” while in police custody and “implied” that he committed the shooting, Washington Police Chief Pamela Smith said. He was identified as Elias Rodriguez, in his early 30s, of Chicago. In custody, he told authorities where he discarded the weapon, Smith added. Mayor Muriel Bowser said there was no active threat to the community following the arrest. The victims were named by the embassy as Yaron Lischinsky and Sarah Milgram. Earlier, Yechiel Leiter, Israel’s ambassador to the United States, said they were a couple on a night out. Israeli Prime Minister Benjamin Netanyahu said he has directed security increases for Israeli missions and representatives around the world. He offered his condolences to the victims, saying, “My heart grieves for the families of the young beloveds, whose lives were cut short in a moment by an abhorrent antisemitic murderer.” The victims were leaving the museum, where an event was being held, when they were gunned down around 9 p.m., Leiter said. Ted Deutch, CEO of the American Jewish Committee, confirmed in a statement that the group was hosting the gathering. The man had been pacing back and forth outside the museum when he approached a group of four and opened fire using a handgun, Smith said. He then entered the building, where he was detained by security, she said. A spokesperson for the Israeli Embassy in Washington, Tal Naim Cohen, described the victims as two staff members, adding that they “were shot this evening at close range while attending a Jewish event.” Danny Danon, Israel’s ambassador to the United Nations, called the incident a “depraved act of anti-Semitic terrorism.” “Harming the Jewish community is crossing a red line,” he said on X. The shooting comes more than 18 months after Israel launched a bombing campaign and ground invasion in Gaza following the Oct. 7, 2023, terrorist attack on Israel by Hamas militants, in which more than 1,200 people were killed and hundreds more were taken hostage, according to Israeli tallies. Israel’s counteroffensive has killed more than 53,000 people in Gaza, many of them women and children, according to the Hamas-run Health Ministry in Gaza. International aid groups and governments have also warned of the risk of famine in the enclave. Netanyahu said Sunday that Israel would allow a limited amount of humanitarian aid to flow in following a three-month blockade. “Free Palestine” has become a popular refrain among supporters of the Palestinian cause. “The couple that was gunned down tonight in the name of ‘Free Palestine’ is a young couple about to be engaged,” he said at a late-night news conference. “The young man purchased a ring this week with the intention of proposing to his girlfriend next week in Jerusalem.” President Donald Trump condemned the violence. “These horrible D.C. killings, based obviously on antisemitism, must end, NOW! Hatred and Radicalism have no place in the USA. Condolences to the families of the victims. So sad that such things as this can happen!” he said on social media. “We’ll be doing everything in our power to keep all citizens safe, especially tonight our Jewish community,” Bondi said at the news conference. She added that Jeanine Pirro, the interim U.S. attorney for Washington, will prosecute the case. Other U.S. officials also decried the shooting. Homeland Security Secretary Kristi Noem said the victims were “senselessly killed,” and Senate Minority Leader Chuck Schumer, D-N.Y., who is Jewish, called it “another horrific instance of antisemitism which as we know is all too rampant in our society.” FBI Director Kash Patel said the agency was working with police to learn more and asked for prayers for the victims and their families. Steve Jensen, assistant director in charge of the FBI’s Washington field office, said his team was working to pin down whether the shooting may have been hate-motivated or potentially an act of terrorism.

Asia-Pacific markets fell Thursday, tracking declines on Wall Street as investor sentiment soured on fears that a new U.S. budget bill could substantially add to the country’s debt. Japan’s benchmark Nikkei 225 fell 0.84% to close at 36,985.87, while the Topix lost 0.58% to end the day at 2,717.09. South Korea’s Kospi slipped 1.22% to 2,593.67 and the small-cap Kosdaq declined 0.82% to close at 717.67. Australia’s benchmark S&P/ASX 200 fell 0.45% to end the trading day at 8,348.7. Hong Kong’s Hang Seng index slipped 1.19% to close at 23,544.31, while mainland China’s CSI 300 fell 0.06% to close at 3,913.87. Stock futures were flat in overnight trading Wednesday following a sizable sell-off on Wall Street as worries about a ballooning deficit deepened. Futures on the Dow Jones Industrial Average dipped 60 points. S&P 500 futures and Nasdaq 100 futures were both little changed. Overnight stateside, the three major averages closed lower. Stocks sold off, pressured by a sharp spike higher in Treasury yields as traders grew worried that a new U.S. budget bill would put even more stress on the country’s already large deficit. The Dow Jones Industrial Average lost 816.80 points, or 1.91% to 41,860.44. The S&P 500 shed 1.61% to 5,844.61. The Nasdaq Composite slid 1.41% to 18,872.64. The 30-year Treasury bond yield last traded around 5.09%, touching the highest level going back to October 2023. The benchmark 10-year Treasury note yield traded at 4.59%.

Stocks sold off on Wednesday, pressured by a sharp spike higher in Treasury yields as traders grew worried that a new U.S. budget bill would put even more stress on the country’s already large deficit. The Dow Jones Industrial Average lost 816.80 points, or 1.91% to 41,860.44. The S&P 500 shed 1.61% to 5,844.61. The Nasdaq Composite slid 1.41% to 18,872.64. The 30-year Treasury bond yield last traded around 5.09%, touching the highest level going back to October 2023. The benchmark 10-year Treasury note yield traded at 4.59%. Long-dated bonds sold off as traders worried a new budget bill would worsen the U.S. deficit. The measure is expected to pass as lawmakers reach a compromise on state and local tax deductions heading into Speaker Mike Johnson’s Memorial Day deadline. Yields spiked even higher after a poor afternoon auction for 20-year debt, raising fears investors may be losing their appetite for funding America’s deficits. “The question now is, from a fiscal perspective, what will the tax bill look like, and will it undo all of the recent fiscal frugality by simply raising the debt level at a slower rate of pace? So I think that’s why the 10-year yield is moving higher — because investors are worried that we’re really not doing anything to slow the pace of inflation and to reduce the debt,” Sam Stovall, CFRA Research chief investment strategist, told CNBC in an interview. “Now it seems as if there is a greater chance that the tax bill will pass, and that could end up simply continuing to raise the overall debt level,” he continued. Treasury yields had spiked last month as worries over President Donald Trump’s tariffs dented confidence in the safe haven status of U.S. debt. The 10-year in April swung from below 3.9% to more than 4.5% in just days. Yields eased from those levels after Trump announced delays on when the levies would take effect. Target shares dropped 5.2% after the big box retailer cut its full-year sales outlook, with executives citing tariff uncertainty and a backlash to the company’s pullback in diversity, equity and inclusion efforts. UnitedHealth was the worst-performing Dow member, losing 5.8% following a downgrade from HSBC. Major tech-related stocks Apple and Amazon also dropped as rates increased. Wednesday’s action comes after a tough session for the three major averages. The S&P 500 ended a six-day win streak, while the Nasdaq saw its first negative day in three. The major averages have staged sharp recoveries since a sell-off last month that engulfed markets after Trump unveiled steep tariffs on imported goods. The S&P 500 and Nasdaq are up more than 13% and 18%, respectively, in the past month. “Some [investors] are a little worried that we’ve gone too far, too fast, and are due for some digestion of recent gains,” Stovall added.

U.S. Treasury yields remained elevated on Thursday as the country’s growing fiscal deficit became a key concern for investors this week. At 3:40 a.m. ET, the 30-year Treasury yield held steady at 5.09%, a high not seen since November 2023. The 10-year yield declined just over one basis point to 4.58%, while the 2-year Treasury yield was lower by over 2 basis points to 3.99%. One basis point is equivalent to 0.01% and yields move inversely to prices. Investors have paid close attention to the U.S.′ budget deficit this week amid a series of blows, including Moody’s decision to downgrade the country’s credit rating by one notch, and U.S. President Donald Trump’s massive budget bill. Trump’s “big beautiful bill” has caused much negotiation and debate on Capitol Hill, and is estimated to add $3 trillion to $5 trillion to the country’s debt, which will increase the deficit, put pressure on inflation, and accelerate an already worrying bond market sell-off. This initial sell-off was triggered by Moody’s slashing the U.S.′ credit rating from Aaa — the highest level — to the second highest level Aa1 on Friday, citing “large annual fiscal deficits and growing interest costs.” That adds to worries that Treasurys may no longer be a risk-free and safe haven investment. “You put all that together, and the market is increasing that risk premium for long-term bonds,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “There is a global repricing in a world where there’s just more sovereign debt and a lot more uncertainty about whether policies are going to adjust to make that look attractive.” Investors will be keeping an eye out for some economic data on Thursday, including weekly jobless claims — which will offer fresh insights into the labor market — and existing home sales.

Despite a brief market scare, the richest 10 Americans got $365 billion richer over the past year, according to a new analysis from Oxfam. The stunning increase in wealth amounts to a gain of roughly $1 billion per day for those billionaires. By contrast, the typical American worker made just over $50,000 in 2023. Oxfam found that it would take a staggering 726,000 years for 10 US workers at median earnings to make that much money. The findings put an exclamation point on the nation’s wealth inequality and come as Republicans debate a costly bill that could make the rich even richer and deeply cut into key safety net programs. “Billionaire wealth has increased astronomically while so many ordinary people struggle to make ends meet,” Rebecca Riddell, senior policy lead for economic and racial justice at Oxfam America, said in the report. Elon Musk alone got $186 billion richer To measure the gains of the richest, Oxfam measured the estimated wealth shifts of the top 10 on the Forbes Real Time Billionaire List between the end of April 2024 and the end of April 2025. Elon Musk, the world’s richest person and CEO of Tesla, accounts for just over half of the total wealth gains, with his net worth spiking by $186.1 billion over that span. An analysis last fall found that Musk, a pivotal figure in President Donald Trump’s return to the White House, is on track to become the world’s first trillionaire. The net worths of Meta boss Mark Zuckerberg and Walmart heir Rob Walton increased by $38.7 billion apiece. Legendary investor Warren Buffett gained $34.8 billion in wealth, while Walmart heir Jim Walton gained $36.5 billion. Oxfam argues that the Republican bill, a legislative priority of Trump, would further stack the deck against ordinary people in favor of the most affluent. “We’re seeing a tax code being designed that would bring about the world’s first trillionaire,” Riddell said. Some progressives have called for fighting inequality by imposing a wealth tax on ultra-millionaires and billionaires. Oxfam found that a 3% tax on wealth above $1 billion would raise $50 billion from the 10 richest Americans alone – enough to provide food assistance for one year to 22.5 million people. Of course, taxing wealth would be very challenging, in part because it can be hard to value net worth. And some legal scholars have questioned whether a wealth tax is even constitutional. Most gains would go to the top 10% Lawmakers are debating whether and how to extend the 2017 Tax Cuts and Jobs Act, Trump’s signature tax law. The bill that has advanced in the House would make permanent essentially all of the individual income tax breaks from the 2017 law and temporarily cut taxes on tips and overtime. The legislation would increase the nation’s economic output, measured by gross domestic product (GDP), by 0.5% in 10 years and 1.7% in 30 years, according to an analysis by the Penn Wharton Budget Model. Those economic gains would be fueled by higher savings and labor supply, incentivized by a weaker social safety net, Penn Wharton found. The bill’s gains would go disproportionately to the rich, according to the analysis. The top 10% of earners would receive about two-thirds (65%) of the total value of the legislation, while households in the bottom 20% would lose about $1,035 in 2026 due to cuts to Medicaid, food stamps and other changes, according to Penn Wharton. Kent Smetters, professor of business economics and public policy at the University of Pennsylvania’s Wharton School, told CNN that the top 10% of households would get about $3.1 trillion worth of tax cuts over 10 years. Smetters, who runs the Penn Wharton Budget Model, noted that the US tax system is “very progressive,” with the same group paying about 70% of all federal income and payroll taxes. Democratic Senator Elizabeth Warren of Massachusetts said the GOP bill is a “giveaway” for the rich. “Donald Trump and Republicans in Congress are trying to jam through massive tax giveaways for the wealthiest Americans — millionaires and billionaires who are only getting richer by the day. Billionaires don’t need another break, working people do,” Warren said in a statement to CNN. The White House, however, says Trump’s budget priorities would help Americans thrive, extending gains from his first term in office. “Wealth inequality in the United States actually decreased for the first time in decades during President Trump’s first term thanks to his economic agenda of tax cuts, deregulation, domestic energy production, and tariffs,” White House spokesman Kush Desai said in a statement to CNN. “The One, Big, Beautiful Bill locks many of these successful policies in, including President Trump’s historic first term tax cuts, to again restore prosperity for Main Street.” Another expensive tax cut? The debate comes as concerns increase over America’s $36 trillion mountain of debt. Moody’s Ratings on Friday downgraded the perfect credit rating it held for the United States since 1917 due to concerns about the surge in government debt over the past decade and high interest payment ratios. The White House has argued the GOP tax bill will help address these concerns by cutting spending. Karoline Leavitt, the White House press secretary, said on Monday that the sweeping legislation won’t add to the deficit. However, in its downgrade decision, Moody’s said it does “not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.” Likewise, the Committee for a Responsible Federal Budget, a fiscal watchdog group, warns that the GOP bill would “add massively to near-term deficits” by piling another $3.3 trillion on the national debt over a decade including interest. That figure surges to $5.2 trillion if temporary provisions are made permanent. “This additional near-term borrowing could stoke inflation and push up interest rates,” the Committee for a Responsible Federal Budget wrote in its analysis.

President Donald Trump and his administration have long suggested that the on-again, off-again rollout of historic tariffs was intentionally chaotic, part of a carefully crafted master plan designed to keep America’s trading partners on the back foot. But that dubious theory has been belied by recent announcements from Trump and his trade officials. Despite a host of tariffs that Trump has imposed, then paused, changed, lowered, exempted and then re-threatened, the president is simply creating “strategic uncertainty,” Treasury Secretary Scott Bessent on Sunday told CNN’s Jake Tapper. “If we were to give too much certainty to the other countries, then they would play us in the negotiations,” Bessent told CNN. Trump has at times suggested something similar – that he understands the power wielded by tariffs in a way few others do. “Tariffs are the most misunderstood thing maybe in any form of business,” Trump said in the White House earlier this month. Top trade adviser Peter Navarro has described Trump’s trade strategy as a game of “3D chess” that the media and mainstream economists fail to comprehend. But those suggestions of a coherent strategy behind the tumultuous rollout of Trump’s tariff plans are contradicted by Trump and Bessent’s recent announcements that they’ll set new tariffs for dozens of countries that want to strike a deal but have been unable to get a meeting with the United States during the three-month pause. They’re undermined by the administration’s carve-outs, concessions and pull-backs. And they’re negated by large American companies declaring that they’ll raise prices. Clock is running out The 3D-chess theory goes something like this: Trump threatened massive tariffs as a warning that America will grow less reliant on foreign trade. To show he’s serious, Trump made good on his threat, putting the tariffs in place to scare the bejesus out of foreign countries and companies that manufacture goods outside the United States. But to be fair and realistic, Trump hit pause to give trading partners time to come to the table and companies time to reshore their manufacturing. To some degree, that has happened: The administration says it is in active discussions with 18 trading partners on potential new trading deals that, in theory, could give US businesses access to untapped markets. The framework of a deal with the United Kingdom, announced earlier this month, opened up the British market to some US agricultural producers, for example. And a number of major companies have made big, multibillion-dollar promises to invest in the United States. For example, Apple committed to a $500 billion long-term plan, much of which was previously in the works, to add manufacturing capacity in the United States. So if the plan was showing signs of success, why restart the tariffs with only a couple trade deals in hand? Trump last week said it was impossible to do 150 deals in enough time before the pause was lifted – so his administration would give countries new tariffs in the next few weeks. Bessent this weekend clarified that the original “reciprocal” tariffs as high as 50% that were announced during Trump’s April 2 “Liberation Day” ceremony could be reimposed on some countries — but the administration may instead decided to replace them with regional tariffs at a different rate. The administration has frequently said 100 or so countries have offered to negotiate on trade to avoid Trump’s tariffs. So restoring initial “reciprocal” tariffs or setting regional rates before most countries have gotten a chance to negotiate undermines the theory that hitting pause would give countries a fair chance to come to the table. Rising prices Tariff proponents may say the high import taxes are necessary to incentivize companies to bring manufacturing back to the United States. Despite some high-profile announcements, that’s by and large not happening. It remains prohibitively expensive and takes considerable time to bring many kinds of manufacturing to the United States. And with the topsy-turvy trade announcements, businesses are uncertain how long Trump’s tariffs will even be in place. For example, Trump’s administration earlier this month lowered tariffs on China to around 30% from 145% after Trump and Bessent called the high rates “unsustainable.” But the only concessions America appeared to get from China was a roll-back on Chinese tariffs and non-tariff trade barriers put in place since April 2. Trump has also issued significant tariff carve-outs on foreign-made auto parts and Chinese electronics, which took considerable bite out of his trade war. “We should not expect any boost to domestic economic activity from tariffs, especially in the near term,” said Seth Carpenter, Morgan Stanley’s chief global economist, in a note to investors this week. “For a business that is contemplating moving production to the US, 30% tariffs might make it cost effective. But if the factory takes a couple years to build and another few to recoup the investment, the CEO needs to be convinced tariffs would will be in place at 30% or higher for the next five years or longer. The newsflow since April 2 suggests no such certainty.” Meanwhile, American companies have begun to raise prices. Walmart said last week tariffs were “too high” and that it would be forced to pass along some tariff costs to consumers – a fact Bessent acknowledged this weekend. Home Depot said Tuesday it planned to keep most prices the same but would have to raise prices or stop selling some items because of tariffs. Toymakers, footwear makers and many others have said prices are going up, too. The bond theory In some social media channels, an even wilder 4D chess theory has emerged. The theory suggest that Trump started his trade war to purposefully tank the stock market (it very nearly plunged 20% into a bear market in two short months), creating more demand for safe-haven assets like Treasuries that would send rates lower, thus sinking costs for consumers and allowing America to refinance its debt at a cheaper rate. Meanwhile, tariff revenue would help pay down the debt, allowing Republicans to pass a massive tax cut bill that will boost the economy. But that theory, too, has been contradicted by the fact that the market has rallied since he exempted many electronics from his tariffs mid-May. And long-term bond rates have remained relatively high: Bond prices, which trade in opposite direction to yields, fell further Monday after Moody’s downgraded America’s debt from its perfect AAA credit rating Friday, warning that America’s debt situation is increasingly dire and could be made worse by tax cuts. The tumbling bond market, in fact, is what spooked the Trump administration in the first place and led Trump to hit pause on the “Liberation Day” tariffs, the administration has conceded. Trump acknowledged on April 9, the day he paused the tariffs, that he had been watching the bond market, which was getting “yippy.” National Economic Council Director Kevin Hassett told Fox News that day that the pause had been previously planned but got “a little extra push from the bond market,” which was saying, “Hey, we don’t believe these guys” on the validity of the tariffs. So it’s sounding more like chaos theory, not the 3D or 4D chess theory, is the reality driving Trump’s trade war.

Just days after the United States and China declared a temporary truce over tariffs, tempers are already flaring: this time over the future of Beijing’s most advanced homegrown semiconductors. Over the past week, Beijing has repeatedly lashed out at Washington for warning companies against using AI chips made by national tech champion Huawei. It has even accused the Trump administration of “undermining” a consensus reached at recent trade talks in Geneva, where both sides agreed to temporarily roll back tariffs and use a 90-day window to hash out a broader deal. The conflict over Huawei’s most advanced chips serves as a reality check that despite the positive words shared by US and Chinese negotiators last week, there are still sharp differences between the two sides on a variety of subjects that may be difficult to bridge. On Wednesday, China’s Commerce Ministry fired its latest broadside, accusing the US of “abusing export controls to suppress and contain China” and engaging in what it called “typical acts of unilateral bullying and protectionism.” China was responding to the Trump administration’s announcement last week rescinding a set of Biden-era curbs meant to keep AI chips out of the hands of foreign adversaries. As part of that announcement, the US Commerce Department issued guidance on May 12 warning companies that “using Huawei Ascend chips anywhere in the world would violate US export controls.” The department has since changed its wording to remove the reference of “anywhere in the world” in an updated version of the statement. The Ascend chips are Huawei’s most powerful AI processors, which are used to train AI models and aim to challenge Nvidia’s dominance in designing high-end chips. Huawei’s efforts are central to Chinese leader Xi Jinping’s plans to build up China’s own capacity to develop cutting-edge chips as it vies for AI supremacy with the US. At a top political meeting last month, Xi called for “self-reliance” to develop AI in China, saying his country would leverage its “new whole national system” to target bottlenecks such as advanced chips. Beijing’s ire On Monday, Beijing signaled the US Commerce Department’s wording change in the updated statement on Huawei wasn’t enough to end the feud. In a statement, China’s Commerce Ministry said that despite the “adjustment” in wording, the “discriminatory measures and market-distorting nature” of the guidance itself remained unchanged. “China has engaged in negotiations and communications with the US at various levels through the China-US economic and trade consultation mechanism, pointing out that the US actions seriously undermined the consensus reached during the high-level talks in Geneva,” the ministry said, urging the US to “correct its mistake.” The ministry’s latest statement on Wednesday came with an extra warning from Beijing to global businesses, threatening legal action against anyone who helps what it calls a US attempt to “globally ban the use of advanced Chinese chips.” “Any organization or individual that implements or assists in implementing these US measures may be in violation of China’s Anti-Foreign Sanctions Law and other relevant laws and regulations, and must bear corresponding legal responsibilities,” the statement said. “China will closely monitor the implementation of the US measures and will take resolute steps to safeguard its legitimate rights and interests,” it added. There has been no announcement of further trade talks between the US and China. But last Friday, US trade representative Jamieson Greer and Chinese trade envoy Li Chenggang met on the sidelines of a gathering of APEC trade ministers in South Korea, Reuters reported.