by Daniel Brouse
April 9, 2025
Today’s record spike in U.S. interest rates is grabbing headlines — but it’s a symptom, not the disease. The real crisis is deeper and far more dangerous: America’s trade war has shattered the trust that once made U.S. financial markets the safest in the world.
For decades, the U.S. enjoyed an extraordinary advantage. No matter what turmoil rocked the world — wars, recessions, pandemics — foreign investors would rush to buy U.S. Treasuries. It wasn’t just about returns. It was about trust. The U.S. was stable, predictable, and reliable. That trust kept our borrowing costs low, our dollar strong, and our economy resilient.
But Trump’s trade war changed everything.
Tariffs didn’t just hit goods and supply chains — they hit America’s credibility. They introduced chaos into global markets, made U.S. policy look arbitrary, and forced long-time allies and trading partners to start hedging their bets. Suddenly, the “safe haven” didn’t feel so safe anymore.
And now we’re seeing the fallout.
Today’s bond market shock — one of the sharpest interest rate spikes in history — is part of a larger shift. Foreign investors aren’t rushing to U.S. Treasuries like they used to. Some are moving to gold. Others to European bonds. Some are simply staying home.
That shift comes at a staggering cost. Without foreign demand for our debt, the U.S. has to offer higher and higher interest rates to attract buyers. That means rising borrowing costs across the entire economy — for the government, for businesses, for homeowners.
This isn’t just about tariffs on steel or soybeans. This is about America losing its greatest economic weapon: trust.
And once trust is gone, it doesn’t come back easily — or quickly. No matter what happens next with Trump’s tariff policies, the damage is done. The U.S. has moved from “most trusted” to “no longer reliable” in the eyes of global investors.
That’s a legacy of the trade war we’ll be paying for long after the headlines move on.
Tariffs and the Liquidity Crisis in Long U.S. Treasuries