by Daniel Brouse
April 10, 2025
April 9th’s unprecedented bounce in the stock market was nothing more than a temporary sugar high — a dead cat bounce in market jargon. It was fleeting, emotional, and utterly disconnected from the underlying economic reality. Fundamentally, nothing positive has changed. In fact, the situation is worse. Far worse.
Why Did Trump Blink on Tariffs?
The reason for Trump’s abrupt about-face on his tariffs wasn’t because of some grand negotiation tactic or economic strategy. It was panic. The night before, the U.S. Treasury bond market suffered one of its worst liquidity crises in modern history. The collapse in bond demand triggered fears that the Federal Reserve might have to step in with emergency intervention. At that exact moment, Trump announced a 90-day “pause” on certain tariffs — a clear attempt to calm the waters.
This pause was not a sign of strength. It was a sign of weakness and desperation.
Traders took the opportunity to buy oversold stocks, but longer-term investors smartly used the bounce to sell into strength. And this morning? Futures were already down again, signaling that smart money knows this isn’t over.
Tariffs Are Still in Place — And More Are Coming
Many of these countries already have long-standing trade agreements with the U.S. — agreements that Trump has repeatedly violated or unilaterally torn up. So why would anyone believe he’s negotiating in good faith now? The pattern is clear: deals don’t mean much if one side keeps changing the rules.
Nothing about the structural trade conflict has improved. The tariff pause doesn’t change the fact that the U.S. and China, the world’s two largest economies, are escalating toward a full-blown economic war. The new tariff structure is estimated to create an effective 145% tariff on Chinese imports into the U.S., and an 84% tariff on U.S. exports to China.
Global trade between the two countries could fall by 80% or more — a staggering figure that would destroy supply chains, eliminate jobs, increase consumer prices, and plunge the global economy into recession.
This is already happening.
Canceled CapEx and Collapsing Investment
We are seeing the damage show up in real-time across corporate America. Capital expenditures (CapEx) — the lifeblood of future economic growth — are being slashed or outright canceled:
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Microsoft abandoned its $1 billion data center project in Ohio citing “market uncertainty.”
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Ford shelved expansion plans in Michigan and cut thousands of jobs due to tariffs increasing steel and aluminum costs.
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Harley-Davidson moved part of its production overseas to avoid retaliatory tariffs — killing U.S. factory jobs.
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Boeing warned of major losses and delayed production schedules as global aircraft orders stall.
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Caterpillar and Deere both cut forward guidance citing collapsing demand in agriculture and construction tied directly to the trade war.
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Tesla scaled back its China expansion plans, warning of higher costs and lower demand.
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Semiconductor manufacturers like Intel and Nvidia cut CapEx due to weakening global tech demand.
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Even Apple hinted at slowing investment in U.S. facilities as its supply chain costs spiral higher.
This is just the tip of the iceberg. Thousands of small and medium businesses — the true backbone of the economy — are quietly canceling investments, freezing hiring, and shelving growth plans. Why build or expand if tomorrow’s rules are unknown and changing by tweet?
The Elephant in the Room: The Bond Market
The most misunderstood part of this entire crisis is the bond market — and Trump’s obsession with the 10-year Treasury yield.
Foreign countries like China and Japan hold the largest reserves of U.S. Treasuries. These reserves come from trade surpluses — dollars earned from selling goods to the U.S. But as Trump deliberately shrinks trade with the world, those dollar flows disappear. Less trade means fewer dollars. Fewer dollars means less buying of U.S. debt. Less demand for Treasuries means higher interest rates — even in the face of a slowing economy.
Ironically, this amounts to a self-inflicted credit war. Trump is attacking the very trade flows that fund the U.S. deficit. Worse, foreign countries are starting to invest their existing reserves elsewhere — in gold, in Euros, in commodities — anything but the U.S. dollar.
This isn’t just about trade anymore. This is about credit strength, reserve status, and financial stability.
Conclusion: The Real State of the Economic Union
The market bounce was a head fake.
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The trade war is still escalating.
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Global CapEx is collapsing.
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Treasury demand is weakening.
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Interest rates are likely to stay elevated despite recession risks.
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Foreign capital is leaving.
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Inflation remains persistent due to tariffs and a weaker dollar.
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Corporate earnings are declining.
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Uncertainty is growing.
Tariffs didn’t just disrupt goods and supply chains — they shattered America’s credibility. The so-called “reciprocal tariff” numbers were pure fiction, rooted in a fundamental misunderstanding of how global trade and capital flows actually work. Worse, they injected chaos into global markets and made U.S. trade policy look reckless, arbitrary, and unmoored from reality. Longtime allies and trading partners, faced with unpredictability from Washington, began hedging their bets and reducing their exposure to the U.S. economy. Suddenly, what was once considered the world’s most reliable safe haven didn’t feel so safe anymore.
This is not a healthy economy. This is an economy headed for stagflation — slow growth, high inflation, and rising interest rates — the worst possible scenario.
The State of the Economic Union?
Still horrible. And likely to get worse.
- Credit War!
- Stock Market Update: A Worsening Economic Landscape
- Tariff Turmoil: The Chaos and Confusion Surrounding U.S. Trade Policies in 2025
- America’s Trade War Is Costing More Than We Realize — It’s Costing Global Trust
- Dump Trump: Buy and Hold Doesn’t Hold
- Mandated Buyers vs Emotional Sellers: The Battle Behind Every Crash
(Why doesn’t the stock market just crash in a straight line?) - Primer: The Chaos Theory of Crashing Markets
- The Great Depression vs. The Climate Crisis: Why the Stock Market May Never Recover