President Donald Trump‘s aggressive trade tariffs extend beyond Wall Street, rattling the Treasury market and the U.S. dollar. The turmoil is now challenging the long-held narrative of “American exceptionalism” that has underpinned global confidence in the U.S. economy for decades.
A broad trade-weighted measure of the dollar fell Friday to its lowest level since April 2022. The greenback is now down 10% since Trump’s inauguration, raising concerns about its global reserve status.
Although recent March inflation reports showed cooling price pressures across both consumer and producer markets, bond markets didn’t react with the usual optimism.
Long-dated Treasury yields climbed steadily all week, with the 10-year yield breaking past 4.50% — a level not seen since February. The 30-year yield briefly hit 5%, signaling that bond vigilantes —investors who dump bonds in protest of policy mistakes — have returned.
Amid widespread selling of U.S. Treasury bonds and the dollar, gold reaffirmed its role as a haven, surging to a new all-time high above $3,200 per ounce.
On Wednesday, stocks skyrocketed after the Trump administration announced a 90-day suspension of tariffs for most trade partners — China being the notable exception, with levies surging to 145%. The move triggered the biggest one-day rally on Wall Street since 2008.
Still, that positive momentum faded quickly. By the week’s end, investor sentiment was once again clouded by uncertainty. The White House remains committed to its hardline tariff policy against China, even as Beijing retaliated with counter-tariffs on U.S. goods that now reach as high as 125%.
Meanwhile, first-quarter earnings reports from banking giants including JPMorgan Chase & Co. JPM, Morgan Stanley MS and Wells Fargo Co. WFC delivered encouraging numbers. Yet, investors remain cautious as the true impact of tariffs likely won’t be visible until the second-quarter results.
“The economy is facing considerable turbulence,” JPMorgan CEO Jamie Dimon said.
More troubling are signs from Main Street. American consumers are growing increasingly pessimistic.
The University of Michigan’s preliminary consumer sentiment index for April plunged to its lowest level since mid-2022. Expectations for inflation jumped sharply: one-year outlooks soared to 6.7%, the highest since 1981, while five-year expectations climbed to 4.4%, the highest since 1990.
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