While Trump befriends America’s enemies, his tariff wars convert friends into enemies. The headlines are filled with the growing animosity from Canada, Mexico, and Europe. However, let’s not forget our friends in Asia.
Japan is currently selling U.S. Treasury bonds in reaction to Trump’s tariff war. So, why do you think we should be concerned? If major foreign bond buyers leave America, America will have to pay more to entice buyers to buy our bonds. Supply and demand economic laws can devastate when demand dries up. When major bond investors leave the American market, interest rates increase, which destabilizes the dollar.
Underlying Japan’s growing antagonism toward America is the growing EV trade war. As Trump protects America’s EV industry, with a preference for Musk’s Tesla, Japan responds predictably. Their reaction goes something like this: “You create barriers for our automobiles, and we withdraw our money from your economy.”
Here we go again. History repeats itself. As countries like Japan withdraw their money from the USA, interest rates increase, and our stock markets decline. Higher interest rates cause corporations to tighten their belts and lay off employees. Higher rates also mean higher mortgage rates for younger people trying to buy their first home.
Aside from the economic aspects of Trump’s trade wars, there are diplomatic and military dimensions. Trade wars often cause world wars and international instability. Is that what we want?