The prerequisite
Indicators of distrust in Donald Trump’s economic policy are multiplying.
According to the University of Michigan survey, American consumers are very worried. In April, they expect inflation to rise sharply to 6.7% over the next 12 months and to reach 4.5% over five years, levels well above those observed during the recent inflationary episode. They are also worried about employment, which, according to the same consumer, would decline significantly over the next six months.
Economic policy uncertainty, as measured by the Economic Policy Uncertainty Index, surged with Trump’s arrival in the White House. At the beginning of April, it blew all the benchmarks, including those of the pandemic, during which we were all sorcerer’s apprentices.
American economic policy is perceived as unpredictable. This is evidenced by the fact that the measure prohibiting taxation of phones, computers, and other devices is now only temporary, according to the Secretary of Commerce, whereas it appeared permanent when it was announced on Saturday.

The dual strategy
The White House is said to be pursuing a dual strategy.
An explicit statement on tariffs and the need to make the rest of the world pay for what the United States has helped shape around the world for decades.
The other strategy would reflect the need for very low interest rates due to the considerable amount of bonds to be refinanced. We’re talking about $7 trillion in bonds that were issued at a reduced interest rate during the pandemic and that must be renewed at market rates. Given the current 10-year rate (4.5%), the additional cost to the US Treasury and budget will be considerable.

Two non-exclusive points
The negotiations to discuss customs tariffs were to focus in particular on this refinancing and the ability of the rest of the world to carry this debt at very low rates so as not to weigh on the US budget. The postponement of the tariff measures pushes back these negotiations and therefore the possibility for the United States to have the rest of the world bear the burden of the debt.
The other option was to plunge the United States into recession to lower interest rates and thus allow for cheaper refinancing. Trump had, in fact, indicated that a short recession might be necessary.

The debate
The loss of investor confidence is reflected in a strategy that is anything but US assets. And this refinancing will likely come at an exorbitant cost to the US Treasury.
We cannot muddy the waters and demand commitments from economic players. This doesn’t work because businesses and investors must have clear and stable rules. Washington’s amateurism raises fears of the worst.