President Trump’s tariffs have sparked a historic storm on Wall Street, with stocks, US government bonds, and the dollar taking a hit simultaneously for the first time in decades. The Dow Jones Industrial Average fell nearly 1,000 points, or over 2%, while a key metric of the dollar against a basket of major currencies reached a three-year low.
The concerns center on whether investors around the world are losing trust in the US as a result of Trump’s unpredictable policies. If true, it would represent a seismic change in the global financial system, with the US no longer considered a haven. Foreign investors’ confidence in the US is critical to the trillions of dollars tied up in this country’s financial markets and the American way of life.
Several factors contribute to the uncertainty:
1. Sophisticated investors adjusting their portfolios based on tariff news.
2. The possibility that foreign investors are losing trust in the US due to Trump’s unpredictable policies, making US bonds and the dollar no longer considered safe investments.
Foreign investors have placed over $8 trillion worth of debt issued by the federal government, and their confidence is crucial to the US finances. If they stop buying or start selling, it could unleash financial turmoil across markets.
Analysts agree that even if foreign investors are not rushing to sell, confidence in the US has taken a big hit. It will take time for markets to return to normal, and rebuilding trust with friends, wives, lovers, and other nations will be challenging.
The impact of China stopping or selling its $750 billion worth of US bonds would be massive, raising concerns about a mutually destructive financial war between the two biggest economies. The uncertainty surrounding foreign investors’ behavior in the US bond market makes it difficult to determine what’s happening, with no agreement on the cause or outcome.
Source: https://www.npr.org/2025/04/21/nx-s1-5361202/trump-tariffs-dollar-china-wall-street-bonds