Behind Trump's tariffs: Lowering US bond yields is the top priority, and the fall in US stocks is just a "price"?

Although President Donald Trump's recent tariff policy has severely hit the U.S. stock market in recent weeks, an increasing number of Wall Street strategists point out that Trump's primary objective may be to lower U.S. bond yields, even if it comes at the cost of a decline in the S&P 500 index. The S&P 500 index fell 1.78% on Thursday, down 2.43% so far this year. Jason DeLorenzo, head of asset allocation for the Americas at UBS Global Wealth Management, said earlier this week, "There is reason to believe that the index must fall further before Trump sees it as a worrisome signal." He added, "We speculate that Trump's current actions are aimed at U.S. Treasury bonds, where a decline in yields, rather than a rise in stock prices, is the best market indicator of success for Trump 2.0 policy." The 10-year U.S. Treasury bond yield is a benchmark for borrowing costs. A decrease in bond yields means a reduction in the cost of debt refinancing. On Thursday, the yield on the 10-year U.S. Treasury bonds was 4.28%, lower than the 4.6% when Trump took office. On Tuesday, Trump told Congress, "Tariffs are to make America prosperous again, to make America great again. That's happening, and it's happening fast. It will cause a little disruption, but we can handle it. It won't have a big impact." When asked about the impact of tariffs on the stock market, U.S. Treasury Secretary Scott Benett also said that the White House's top priority in the short term is not the stock market. Benett said earlier this week, "In the medium term, we are focusing on ordinary people. Wall Street is doing well, Wall Street can continue to do well, but our focus is on small businesses and consumers, so we will rebalance the economy." Market forecasts suggest that if the U.S. economy slows to a certain extent, the Federal Reserve will cut interest rates, while tax cuts and deregulation will stimulate economic growth. DeLorenzo said, "Trump may not see a slowdown in economic growth as a policy mistake, but as a necessary prerequisite for future economic growth to accelerate." He added, "Investors lack patience, but if this approach is combined with future growth-promoting policies such as tax cuts and deregulation, they will be more tolerant. These policies may come later this year, which is an important factor for investors to consider when assessing current economic growth." Charlie MacGregor, managing director of Nomura, said on Wednesday that the Trump administration is actively acknowledging the "negative wealth effect" in order to rebalance the U.S. economy, as it tries to shift growth from relying on government overspending to being more driven by the private sector. "This is undoubtedly very dangerous," MacGregor said. "Everything has a cost, so if the speed or intensity of market shocks increase, he will definitely be forced to try to use a more moderate and conciliatory tone." These concessions began on Wednesday when the Trump administration temporarily exempted three major car manufacturers after imposing a 25% tariff on trade partners Canada and Mexico. On Thursday, Trump announced a suspension of tariffs on certain Mexican goods, and the White House later announced that the suspension would also include goods from Canada.