Trump fought the bond market, the bond market won: Saifedean Ammous

Analysts are criticizing the financial implications of US President Donald Trump’s import tariffs, a development that some say highlights Bitcoin’s unique economic properties during times of global uncertainty.

Trump’s 90-day pause on higher reciprocal tariffs, reverting them to a 10% baseline for most countries except China, has exposed vulnerabilities in the US bond market, according to critics.

Economist and author of The Bitcoin Standard, Saifedean Ammous, said Trump’s decision to reverse the higher tariffs was likely a reaction to rising bond yields, suggesting the administration’s hand was forced.

“Trump fought the bond market and the bond market won,” Ammous said in an April 23 X post. “The gambit seemed to work for the first day, and the huge crash in the stock market was presented as a small price to pay for fiscal sustainability.

“But then the bonds began to crash, and it became clear how disastrous the tariffs were, and how wrong it was to expect that deliberately crashing the stock market would boost the bond market,” he added.

Treasury yields spike after tariff move

Following Trump’s tariff announcement, CNBC data shows that the 10-year Treasury yield surged from under 4% to 4.5% amid a sell-off driven by inflation and recession concerns.

*10-year bond yield, 1-year chart. Source: CNBC*

“The rise in yields was the exact opposite of what the administration wanted, and reversing course on the tariffs half a day after they go into effect was absolutely devastating for Trump’s negotiating position,” Ammous said.

Some analysts, including Global Macro Investor founder Raoul Pal, have suggested the tariff maneuvering may only be “posturing” for the US to reach a trade agreement with China.

“All of the talk about China buckling under the threat of Trump now sounds hilarious in retrospect, when Trump could not keep his tariffs in place for two days,” Ammous said, adding that China “showed absolutely no inclination” to reach out and strike a deal.

Delays in reaching a trade agreement may limit the recovery of both equity and cryptocurrency markets, which hinge on the outcomes of the trade negotiations, according to Nansen analysts.

Meanwhile, Bitcoin (BTC) is acting “less like a tech stock and more like a hedge against economic uncertainty,” after Trump signaled a “substantial reduction in tariffs on Chinese goods,” Nexo dispatch analyst Iliya Kalchev told Cointelegraph.

Trade wars reignite the need for a Bitcoin standard

The situation has revived long-standing proposals to back the US dollar with Bitcoin.

Ammous said the US should keep buying BTC until the government holds enough to fully back the dollar supply, ultimately switching to a Bitcoin standard:

“Keep buying bitcoin until the value of the bitcoin held by the US government is enough to back the entire US dollar supply, then go on a bitcoin standard where dollars are redeemable for bitcoin, and have the government never spend more than it earns.”

Historically, the dollar was backed by gold and redeemable for a fixed amount of the precious metal until 1933, when President Franklin D. Roosevelt suspended gold convertibility in response to the Great Depression.

In 1971, President Richard Nixon halted the dollar’s convertibility into gold, aiming to protect the US gold reserves and stabilize the economy, marking the beginning of the fiat currency system that remains in place today.

Bitcoin’s fixed supply, which is hard-coded in its tokenomics, makes it a popular digital competitor to gold.

Joe Burnett, director of market research at Unchained, predicted that Bitcoin may rival or surpass gold’s market capitalization in the next decade, projecting that the Bitcoin price will surpass $1.8 million by 2035.