Analysis of Trump's Tariff Strategy: Lowering U.S. Treasury Yields to Alleviate Fiscal Crisis and Balance Stock and Bond Market Volatility as Key

President Trump's policies are characterized by unpredictability, especially the tariff war, which has left the market in confusion. X platform user @magicube121 has analyzed and revealed that Trump's core strategy is actually to "lower the 10-year U.S. Treasury yield to 3.17%" as a primary objective, in order to address the unprecedented U.S. fiscal crisis, while also managing the balance of declines in both the U.S. stock market and U.S. Treasury.

The Pressure of U.S. Bonds: Trump's "3.17%" Strategy

According to @magicube121's analysis, the Trump administration's real policy goal is not what the outside world believes is to make America great again by "boosting the US stock market," but rather to keep the "10-year Treasury yield down to 3.17%," corresponding to the average interest rate level for the fiscal year 2024:

The goal behind this is to prevent the interest on new debts from exceeding that of old debts, in order to curb fiscal excess.

He further explained that the fiscal pressure currently faced by the United States is even higher than that of the United Kingdom after World War II, with an estimated need to repay about 7.6 trillion dollars in short- and medium-term national debt by 2025. The current yield of nearly 5% represents interest costs far exceeding the lows of 2020, which can be described as a "disaster of interest skyrocketing tenfold":

Therefore, the primary task of the Trump team is to pressure U.S. bond yields to reverse this debt storm.

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Killing three birds with one stone: How tariffs became Trump's fiscal weapon

In addition, he pointed out that the reason Trump restarted the tariff war is due to intricate financial calculations. Through "reciprocal tariffs," the U.S. can increase its tax revenue by about $750 billion a year, almost equivalent to the defense budget, achieving "fiscal expansion."

More importantly, the pressure on the stock market caused by tariffs can prompt capital to shift towards U.S. Treasuries for hedging, thereby lowering bond yields, which can be considered a win-win situation.

Since Trump took office at the beginning of this year, U.S. Treasury yields have fallen from 4.81% to 4.06%, saving $600 billion in interest expenses. If it further drops to 3.17%, an additional $600 billion can be saved.

This strategy not only "opens up sources and saves money", but also paves the way for fiscal reform achievements in the midterm elections, demonstrating the "three birds with one stone" effect of tariff policy.

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The truth behind the fluctuating tariff policy: Trump tightly grasps the balance between the decline of the US stock market and US bonds.

Regarding the "flip-flopping" of tariff policies and the rampant spread of fake news, @magicube121 explains in the second article that this is actually a deliberate balancing act by the Trump team to maintain the equilibrium between "a gradual decline in U.S. stocks" and "a decrease in U.S. Treasury yields:"

When the market overreacts to tariffs and the US stock market plummets, the team will release soothing news to stabilize the market and prevent uncontrolled market sentiment from causing financial turmoil. However, if funds flee from the bond market to bottom fish in US stocks, causing US Treasury yields to rise above 4%, Trump will restart suppression measures to maintain his strategic rhythm.

He emphasized that "for Trump, the truth of the news does not matter; the real key and focus is 'controlling the speed of market fluctuations.'"

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Future Strategy Roadmap: Box Fluctuations and Election Campaign Layout

@magicube121 predicts that before pushing the ten-year U.S. Treasury yield down to 3.17%, Trump will continue to use tools such as tariffs, withdrawing from international organizations, and judicial lawsuits to suppress upward pressure on U.S. Treasury yields, while ensuring non-farm employment data, shaping a controllable policy framework. He also reminds investors:

We must accept the fact that major assets will gradually decline and closely observe the trends in the bond market. Once yields rise, Trump will inevitably take action again.

In addition, he also pointed out that Trump may shift the blame to the Federal Reserve (Fed) or the previous administration, in order to reduce political pressure and pave the way for the midterm elections in 2026, hoping for a rebound effect from eventual fiscal improvement and market recovery.

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Behind the policy is a precise game of the debt crisis.

According to the analysis from @magicube121, Trump's policies are not arbitrary moves, but rather a fiscal reform strategy centered around the "3.17% U.S. Treasury yield." Through the interaction of stocks and bonds, as well as tariff tools, he is trying to maintain balance on the tightrope of this fiscal crisis. Whether this strategy can truly succeed will directly impact the fiscal trends in the United States and the movements of the global market.

This article analyzes Trump's tariff strategy: lowering U.S. Treasury yields to resolve the fiscal crisis and balancing stock and bond market fluctuations as the key factor. First appeared in Chain News ABMedia.