The Trump administration's trade war eases, the yield on the US 10-year Treasury bond declines, and Treasury Secretary Besent's influence grows.

Taiwan • Business • 04/26 18:00
The Trump administration's trade war eases, the yield on the US 10-year Treasury bond declines, and Treasury Secretary Besent's influence grows.

The Trump administration recently signaled a de-escalation in the trade war, leading to the U.S. 10-year Treasury yield dropping to 4.267%, which helped stabilize market sentiment. Treasury Secretary Mnuchin played a crucial role in policy adjustments, thereby increasing his influence. The market generally views 4.5% as the critical threshold for the 10-year Treasury yield, making it a sensitive indicator for policy changes.

Key Updates

04/27 19:02

Trump's Tariff Policies: Reshaping US-China Trade and Posing Challenges to the American Supply Chain and Social Structure

The Trump administration's high tariff policy has intensified the pressure on U.S. social welfare spending, impacting the retail supply chain and the import of auto parts, while progress in manufacturing reshoring remains slow. Walmart has notified Chinese suppliers to resume shipments, with the tariffs being borne by U.S. buyers. China is advancing the integration of domestic and international trade to help exporters pivot to the domestic market. This trade war is transforming the industrial and social landscapes of both the U.S. and China.

04/27 17:00

The United States Launches Tariff Talks with 18 Nations: Reciprocal Tariffs Will Be Imposed if No Deal is Made

The U.S. government is advancing tariff negotiations with 18 trade partners, using a new framework from the U.S. Trade Representative, focusing on tariffs, non-tariff barriers, and digital trade issues, with plans to finalize by July 8, 2025. If no agreement is reached, reciprocal tariffs will be imposed. Mexico, Canada, and China are excluded from this framework and will be addressed separately.

04/27 15:02

US-China Tariff War: Pepsi is impacted by a 10% tariff on Irish concentrate imports, reducing its competitiveness compared to Coca-Cola.

Due to its reliance on Ireland for concentrate production, PepsiCo is facing the impact of a 10% import tariff due to the US-China trade war, which weakens its competitiveness in the US market. In contrast, Coca-Cola, which produces its concentrate domestically, is less affected. Both companies are also facing the challenge of a 25% tariff on imported aluminum in the US, which drives up packaging costs. Pepsi's market position in the US has weakened, and it has lowered its full-year profit expectations, while Coca-Cola demonstrates greater resilience.

04/27 14:00

Hwa Sheng Co. sells its Chinese subsidiary's shares and reinvests in Taiwan to invest in new businesses to mitigate risks from US-China tariffs.

Hwa Sheng (stock code: 3202) announced on April 27, 2025, the sale of a 37.04% stake in its Chinese subsidiary, High-Tek Harness Enterprise Co., Ltd. (SAMOA), to recover $10 million to accelerate investments back in Taiwan. The company plans to invest in areas such as organic waste recycling, urban-rural development, and agricultural innovation initiatives, while also improving its financial structure to address challenges posed by the US-China tariff war and avoid the risk of being delisted from the stock exchange.

04/27 12:30

US-China Trade War Heats Up: American Households' Dependence on and Challenges with Chinese-Made Products

The US-China trade war is escalating, with tariffs reaching historic highs, and the reliance of American households on Chinese-made goods has become a central issue. Most everyday items, such as kitchenware, toys, and personal care products, are sourced from China. Even though some production has moved to countries like Vietnam and Mexico, the supply chain continues to rely on Chinese components. The high tariffs have resulted in price hikes, and retailers are worried about disruptions in the supply chain. Experts highlight that it is challenging for the US to fully replace the Chinese supply chain in the short term.

04/26 18:00

The Trump administration's trade war eases, the yield on the US 10-year Treasury bond declines, and Treasury Secretary Besent's influence grows.

The Trump administration recently signaled a de-escalation in the trade war, leading to the U.S. 10-year Treasury yield dropping to 4.267%, which helped stabilize market sentiment. Treasury Secretary Mnuchin played a crucial role in policy adjustments, thereby increasing his influence. The market generally views 4.5% as the critical threshold for the 10-year Treasury yield, making it a sensitive indicator for policy changes.

04/26 14:00

Taiwan's network communications industry utilizes AI and 5G technological innovations to successfully overcome US-China trade barriers and expand into the North American market.

Amid rising trade barriers between the US and China, Taiwan's network communications industry has successfully tackled tariff challenges and ensured a stable supply to the North American market by leveraging AI and 5G technology innovations and making flexible supply chain adjustments. Companies such as Accton, Zyxel, and Realtek have made significant strides in the high-end network communications equipment sector and continue to expand their global presence by mitigating risks through a strategy of production diversification.

04/26 07:29

China waives tariffs on some U.S. semiconductor products, but memory chips will still face high tariffs.

Amid the trade tensions between China and the United States, China has exempted some U.S.-made semiconductor products from a 125% punitive tariff, involving eight IC product tariff codes. Companies are allowed to apply for a refund of tariffs paid between April 10 and 24, but memory chips still face high tariffs. Chinese and U.S. officials have both denied engaging in formal negotiations on tariff issues, indicating that both sides have not reached a consensus in trade talks.

04/26 06:31

Kyle Bass, Investor: An Analysis of Why the U.S. Holds the Advantage in the U.S.-China Trade War

Renowned hedge fund manager Kyle Bass stated that the United States holds an advantageous position in the US-China trade war because the trade imbalance exerts greater pressure on China. Bass pointed out that China's weak economy, anomalies in the bond market, and weakness in the consumer market weaken its negotiating power. The US, on the other hand, is able to endure pressure for a longer period thanks to robust domestic demand and stable consumer spending. Bass believes that recent indications of concessions by China indicate that it is at a disadvantage in the trade war.

04/26 06:00

The United States will levy port fees on Chinese shipping firms and ships, which will have limited impact on Taiwanese shipping firms.

The United States Trade Representative (USTR) announced on April 17, 2025, that it will impose staggered port fees on Chinese shipping companies and vessels made in China as a response to China's unfair practices in the shipping, logistics, and shipbuilding sectors. The new policy will be implemented starting October 14, 2025, with a 180-day grace period. Industry experts believe that Taiwanese shipping companies will be minimally affected because of the low percentage of vessels made in China, keeping a neutral stance on shipping stocks.

Signs of Trade War Easing Emerge

Since the Trump administration announced the "Liberation Day" tariffs in early April, the US-China trade situation has been tense, leading to significant market fluctuations. However, recent actions indicate a softening stance from the White House. Trump publicly stated that the 145% tariffs imposed on Chinese goods "will be significantly reduced," although "not back to zero." Meanwhile, China is reportedly considering exempting some US goods from additional tariffs, including medical equipment, industrial chemicals, and leased aircraft, further indicating a willingness to ease tensions.

Additionally, reports suggest that China's Ministry of Commerce is compiling a list of goods that may be exempt from tariffs and has informed some companies that their imported goods may be spared from retaliatory tariffs. The market interprets these actions as both sides intending to avoid further escalation of the trade war, even though formal negotiations have yet to begin.

US Treasury Yields Continue to Decline

Amid expectations of a cooling trade war, the US Treasury market has shown a clear reaction. According to Dow Jones market data, as of April 25, the 10-year US Treasury yield fell by 5.9 basis points over the week, dropping to 4.267%, the lowest level since April 8. The 30-year Treasury yield also fell by 7.1 basis points to 4.738%.

This decline in yields has almost recovered the losses since early April, reflecting renewed market confidence in a policy shift by the Trump administration. Bond prices and yields have an inverse relationship, and a decrease in yields indicates increased demand for bonds, suggesting a relief in the sell-off of US assets by investors.

Rising Influence of Treasury Secretary Besent

In this policy shift, Treasury Secretary Besent's role has been particularly noteworthy. As a former hedge fund manager, Besent is knowledgeable about market operations and gained fame during Soros's 1992 attack on the British pound. Recently, he has repeatedly stepped in at critical moments to calm market sentiment, including quickly releasing more moderate messages after Trump threatened to replace Federal Reserve Chairman Jerome Powell.

Reports indicate that in closed-door meetings with investors, Besent acknowledged that the current high tariff levels are "unsustainable" and predicted that the US-China trade war would gradually cool down. He also assured the market that the government has several tools available to stabilize the bond market, including expanding repurchase operations and adjusting liquidity coverage ratio (LCR) regulations.

Furthermore, Besent has proposed more creative ideas, such as supporting bonds with Treasury gold reserves, encouraging allies to increase their holdings of US Treasuries, and even promoting stablecoins backed by US Treasuries. Although these plans have not yet been implemented, they demonstrate his flexibility and leadership in policy design.

4.5% Yield as Market Warning Level

Market observers widely regard 4.5% as an important warning level for the 10-year US Treasury yield. The market trend since early April shows that whenever yields approach or exceed 4.5%, the Trump administration releases easing signals to try to stabilize market sentiment.

Economist Nouriel Roubini pointed out that bond market traders currently hold a "trump card" to "check Trump," with market volatility becoming an important trigger for policy adjustments. This phenomenon is likened to the bond market having a "put," meaning that when yields rise to a certain level, market pressure will force the White House to adjust its policy stance.

Recent yield trends have confirmed this. In early April, the 10-year yield briefly surged to 4.59%, then quickly retreated after the policy tone turned more moderate. Now, yields have stabilized in the 4.2% to 4.3% range, indicating that market expectations for policy easing have been partially reflected in prices.

References

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