The real reason behind TRUMP’s tariff war

an article written by Eric Demuth – CEO at Bitpanda

It’s not about China or Europe. It’s about crashing the cycle.
Everyone’s busy debating whether Trump’s new tariff rhetoric is about protectionism, election tactics, or geopolitical strategy. But they’re missing the point — entirely. What seems like protectionism might actually be a recession strategy.

The U.S. government is facing a massive refinancing wave. By the end of 2026, it needs to roll over $9 trillion (yes, trillion with a ‘T’) in maturing Treasury bonds. Most of this debt was issued during the near-zero interest rate years — a time we won’t see again anytime soon.

Today, the 10-Year U.S. Treasury Yield is hovering below 4.20%, after peaking above 4.60% in Q4/2024. That rate is the number that matters. Every single basis point shaved off means billions saved in interest over the next decade.

And here’s the brutal truth: the only realistic way to bring that yield down — is to slow the economy. By force, if necessary.

Enter tariffs.
Enter “economic nationalism.”
Enter measures that look irrational — but are laser-focused on deflating long-term growth expectations.

And yes, I understand the argument that tariffs tend to be inflationary in the short term. But what we’re seeing here is a systematic and significantly large-scale implementation — one that will, over the medium term, trigger a recession in the U.S. economy. And that’s exactly the scenario I described above.

A weaker economy leads to lower inflation expectations, lower demand for capital, and thus, lower yields. That’s exactly what Trump—and frankly, anyone at the helm of a debt-ridden superpower—needs right now.

It’s not just about tariffs. We’re seeing deliberate tolerance, even engineering, of economic slowdown.
The game plan is clear:
1. Suppress yields now.
2. Refinance trillions at lower cost.
3. Then switch to stimulus mode, revive the economy, and re-open the monetary floodgates.

We’ve seen this movie before. Think 2020–2021. Quantitative easing at scale. Zero rates. Explosive risk-on rally. That won’t happen again until this refinancing cycle is complete—and until the 10-Year Yield is under control.

Until then, we stay in a tight liquidity environment. The Fed is still reducing its balance sheet, and risk assets—especially in the tech and crypto space—remain subdued as a result.

So the next time someone says Trump is “starting a trade war,” look at it differently. This isn’t a trade war. It’s a yield war.

And for those watching markets: follow the 10-Year Treasury Yield Curve. That’s where the real story is being written.