U.S. Treasury yields fell sharply on Thursday after President Donald Trump’s “reciprocal tariff” policy announcement, which raised concerns about the possibility of a global trade war.
At 5:39 a.m. ET, the 10-year Treasury yield dropped by more than 13 basis points to 4.062%. The 2-year Treasury yield also shed 12 basis points to trade at 3.78%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
Investors digested the rollout of Trump’s tariff polices on Thursday, with him signing an executive order on Wednesday that imposed a sweeping tariff plan.
The measure sets a baseline tariff of 10% across the board, which will take effect April 5. It also includes a slew of steep tariff rates on more than 180 countries and territories, including 34% on China, 20% on the European Union, 46% on Vietnam, and 32% on Taiwan.
“We will charge them approximately half of what they are and have been charging us,” Trump said in a press conference from the White House Rose Garden. “So, the tariffs will be not a full reciprocal.”
That halved figure includes “the combined rate of all their tariffs, non-monetary barriers and other forms of cheating,” he added.
“Even if tariffs are ultimately reduced by year-end, the near-term shock and associated uncertainty is likely to drive a near-term slowdown in the U.S. economy and reduce full-year 2025 growth to closer to or below 1%. We would also expect the Federal Reserve to deliver 75-100bps of rate cuts over the remainder of 2025,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note.
Investors will also be awaiting further economic data, including the ISM Services PMI in the morning and nonfarm payrolls on Friday. Federal Reserve Chairman Jerome Powell is also set to give a speech on Friday, which investors will monitor for clues on monetary policy in an uncertain economic climate.
