Understandably, immediate tariff tension is clogging headlines as the U.S. gave a 30-day reprieve to Canada and Mexico and added 10% on China. But developments leading up to an April 1 report deadline are also worth paying attention to. The heads of three U.S. government agencies have been tasked with coming up with recommendations to overhaul the trading system and establish an “external revenue service to collect all tariffs, duties and revenues.” That mandate seems to be pushing closer to some version of a universal tariff, which would be a major shift in global trade.
Away from trade, there was an interesting market development this week. As the new U.S. Treasury secretary, Scott Bessent, caught up with the press he made clear that he and the President “are focused on the 10-year Treasury” and are less concerned about the U.S. Federal Reserve’s moves.
The 10-year Treasury bond is undoubtedly one of the largest and most liquid securities in the world. It is driven by economics and global market dynamics and is agnostic to political pressures. It influences the pricing of a large chunk of household and corporate debt. And it also pays a lot of attention to responsible inflation and deficit dynamics.
Bessent seems alert to what he is dealing with. He reiterated the list of what the administration believes it needs to do: cut spending, cut taxes, deregulate the economy and lower energy costs. While the list is clear, execution is of course difficult.
Meanwhile, the 10-year Treasury is a tough scorekeeper and will quickly provide feedback. Of late, its rate has dropped as it likes what it sees on the inflation front and the cooling in Canadian and Mexican tariff tensions.
Sources: Bloomberg, Financial Times, 2025.