Treasury Bond Turmoil Prompts Trump Tariff Delay

WASHINGTON DC, THURSDAY – Turmoil in the bond market or government debt securities has become one of the reasons for the delay in the United States' import tariff rates. The global market became buoyant following the announcement of the tariff delay.

On Wednesday afternoon (9/4/2025) Washington DC time, or early Thursday morning Western Indonesia Time, United States President Donald Trump announced the postponement of the implementation of certain import duty tariffs (BMI). The BMI rate, which reaches 32 percent for Indonesia, will not be applied until the next three months. All imports to the US will only be subject to a BMI of 10 percent.

Various U.S. media outlets highlighted the turmoil in the government bond market (SUN) as the reason for the delay. "The bond market is very misleading. I’ve been observing that," said Trump on Wednesday afternoon.

In the early hours of Wednesday, U.S. Treasury yields surged. The yield on the 10-year Treasury note reached 4.51 percent. Last week, its yield was below 3.9 percent.

Meanwhile, in the 30-year tenor, the yield flew to 5.02 percent. Previously, it was 4.715 percent. "The increase in SUN yields means higher costs for companies to borrow, and of course the government is affected," said Chief Analyst at investment institution AJ Bell, Laith Khalaf, to the BBC.

The yield on 10-year government bonds (SUN) is one of the benchmarks for determining interest rates on home loans, vehicle loans, and even credit cards. A 10 percent increase in the yield on 10-year government bonds means that consumer credit costs will also surge.

The yield on U.S. government bonds (SUN AS) continues to rise following Trump's announcement of an increase in the BMI. This increase has sparked concerns about investment security in the U.S. as well as economic performance. As a result, investors are rushing to sell off U.S. government bonds. This massive sell-off has driven up the yields.

U.S. Treasury Bonds are considered one of the main foundations of the global financial and investment markets. U.S. Treasury Bonds have long been regarded as one of the safest investment instruments.

U.S. government bonds, said Khalaf, usually perform well when the stock market is volatile. However, the trade war triggered by Trump has weakened the U.S. government bond market.

CNNreported that US Treasury Secretary Scott Bessent brought up the issue of government bond market volatility to Trump on Wednesday morning. Several Trump administration officials have also expressed similar concerns.

Before Bessent, Trump had received warnings from various parties about the negative impacts of the BMI spike. One of them was JPMorgan CEO Jamie Dimon. According to Dimon, the chances of a US recession increased after the implementation of the new BMI.

Several corporate and conglomerate executives also called Trump and his administration officials. Their message was the same: the U.S. will go into recession if the new BMI tariffs are imposed.

The series of calls included the Chief of Staff of Gedung Puyih, Susie Wiles. Based on the calls, Wiles persuaded Trump to delay the implementation of the BMI.

Wiles, among other things, links the damage caused by the BMI to the chances of Republicans and Trump losing in the political arena. Some Republicans worry that a recession caused by Trump's tariffs could cost them the midterm elections in November 2026.

Until Tuesday, Trump had insisted he would not change his policy on the BMI. But on Wednesday afternoon, he announced a change. "You have to be flexible. I think about the financial markets, because they change," Trump said.

Following Trump's announcement, the US stock market was buoyant. Various indexes jumped back into positive territory.

The enthusiasm is also seen in Asian stock exchanges. Indonesia, Japan, Hong Kong, and Australia are in the green.

Japan's Nikkei 225 index flew 8.32 percent. Meanwhile, Hang Seng rose 3.83 percent. A surge was also seen in Australia's ASX 200, turning green with a 4.69 percent increase. The IHSG on the Indonesia Stock Exchange also turned green.

Positive sentiment is expected to spread to Europe. European stock exchanges will open on Thursday afternoon WIB.

Strengthening was also observed in the currencies of various countries. The rupiah strengthened against the US dollar along with the Japanese yen, euro, and Australian dollar. (AP/AFP/REUTERS)