End of Week Notes: Republican Polices Pose Danger to US Economy

As Republicans engaged in negotiations this week over a tax bill projected to add trillions to federal deficits, the long-term costs associated with financing the national debt surged. The U.S. government is poised to issue a significant volume of debt causing the bond market to be cautious directly affecting interest rates we pay on our debt. 

A report in The New York Post, retailers are likely to raise prices in the coming weeks as a direct consequence of President Donald Trump’s tariffs. Apple’s stock took a hit after Trump threatened to impose a 25% tariff on its products unless the company relocates iPhone manufacturing to the United States. The retail sector is warning President Trump that they cannot absorb the costs of these tariffs indefinitely, and price increases are imminent.

U.S. stock markets experienced declines on Friday following Trump’s announcement of potential 50% tariffs on the European Union, which could take effect in just over a week. The S&P 500 index fell by 0.8% in morning trading, positioning it for its worst week in the past seven. The Dow Jones Industrial Average dropped 276 points, or 0.7%, by 10:25 a.m. Eastern Time, while the Nasdaq composite index decreased by 1%.

Trump made his tariff threat public before the U.S. stock market opened, stating on his Truth Social platform that trade negotiations with the European Union “were going nowhere” and that the “straight 50%” tariffs would be implemented on June 1. The European Union represents one of the United States’ largest trading partners. Markets have historically reacted negatively to abrupt policy shifts. 

In the bond market, Treasury yields fluctuated before ultimately declining. The yield on the 10-year Treasury note eased to 4.51% from 4.54% late Thursday. Earlier in the week, yields had been rising, partly due to concerns that Washington’s tax-cutting efforts could exacerbate the