U.S. President Trump's implementation of reciprocal tariff policies has led to extreme volatility in global stock markets and triggered a sell-off of U.S. government bonds. Former legislator Kuo Cheng-liang notes that foreign investors' massive sell-off of U.S. Treasuries will undoubtedly shake the dollar's status as the global currency powerhouse. Currently, no alternative currency can immediately replace the dollar, which is poised to unleash a financial crisis worldwide.

Kuo further highlights that not only U.S. Treasuries are being sold off, but also corporate and junk bonds are facing similar fates. Within just one week, the outflow of U.S. junk bonds reached $300 billion, and $6.5 billion of capital exited the U.S. after the bond sell-off. This indicates that the sell-off is not limited to junk bonds but also involves a direct sale of dollars, causing significant alarm in the White House.

Since Trump announced the tariff policy on April 2, the yield on ten-year U.S. Treasuries has soared from 4% to 4.486%. Kuo warns that such a spike is extremely rare in the bond market, and it means the government will face an additional interest expense of $180 billion per year. The scale of U.S. national debt has reached $36.2 trillion, and each 0.5% increase in yield translates to an additional $100 billion in annual expenditure.

Kuo observes that while the U.S. government collects approximately $5 trillion annually in tax revenue, should interest payments alone reach $1 trillion, the government will face significant fiscal pressure, which is the core concern of the White House. Initially, Trump's intent behind the tariff war was to instigate a mild economic recession to suppress inflation, thus prompting the Federal Reserve to cut interest rates; however, the situation has spiraled out of control, with the stock market collapse now encompassing all of the financial market, indicating signs of a potential major recession.

Kuo believes that the turmoil triggered by Trump’s tariff war will ultimately face three key constraints: first, a lack of support from the international community; second, China has sufficient economic resilience with its high savings rate and government intervention capability; and third, Trump's biggest adversary is the domestic financial market’s decline, which will inevitably lead to greater resistance from the American people and concerns among Republican lawmakers about continuing down this path.