Is This Really a Trade War? Or Are We Just Watching a Capital Showdown?

Is This Really a Trade War? Or Are We Just Watching a Capital Showdown?

It’s starting to look like this trade war is slowly turning into a capital war, and let’s just say the US might be playing with fire here.

Remember the morning of April 4th? That’s when China hit the US with its retaliatory tariffs. And since then, oh boy, things have taken a weird turn.

US yields rose by almost 50 basis points—which is odd, especially considering a 6% decline in the equity market. Meanwhile, other growth assets are taking a nosedive, and yet gold is hanging in there like it’s still the 1990s.

But here’s the kicker: the dollar is getting soft while the yen is getting stronger. I guess the Japanese are doing their best to turn the US into a financial pariah.

Here’s the big question: who really has the cards? The US has the economic power, sure, but the rest of the world is playing a different game. If they decide to escalate this to a capital war (spoiler alert: they totally could), the US might find itself in deep, deep trouble.

So while we’re busy debating tariffs, the real damage might already be done—financially. Welcome to the new age of economic warfare, where capital flees faster than you can say “trade deficit”.