Trump Sets 10% Tariff Floor; Bond Giant Pimco Warns Of Unlikely Return to Pre-‘Liberation Day’ Rates

President Donald Trump declared that a 10% tariff will serve as the minimum threshold for imports from countries seeking trade agreements with the United States. 

“Some will be much higher because they have massive trade surpluses and in many cases they didn’t treat us right,” Trump said Thursday at the White House while discussing a new deal with the United Kingdom, according to a CNBC report.

The announcement follows Trump’s “liberation day” event on April 2, when he introduced sweeping “reciprocal” tariffs on major US trading partners — a move that briefly rattled equity and credit markets before a 90-day pause calmed investor nerves. 

However, Dan Ivascyn, chief investment officer at bond giant Pimco, warned investors not to assume those tariffs will be rolled back anytime soon.

“Believe Trump. He believes in tariffs,” Ivascyn said in an interview with the Financial Times. “People still believe that there are going to be off-ramps [to tariffs] … We’re not so sure.”

Ivascyn said Pimco sees elevated recession risks, the highest in years, as tariffs push up price levels in an economy already showing signs of cooling. 

He described the outlook as “stagflationary,” citing concerns over persistent inflation and weakening growth.

Although Trump granted the UK a “baseline” 10% rate for treating the U.S. with “great respect,” he said the same cannot be expected for others. 

“That’s a low number, they made a good deal,” Trump told reporters. “One thing with [the] U.K. ... they always treated us with great respect.”

Pimco, which manages about $2 trillion in assets, has responded by turning defensive: reducing exposure to riskier credit and favoring high-quality sectors such as mortgages. 

Ivascyn also revealed modest increases in the U.S. Treasury holdings, focused on shorter maturities, while diversifying into sovereign debt from other countries.

Meanwhile, the Federal Reserve has flagged rising uncertainty from Trump’s tariff regime, warning that trade friction could impact employment and inflation expectations. 

Ivascyn echoed this concern, highlighting the U.S.' deteriorating fiscal position and warning that investors hoping for a return to pre-tariff normalcy may be misjudging both policy intent and its long-term effects.

“The U.S. is not going to lose its reserve currency status soon,” Ivascyn said. “But it’s hard to see meaningful progress on deficits, and tariffs could drive up prices at exactly the wrong time.”

The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500, is down 3.4% year-to-date, while the Invesco QQQ Trust, Series 1 (QQQ), which tracks the Nasdaq-100, has lost 4.3%. Meanwhile, the SPDR Dow Jones Industrial Average ETF Trust (DIA) is down 2.3%.

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