Part 10/19:
The conversation also explores recent geopolitical and domestic policy developments, such as President Trump's tariffs deemed illegal by U.S. courts. McDonald points out that these protections and tariffs—aimed at boosting domestic industry—result in reduced tax revenues and increased economic uncertainty. These policy failures compound the fiscal fragility, escalating the risk of a crisis when bondholders lose faith.
He warns that the debt ceiling suspension until 2025 merely delays the inevitable, with upcoming borrowing needs reaching an estimated $600 billion in additional issuance by year's end. The market's reaction to these funding pressures could be severe, reminiscent of the UK’s 2022 bond crisis, where bond yields spiked and forced intervention by the Bank of England.