Treasury Yields Climb as Trump’s Tariffs Stir Oil Market Concerns

US President Donald Trump’s tariff announcements on July 7, 2025, targeting imports from Japan and South Korea at 25% effective August 1, have pushed US Treasury yields higher, signaling inflation fears that ripple through oil markets. This analysis explores the oil market’s response and broader asset implications.

Yields Surge on Tariff-Driven Inflation Fears

The 10-year US Treasury yield rose to 4.392% on July 7, 2025, at 10:16 PM EEST, up from 4.351%, with an intraday range of 4.325% to 4.402%. The tariff hike, part of a broader policy targeting over 100 countries by July 9, revives decisions from April 2, 2025, previously suspended for 90 days. Higher tariffs, expected to inflate producer and consumer prices, stoke inflation expectations, lifting yields. This pressures oil markets, as WTI crude, at $67.91 (+$0.54), faces upward risks from costlier imports and US-Iran tensions, potentially disrupting Iran’s 3.4 million bpd output.

Oil Markets Navigate Tariff and Supply Risks

Despite OPEC+’s addition of 548,000 bpd starting August, WTI climbed to $67.91, the highest since the June 23 Iran ceasefire, shrugging off an initial $2 drop. Tariff-induced inflation and fears of Middle East supply disruptions could push WTI to $75–$80 in weeks, especially if the Strait of Hormuz, handling 18–21 million barrels daily, is threatened. Long term, oil might stabilize at $60–$65 by 2026 if US shale ramps up, but sustained tariffs and geopolitical risks could hold prices at $70–$80, challenging assumptions of oversupply as US shale production plans decline.

Other Assets Face Tariff Fallout

The US Dollar, with the Dollar Index at 97.35 (+0.35%), gains as a safe-haven, pressuring GBP/USD to 1.3638 and EUR/USD to 1.1725 (-0.40%). Gold, at $3,455/oz, could hit $3,600 if tensions escalate. The S&P 500, down 1.13% to 5,976.97, risks a 10–15% drop to 5,100–5,400 in weeks, though energy stocks may rally. Bitcoin, at $104,343, could dip below $100,000 short term but climb to $120,000 by 2026 as an inflation hedge. These assets face volatility, but oil remains the focal point amid tariff-driven costs.

This yield surge signals deeper market shifts. Declining US shale output and tariff pressures challenge oil supply assumptions, while nuclear talks offer slim de-escalation hopes. Hedging with energy assets counters risks, urging agile strategies to navigate a world where tariffs and geopolitical tensions reshape economic realities.