The financial markets experienced a shake-up as the US Dollar rebounded following a social media post by President Donald Trump, hinting at the introduction of reciprocal tariffs. On Thursday, the currency dynamics shifted, affecting various asset classes and currency pairs. The BTC price consolidated below the $100,000 mark, erasing less than 2% of its value on the day. Meanwhile, the GBP/USD pair lost its bullish momentum, trading below 1.2500 after earlier gains driven by positive UK economic data.
"Three great weeks, perhaps the best ever, but today is the big one: reciprocal tariffs!!! Make America great again!!!" – Donald Trump
President Trump's statement on Truth Social suggested that an announcement regarding reciprocal tariffs might be forthcoming later in the day. This revelation prompted an immediate reaction in the currency markets, with the US Dollar Index recovering from session lows. At the time of press, the index was down 0.15% on the day but hovered near 108.00.
The potential imposition of reciprocal tariffs appears to target major trade partners, with Trump emphasizing Mexico, China, and Canada. These countries accounted for a significant portion of US imports in 2024, together comprising 42% of the total. Among them, Mexico emerged as a standout exporter, with $466.6 billion worth of goods shipped to the United States, according to data from the US Census Bureau.
In currency markets, the EUR/USD pair lost traction and retreated to the 1.0400 area ahead of upcoming US data releases. This movement underscores the sensitivity of currency valuations to geopolitical developments and economic indicators.
Economists remain divided on the efficacy and impact of tariffs as a tool for economic policy. While some view them as a means to protect domestic industries and reduce trade deficits, others caution that such measures can lead to retaliatory actions and disrupt global trade flows.
The cryptocurrency market also felt the tremors of these developments. Bitcoin's consolidation below $100,000 highlights investor caution amid uncertainties. The digital asset market often reacts to broader economic signals and geopolitical shifts, and Thursday was no exception.
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