US President Donald Trump announced the establishment of a Crypto Strategic Reserve, triggering a "buy the rumor, sell the news" phenomenon in financial markets. The announcement, aimed at bolstering the nation's economic position, comes amidst ongoing debates over the effectiveness of tariffs in international trade. On the day of the announcement, the S&P 500 Index fell by 1.6%, reflecting investor uncertainty.
Mexico, China, and Canada collectively accounted for 42% of total US imports in 2024, highlighting their significance in the US trade landscape. In an effort to support the American economy and producers, Trump intends to employ tariffs as a strategic tool. However, this approach has sparked varied opinions among economists regarding its potential benefits and drawbacks.
The currency market also reacted to the day's developments. The GBP/USD currency pair surged to three-month highs, reaching around 1.2750, while the US Dollar experienced a mild rebound. Conversely, the EUR/USD pair rose to new 2025 highs around 1.0560, showcasing mixed responses across different currency pairs.
Mexico emerged as the top exporter to the United States with $466.6 billion in exports, according to the US Census Bureau. In response to the US tariffs, Mexican President Claudia Sheinbaum announced that Mexico would retaliate with both tariff and non-tariff measures.
"No one wins with this decision." – Mexican President Claudia Sheinbaum
The cryptocurrency market also faced turbulence, with major digital currencies like Bitcoin, Ethereum, Solana, Ripple, and Cardano declining for the second consecutive day. This downturn further emphasized the market's volatility amidst the broader economic shifts.
The Mexican President also called for accountability from the US government regarding the opioid crisis, underscoring a pressing concern that remains unresolved in diplomatic discussions.
As economists debate Trump's tariff strategy, two schools of thought have emerged. While some believe tariffs can protect domestic industries and boost economic growth, others argue that they may lead to trade wars and increased costs for consumers.