A recent report by WSJ reveals a surprising twist in Trump’s stance on trade. Instead of imposing additional tariffs on China and neighboring countries, the focus has shifted toward reevaluating existing trade agreements. This decision comes as a relief to markets concerned about the potential inflationary impact of new tariffs.
According to the report, the statement set to be released by Trump today will emphasize improving trade relationships rather than punitive measures. Notably, the statement does not include any reference to “additional tariffs,” signaling a more collaborative approach to trade.
Immediate Effects on Markets
The announcement has already had an effect on the markets. The dollar index (DXY), which was strengthening prior to the news, has taken a downturn. A weaker dollar is often seen as a boon for risk assets like cryptocurrencies, which thrive in a favorable liquidity environment.
Moreover, the Federal Reserve can no longer point to potential tariffs as a source of inflationary pressure. This reduces uncertainty, providing further tailwinds for the crypto market. As of now, Bitcoin is trading around $107,700, while Ethereum remains steady at $3,300. However, despite increased trading volumes, there are no significant gains in leading altcoins like XRP.
Reevaluating Trade Agreements
Trump’s focus is shifting toward revisiting key agreements, including the 2020 trade deal with China and the 2026 review of the updated United States-Mexico-Canada Agreement (USMCA). By prioritizing these agreements over new tariffs, Trump aims to solidify trade relationships and foster economic stability. This strategy could alleviate some of the market volatility experienced in recent years.
Crypto Market Implications
The crypto market’s reaction will hinge on the details of Trump’s upcoming executive orders. If the announcements include crypto-friendly policies, such as regulatory clarity or easing restrictions, it could trigger a rally in both Bitcoin and altcoins. However, if this turns into a “sell the news” event, the market may experience short-term corrections.
Altcoins, already struggling with weak liquidity, are particularly vulnerable. A significant portion of market liquidity has shifted to meme coins, driven by Trump and his wife’s reported interest in these tokens. As a result, smaller altcoins have faced further declines in liquidity.
What to Watch For
Trump’s expected executive orders at 8:00 PM could set the tone for the coming weeks. If the policies support crypto innovation while addressing regulatory concerns, the market may see a broader recovery within two weeks. Investors will also closely monitor how the SEC handles its pending cases and whether any changes are made to the enforcement of crypto-related regulations.
Key Takeaways
- Trump’s focus on trade agreements over tariffs has eased market concerns.
- A weaker dollar provides support for cryptocurrencies and other risk assets.
- Investors are closely watching for crypto-friendly policies in Trump’s executive orders.
- Altcoins face liquidity challenges as capital flows into meme coins.
- The SEC’s approach to regulatory enforcement could have significant implications for the crypto market.
