TLDR
- Bitcoin surpassed $100,000 for the first time since February
- Trump administration announced first UK trade deal, lowering some tariffs
- US-China trade talks scheduled for this weekend with potential for de-escalation
- New China data shows 21% drop in US exports while Southeast Asia exports increased
- Federal Reserve kept interest rates on hold, warning tariffs risk both unemployment and inflation
Bitcoin has broken through the $100,000 barrier for the first time since February, extending its rally as markets responded to news of a trade deal between the US and UK. The cryptocurrency’s rise comes amid broader market movements influenced by recent trade developments and upcoming talks between the US and China.
The Trump administration announced a trade deal with the UK on Thursday, described by President Trump as “a full and comprehensive” arrangement that will be the “first of many.” The deal will increase imports of US agricultural products including ethanol, beef, and machinery, while lowering US tariffs on some steel and auto imports from the UK.
Despite the positive market reaction, the deal will maintain the 10% “baseline” tariff that the US introduced in April. President Trump stated this baseline is as low as the UK and other countries will see.
Commerce Secretary Howard Lutnick announced that a UK company agreed to purchase $10 billion worth of airplanes from Boeing as part of the agreement. President Trump indicated the details would be finalized in “coming weeks.”
US-China Relations
More attention is now turning to upcoming talks with China. US and Chinese officials are set to meet this weekend, potentially paving the way for broader negotiations. Both sides have indicated the key objective is to de-escalate tensions.
President Trump described the upcoming China talks as “very substantive” and suggested that tariffs on Chinese goods “can’t get any higher.” He indicated he might speak with President Xi after the talks and could be willing to reduce tariffs following discussions.
New data from China showed the early effects of tariff increases, with goods shipments to the US falling 21% in April compared to a year earlier. Meanwhile, exports to Southeast Asia jumped as trade patterns shift.
Tariffs on Chinese imports currently stand at 145%, while Chinese tariffs on US goods are at 125%. The scheduled talks could potentially thaw the escalation between the two countries that has brought trade to near standstill.
Economic Impact
The Federal Reserve kept interest rates on hold Wednesday, warning that tariffs were raising the risks of both higher unemployment and inflation. Markets are pricing in an 80% chance for unchanged rates in June and a 55% chance of a quarter-point cut in July.
Several Federal Reserve policymakers are scheduled to speak Friday, including governors Michael Barr, Adriana Kugler, Christopher Waller and Lisa Cook. Their comments will be closely watched for further insights on monetary policy.
The trade tensions are already impacting global shipping. A.P. Moeller-Maersk, often seen as a bellwether for global trade, maintained its full-year earnings guidance but warned that trade tensions could hit global container market volumes. The Danish shipping giant now forecasts global container volume growth between a 1% fall and a 4% rise, down from a previous expectation of 4% growth.
Toyota also warned that its annual profit will plunge, stating that US tariffs could dent its bottom line. The Japanese car maker now expects its profit for the current fiscal year to tumble 35% to 3.1 trillion yen ($21.4 billion).
President Trump has criticized companies that plan to raise prices in response to tariffs or that have threatened to relocate production. “Let them go and we’ll put 100% of tariffs on his toys and they won’t sell one toy in the United States,” Trump said, arguing that companies and countries can absorb the cost of tariffs rather than passing them to consumers.
The stock market extended its rally after Thursday’s trade deal announcement. The S&P 500 was up 1.2% midday Thursday, while the Dow Jones Industrial Average climbed 1.4%.
Trump has predicted the market “to really rally” with the UK announcement, at one point advising investors they “better go out and buy stocks now.” However, futures early Friday pointed to muted moves at market open.
While the UK deal represents progress, analysts note that the UK is only the fifth-biggest buyer of US exports, behind Canada, Mexico, China, and Japan. Additionally, the UK actually ran a trade surplus with the US in the fourth quarter of 2024 for the first time since 2011 (excluding pandemic periods).
This suggests that deals with larger trading partners, particularly those with which the US runs trade deficits, will be more complex to negotiate. Trump’s “Liberation Day” taxes are set to take effect July 8 if no further agreements are reached.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
