Trump Halts US-Canada Trade Talks, Bitcoin Drops 10%

President Trump announced on Friday that he was terminating trade talks with Canada and threatened to impose new tariffs on Canadian goods within the next week. This decision came in response to Canada's implementation of a digital services tax on technology companies, which Trump deemed a "direct and blatant attack on our country." The abrupt halt in US-Canada relations followed a period of optimism on the trade front, which had helped drive stocks to new records. Notably, the US and China had moved closer to a comprehensive tariff and trade deal, formalizing an understanding reached in Geneva talks in May. Under this pact, US tariffs on Chinese imports would start at 30%, while China would impose a 10% tariff on US imports. This agreement marked a significant step in stabilizing trade relations between the two countries, which had deteriorated following an initial truce in May. China confirmed its commitment to delivering rare earths to the US as part of the trade framework, and the US pledged to lift its countermeasures in response. Commerce Secretary Howard Lutnick also indicated that trade agreements with 10 key US trading partners were imminent, as countries from Canada to Japan rushed to finalize deals with just two weeks remaining. Treasury Secretary Scott Bessent expressed optimism that the US could complete its most important trade talks by Labor Day. The Trump administration had signaled a willingness to extend the self-imposed tariff deadline of July 9, with Stephen Miran, chairman of the White House Council of Economic Advisers, suggesting that the tariff pause could be extended for countries negotiating in good faith. Trump had already secured a trade deal with the United Kingdom, and trade talks with the European Union had gained momentum, with US tariffs of up to 50% on EU imports looming by the same deadline. Officials were reportedly optimistic about reaching a deal.

The abrupt halt in US-Canada trade talks sent shockwaves through the markets, with Bitcoin dropping 10% to $106,500. The suspension of trade discussions with Canada came just days before a potential agreement, adding to the market's volatility. Despite the tariff threats, the crypto markets remained relatively stable, with Bitcoin dipping only 0.7% to $106,700. The market's reaction to Trump's tariff policies has been tumultuous, with stocks surging in response to a temporary pause on tariffs, leading to a relief rally across major indexes. However, the market remained lower than before the tariffs were introduced, and inflation showed no signs of easing. The court ruling on Trump's tariffs was a significant setback, as his erratic trade policies had rocked financial markets, paralyzed businesses with uncertainty, and raised fears of a broader economic impact. The suspension of trade talks with Canada and the potential imposition of new tariffs added to the market's uncertainty, with traders weighing the implications of Trump's actions on global trade relations. The market's reaction to Trump's tariff policies highlighted the delicate balance between trade negotiations and market stability, as investors grappled with the potential impact of new tariffs on global trade and economic growth.