U.S. President Donald Trump has intensified his stance on Iran while simultaneously taking aim at traditional allies Spain and the United Kingdom. During meetings with Germany's Merz, Trump signaled that renewed hostilities could reignite trade battles, specifically targeting Spain and the UK for policies he deems unfavorable to U.S. interests. He revealed an order to Treasury Secretary Bessent to completely halt trade and diplomatic relations with Spain, and expressed dissatisfaction with the UK. Trump predicted oil prices might climb briefly but would soon stabilize. Despite these geopolitical shocks, Bitcoin (BTC) has held above the $67,000 threshold, showing resilience amid rising global uncertainty.
Trump Pressures Iran and Allies as Trade War Flares Up
Trump stated that much in Iran had already been destroyed and reiterated his belief that Iran was poised to launch the first strike. He acknowledged applying pressure on Israel, argued that Iran's air defenses and detection systems had been neutralized, and accused Tehran of attacking countries uninvolved in the current conflict. According to Trump, Iran's new government faced another major blow and many inside the country now sought immunity. He insisted the U.S. would press on with its objectives, drawing attention to the significance of recent attacks on Iranian leadership. Trump stressed that the worst scenario would involve the rise of a leader even more problematic than his predecessor, signaling a preference for reform from within Iran. He praised Germany's conduct while criticizing some European countries. Due to rapid developments, there are currently no plans to evacuate U.S. embassies.
Fed's Kashkari Warns Iran Crisis Could Delay Rate Cuts
Federal Reserve official Neel Kashkari delivered a sobering outlook for markets and policymakers, noting that the escalating Iran crisis could influence future monetary decisions. He warned that expectations for a rate cut in 2026 may now be delayed beyond July due to heightened risks—most notably, the rapid rise in oil prices, which could reignite inflationary pressures and undermine hopes for near-term easing. Kashkari said: "The impact of the war with Iran could alter the course of monetary policy. Given the recent inflation trend, we must keep a close eye on rising headline inflation. At one point, I believed the policy stance was well-calibrated, but now the Fed must assess the size and duration of the Iran shock. Uncertainty around new tariff regimes is weighing on the economy. I see only a small likelihood that tariffs could rise significantly. I was expecting a rate cut in 2026, but at this stage, I am no longer certain." This uncertainty is prompting analysts and market participants to reevaluate assumptions about the direction and timing of economic policy moves. Volatility in energy markets—fueled by further disruptions to oil supplies—and speculation over retaliatory trade measures are creating additional headwinds. Investors and policymakers now navigate a fraught environment where diplomatic confrontations and economic crosscurrents threaten to upend carefully laid plans. The hope for a smooth path to lower interest rates has faded, supplanted by concerns over inflation and unpredictable fallout from global crises.