The EU is scrambling to finish its US trade deal before May 19's Strasbourg talks, but Trump's May 2 threat to push auto tariffs to 25% has stalled progress. With Germany's growth stuck at 0.8% and March's 3.5% headline PCE inflation forcing the Fed to hold rates, Bitcoin faces growing pressure from fading risk appetite.
Talks Hang in Balance
Next week's trilogue session is make-or-break. Chief trade negotiator Bernd Lange said May 7 that there's 'still some way to go' despite the European Parliament passing implementing legislation in March. Some EU governments pushed back against the deal's sunset clause and safeguards, arguing they slow implementation too much. But Trump's tariff threat looms large over the negotiating table.
Inflation Won't Budge
Tariffs through November 2025 already lifted core goods PCE by 3.1%, the Fed confirmed April 8. Dallas Fed research May 5 backed those findings. True core inflation without tariffs would sit near 2.3%—far below March's 3.5% reality. The Fed held rates at 3.5%-3.75% last month, calling inflation 'still elevated.' San Francisco Fed data shows tariff spikes hit goods inflation hardest in year two, keeping pressure on policymakers.
Bitcoin Catches the De-Risking Wave
This isn't just an economic story. The IMF found a single 'crypto factor' now drives 80% of crypto price moves, with Bitcoin and Ethereum 4 to 8 times more tied to US equities than before the pandemic. Non-linear tariff effects could keep the Fed anchored, tightening dollar liquidity. When European growth fears meet US inflation anxiety, the market dumps risk assets. Bitcoin won't get a pass this time.
The Strasbourg meeting on May 19 will decide whether tariff threats or deal momentum wins. If talks collapse, the Fed stays put longer—and crypto bears the brunt.
