The Impacts of Trump’s Tariffs on Crypto Markets
Upon maintaining his staunch declaration of charging 100% tariffs on China, Trump instigated a drop in cryptocurrency markets. While seemingly impractical, Donald Trump, the U.S. president, supported 100% tariffs, regardless of the widely acknowledged thought that they aren’t realistic or durable.
Initial Market Reactions
The global financial market, including the cryptosphere, reacted vehemently, indicated by a downfall of more than 5% in cryptocurrency prices. Donald Trump defended the irrational policy stand by putting the blame square on China for any adverse consequences.
Renewed risk aversion across global economic markets following the announcement of the new tariffs against China severely impacted the crypto assets. In light of the upheaval, on the 17th of October, Bitcoin experienced a 5% dip, which tagged along with a weekly loss of 13%. Subsequently, the total market cap of cryptocurrencies reported a 5.75% reduction. Almost the entire listing of the top 20 digital currencies suffered a drop about 5% concurrently.
Trump’s Statement on Tariffs
President Trump defended the unreasonable tariffs placed on Chinese goods during a recent interview. Although he acknowledged the unsustainable nature of these tariffs, the blame, according to Trump, falls solely on China. He emphasized that he was constrained to enforce these tariffs because of China’s actions.
Prior to the tariff announcement, he had indicated a degree of positive anticipation regarding trade discussions with China. Furthermore, Trump confirmed a scheduled meeting with Chinese President Xi Jinping at a conference in South Korea, which is to be held within the following fortnight.
Trigger for the Tariffs: Trade War and Export Controls
These tariff proceedings, together with escalated export regulations on crucial software, were actuated in response to China’s broadening of export controls on certain minerals with high economic importance. These include the rare earth minerals, which are fundamental to the U.S., particularly to its technologically advancing sector. Meanwhile, China remains largely dependent on Taiwan, an ally of the U.S, for its needs of sophisticated microchips.
Effect of Trump’s Tariffs on the Global Economy
The enforcement of a 100% tariff on Chinese goods by the U.S. poses significant threats to the stability of the global economy. Many authorities, like those within the Federal Reserve, predict severe negative impact on several crucial economic factors, including employment, inflation, and economic growth.
Repercussions on Crypto and Other High-Growth Assets
Owing to these reasoning, high-yield assets such as technology stocks and cryptocurrencies witnessed a decline in the unfolding tariff tensions. This led to a surge in the demand for gold, which touched record highs, with the trading price soaring as high as $4,250 per ounce.
Undoubtedly, these tariffs from the U.S. on China have caused a ripple effect globally; especially in financial sectors linked with high-growth assets and cryptocurrency. As the standoff continues, stakeholders will be keenly observing the diplomatic steps taken by both the U.S. and China in the coming weeks.
