Key Takeaways
- US President Donald Trump announced reciprocal tariffs on international imports based on 50% of each trading partner’s rates.
- The baseline tariff will be 10% on all imports into the US, while foreign-made cars will be charged 25%.
- Bitcoin, crypto stocks, and altcoins, including Ethereum, Solana, and XRP, saw significant declines following the tariff announcement.
The prices of Bitcoin and all major altcoins fell sharply Wednesday after US President Donald Trump announced sweeping tariffs targeting 185 countries worldwide, triggering a broad risk-free move.
In a move that the Kobeissi Letter described as “truly insane to watch,” Trump unveiled reciprocal tariff rates nationwide in an event he dubbed “Make America Wealthy Again.” Following the announcement, BTC slid 2% while ETH, XRP, and SOL declined 4%, 3%, and 4% during late Wednesday trading.
Tariffs Based on 50% of Target Country’s Rates
In the stock market, the S&P 500 lost more than $2 trillion in market capitalization within 15 minutes, even as Nasdaq 100 futures swung nearly 900 points from peak to trough before closing off session lows. The tariff announcement also rattled crypto-related stocks. Strategy (MSTR), owned by the former MicroStrategy, went down 7%, while Coinbase Global (COIN) lost 6%, followed by Robinhood (HOOD), which went down about 9%.
The Donald Trump administration announced a baseline 10% tariff on all imports into the country, with several countries specifically targeted with higher rates. China is among the most severely hit countries, with a 34% rate, while nations within the European Union will face a 20% rate. In a measure that the President termed reciprocal rates, Trump said the US rates would be set at 50% of what other countries impose on American goods.
Expected Consequences of Inflation
According to data from CoinGecko, the crypto market reacted immediately to the development, with Bitcoin trading at around $83,200, while Ethereum has shed 4.5% to $1,817. Commenting on the development, Joe McCann, the founder and CEO of Asymmetric, said:
“Very little reason to own risk here […] crypto is at the behest of macro and traditional markets at this point… Without a clear and distinct catalyst, crypto will trade like any other risk asset.”
McCann is also concerned about the possibility of consequences for inflation expectations where one-year inflation swaps have climbed above 3.3%, warning Trump’s reciprocal tariff shock could push Q2 GDP into negative territory. In the meantime, a bill by Senator Tim Kaine to remove Trump’s emergency tariff powers over Canada picked up bipartisan support.
The tariffs, one of the largest in the history of the United States, target at least 185 countries, with tariffs on cars going live on Thursday, the baseline tariffs on Saturday, and the reciprocal tariffs commencing on April 9, 2025. In the crypto market, Bitcoin traders were the highest hit, with the asset liquidating at least $179.71 million. The decline in crypto prices reflects a broader risk-off sentiment in the financial markets. Commenting, Arthur Azizov, Founder of B2 Ventures said:
“The initial market ‘shock’ may likely spike volatility, but it should be a short-term effect. As for long-lasting ones, a lot will depend on how quickly the market adjusts to major changes.”
Conclusion
Bitcoin and major altcoins are bracing for a serious shakeup as traders wait to see the real impact of President Donald Trump’s “Liberation Day” tariffs, which have put the President on a collision course with the Federal Reserve. As analysts warn that the crypto market and Wall Street will become significant casualties in the short term, only time will tell how much lower the market will descend.
Frequently Asked Questions (FAQs)
How do tariffs affect cryptocurrency?
Bitcoin and altcoin prices fell sharply immediately after President Donald Trump announced his latest tariffs. The leading cryptocurrency recently changed hands above $83,000, dropping from nearly $88,000 just before Trump unveiled the trade policies.
What are the effects of trade tariffs?
Tariffs are import taxes that alter the relative prices of imported goods compared to those produced domestically. The downside effect can be profound and could negatively impact inflation, exchange rates, economic growth, industrial productivity, and long-term innovation.
What are the objectives of tariffs?
Tariffs are usually levied either to raise revenue or to protect domestic industries. In most cases, they are designed to raise revenue or exercise a strong protective influence.
