Crypto Markets on Edge as Trump Threatens Historic Tariff Hike on China
By David Marsanic
April 7, 2025
In a dramatic escalation of the ongoing trade war between the United States and China, former President Donald Trump has threatened to increase tariffs on Chinese imports to an unprecedented 104%. Traders in the crypto market are particularly unsettled, with ongoing fluctuations reflecting the uncertainty surrounding these economic developments.
Trump’s Ultimatum to China
On April 7, Trump took to his social media platform, Truth Social, to state that if China did not remove its recently imposed retaliatory tariffs—which were set at 34%—by April 8, the U.S. would impose additional tariffs of 50%, effective April 9. Trump emphasized the seriousness of his ultimatum, saying, “If China does not withdraw its 34% increase above their already long-term trading abuses by tomorrow, the United States will impose ADDITIONAL Tariffs on China of 50%.”
Currently, the combined tariffs on Chinese imports from the U.S. stand at 54% when accounting for existing tariffs. If Trump’s announced tariffs take effect, it would result in a staggering total of 104% tariffs on various Chinese goods, particularly affecting sectors such as automobiles and electronics.
Escalating Trade War Concerns
The latest tariff threats follow China’s introduction of retaliatory tariffs on U.S. goods after a recent push by the U.S. to raise tariffs. This back-and-forth has contributed to rising tariffs on foreign goods in the U.S., which have now reached an average of 18.8%, the highest since the Smoot-Hawley Act of 1930—a situation that worries both stock and cryptocurrency investors alike.
In light of these developments, the crypto markets have seen significant turbulence. After peaking at a daily high of $81,119, Bitcoin recently dropped to around $78,321. This volatility in the digital currency market is largely influenced by growing fears of inflation and potential declines in economic growth and employment due to the adverse effects of the tariff increases.
Market Sentiment and Future Predictions
Market participants are split on the long-term implications of these tariffs. Some traders view them as a bargaining tactic from Trump, hoping that they will be retracted sooner rather than later. According to data from Polymarket, the likelihood of Trump reducing the majority of tariffs by July surged from 33% to 59% within just one day following his latest announcement.
Furthermore, Trump hinted at a possible 90-day pause on tariff increases—excluding those aimed at China—indicating that negotiations might be in play. This potential reprieve has given some traders cause for optimism amidst a generally unfavorable economic climate.
Conclusion
As the U.S.-China trade war intensifies, the ramifications are being felt across various markets, with crypto investors on high alert. The outcome of Trump’s ultimatum and the broader trade negotiations could significantly influence global economic conditions and cryptocurrency valuations in the coming months. Investors and analysts alike will be closely monitoring the situation as trade developments unfold.
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