Bitcoin — and the stock market — hated “Liberation Day,” when Donald Trump unveiled plans to impose tariffs on some of America’s closest trading partners.
The world’s biggest cryptocurrency sunk to lows of about $75,000 in the week after his announcement in April, amid fears aggressive taxes on imported goods would fuel inflation and potentially tip the U.S. into recession.
Equities and digital assets soon rebounded when Trump performed something of a U-turn — announcing that tariffs would be delayed so major economies could strike up trade deals with the White House.
But the president made one thing clear: his deadline of 1 August was not going to be extended, meaning countries that had failed to reach an agreement with Washington by then would soon take a severe financial hit.
Some of the world’s biggest economies have managed to draw up trade deals with Trump over this timeframe — covering billions of consumers — including the European Union, the United Kingdom, Japan and South Korea.
But late on Thursday night, a barrage of breaking news lines started to emerge from the White House, revealing what dozens of countries — many of them poor — will now end up paying when their goods are shipped to the States.
The most headline-grabbing announcement concerns neighboring Canada, where tariffs on some goods have now jumped up to 35%. But Mexico, on the other side of the border, has managed to secure another 90-day reprieve.
About 90 countries are going to end up facing elevated costs, with the BBC having a breakdown of some of the nations affected:
As the graphic above makes clear, even countries that aren’t explicitly named in this new executive order will still face a baseline tariff of 10%. This elevated trade war is going to cost everybody something.
It is worth noting that some of these tariffs won’t come into force immediately. In most cases, they’ll only apply from 7 August — meaning that there’s theoretically a small window of time for last-minute negotiations. The levies also won’t apply to goods arriving by sea until the beginning of October, which could help prevent dramatic price hikes when consumers are shopping for Christmas presents.
Asian stocks took a battering early on Friday as investors there digested the news — suffering their worst week since “Liberation Day” — and it’s likely that this will be followed by more of the same across Europe and the Americas later on Friday. Many experts argue that hiking levies to their highest level since World War Two is needless and an act of economic self-harm.
Bitcoin, which trades 24/7, wasn’t immune to this latest bout of uncertainty. At the time of writing, it had fallen by 2.3% over 24 hours, but was continuing to trade above $115,000.
Altcoins have been faring far worse. Ether’s dropped by about 5%, with XRP’s losses closer to 6%. And as often happens during crypto corrections, it’s meme coins that are faring the worst — with pump.fun shedding 20% of its value and Pudgy Penguins plunging by 11%.
BTC could find itself in a vulnerable position if developments prompt institutional investors to start pulling their capital out of exchange-traded funds — exacerbating selling pressure. The resurgence of tariff talk also takes the shine out of the White House crypto report that was released just a day earlier.
A big problem for crypto and equity investors alike is the lack of certainty that this latest bout of tariffs creates. While there have been a flurry of high-profile earnings reports in recent days, many are yet to fully illustrate the impact that these trade tensions are having on bottom lines. Most retailers will have little choice but to pass on some of the elevated costs onto customers, which could feed through into lower levels of spending.
There are also further clouds on the horizon. We’re yet to find out whether the U.S. will be able to reach a deal with China — by far the world’s biggest exporter of products — by a separate deadline of August 12. At one point in April, Trump had been suggesting that tariffs on Chinese goods could surge to a jaw-dropping 145%.
A fresh flurry of erratic announcements from Trump, complete with lower levels of trading during the summer months, may well mean that Bitcoin struggles to find its footing for a while.
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