Markets Tumble as Trump’s Tariff Plans Shake Investors

The digital world experienced a sharp decline after U.S. President Donald Trump announced major tariffs. This triggered the dollar to hit a high mark while decreasing the value of cryptocurrencies and other digital assets. 

Trump imposed a 25% tariff on European, Mexican, and Canadian imports, and an additional 10% levy on Chinese goods would come into action on March 4, crushing the hope of many global investors. This one move ignited digital trade tensions, leading many investors to sell their virtual assets. 

Cryptocurrencies Slide Sharply

The recent market fluctuations caused Bitcoin to drop more than 7% below $80k, its lowest since November 2024. Similar to BTC, Ethereum also fell over 10%, hitting $2,134.69 in the past 24 hours. Not just these two cryptocurrencies, but the global market crashed due to the unpreparedness for the sudden tariff announcement. 

Both cryptocurrencies are now on track for their steepest monthly losses since June 2022, reversing last year’s strong rally, which was fueled by optimism over a crypto-friendly administration.

“Bitcoin’s dip below $80,000 shows the effect of political endorsements and regulatory support has faded,” said Joshua Chu, co-chair of the Hong Kong Web3 Association. “It remains a risky asset rather than the inflation hedge many claim to be.”

Currency Markets Under Pressure

The Australian dollar fell 0.4% to a three-week low of $0.62105, adding to its weekly loss of close to 2%. The New Zealand dollar fell 0.5% to $0.5599, 1.9% down on the week. The euro languished at $1.0380, a 0.6% decline this week. The Canadian dollar fell to C$1.4452, 1.5% lower this week.

The yuan is quoted at 7.2846 against the dollar as traders are not taking large positions in anticipation of a crucial political summit next week.

“The People’s Bank of China will intervene if needed,” TD Securities FX strategist Alex Loo stated, reflecting the market vulnerability 

Dollar Gains as Investors Seek Safety

The dollar index, a measure of the dollar’s strength against the other major currencies, rose to a two-week high of 107.42, following Thursday’s 0.8% increase. Even with this gain, the dollar is set to decline 1% for the month, its worst since August.

Concerns over the U.S. economy prompted investors to raise bets on the Federal Reserve reducing interest rates, reducing Treasury yields, and topping the dollar rally.

“Economic growth worries are now behind yield declines, and market volatility is rising,” National Australia Bank senior currency strategist Rodrigo Catril stated.

Sterling and Yen Show Mixed Reactions

The British pound dropped 0.17% to $1.2580 but will end February up 1.6% %—a five-month high. The pound has risen on the belief that the Bank of England (BoE) will reduce rates less aggressively than the European Central Bank (ECB) and the U.S. Federal Reserve.

Meanwhile, the Japanese yen fell 0.1 to 149.91 per dollar but remains up 3.5% for the month, its highest since last July. The yen has been supported by bets that the Bank of Japan (BOJ) will again raise interest rates this year.

Tokyo’s core inflation data showed a slowdown in February but remained well above the BOJ’s 2% target, supporting expectations of tighter monetary policy.

With investors adjusting to renewed trade tensions, risk-sensitive assets are likely to remain under pressure. Hence, investors must do research on market economics and strategies before investing.