Trump’s New Tariffs Shake Financial and Crypto Markets

On April 2, U.S. President Donald Trump revealed the “Liberation Day” tariffs, which plunged financial and crypto markets into disarray. The policy includes a minimum 10% tariff on all imports, with some nations facing much higher rates. China is hardest hit, with tariffs rising to 54% due to an additional 34% tariff on top of a current 20% tariff. The European Union will be charged a 20% tariff, with Vietnam (46%), Taiwan (32%), India (26%), and Japan (24%) also facing rising trade barriers.

Canada and Mexico, however, are currently exempt from the baseline tariff. Trump stated that the 10% tariff would only apply if he withdraws the existing 25% duties placed on these nations over concerns about crime and drug trafficking. Additionally, all foreign-made cars will face a new 25% tariff starting at midnight on April 4. While Trump argues that these tariffs will strengthen American industries and reduce consumer prices, many investors remain skeptical, leading to a market downturn.

U.S. Stock Markets Take a Hit

Financial markets responded quickly to the tariff news, with U.S. stock market indexes plummeting. Dow futures fell by more than 1,000 points, and the S&P 500 and Nasdaq recorded steep declines. 

Investors fear that increased import costs can burden industries that rely on foreign products, adding to trade tensions with major economic partners such as China and the European Union. The uncertainty over the tariffs has contributed to market volatility, with most taking a wait-and-see approach.

Crypto Market Feels the Shockwaves

The volatility spilled over into traditional markets, affecting the cryptocurrency market, too. The overall crypto capitalization saw a drop of 4%, reaching $2.7 trillion. Initially, Bitcoin saw a surge to $88,500 at the time Trump was speaking; however, it later fell to $83k, down by 2% in only 24 hours. Other major cryptocurrencies also had similar issues: Ethereum dropped by 4% to $1,816, while Solana fell by 5% to $120.

The liquidation caused a record-breaking $514 million of liquidations in one day, with long-position traders losing most of their funds $290 million, as per Coinglass statistics. The market response is a reflection of the increasing correlation between cryptocurrency and traditional finance as macroeconomic pressures continue to shape the digital asset landscape.

Experts Weigh In on What’s Next

Arthur Hayes, co-founder of the BitMEX crypto exchange, shared his thoughts on the market reaction. Posting on social media platform X, Hayes acknowledged the market’s negative response but suggested that Bitcoin could regain stability if it stays above $76,500 until the U.S. tax day on April 15. He advised investors to avoid risky trades, warning against getting “chopped up” in the market’s turbulence.

As markets around the globe change, investors and analysts will be closely watching how both financial and crypto markets develop in the coming weeks. Until then, uncertainty is unavoidable, and volatility reigns as the world reacts to Trump’s latest trade moves.