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The global financial landscape has been thrown into disarray as US President Donald Trump reignited his trade war playbook, imposing sweeping tariffs on Canada, Mexico, and China.
The move sent traditional markets spiraling and triggered a sharp sell-off in cryptocurrencies, with Bitcoin (BTC) and Ethereum (ETH) bearing the brunt of the fallout.
Trump’s executive order, signed on Saturday, introduced a 25% tariff on imports from Canada and Mexico, alongside a 10% levy on Chinese goods. These measures build upon existing tariffs from his first presidency, targeting industries ranging from automobiles to electronics and agriculture. The scale of the impact is immense, affecting approximately $1.6 trillion in annual trade, equivalent to 5% of US GDP.
Canada wasted no time in retaliating, announcing 25% tariffs on over $155 billion worth of American goods. Meanwhile, China hinted at countermeasures, though details remain scarce.
The immediate reaction was swift and severe: stock futures plummeted, with major U.S. indices like the S&P 500 and Dow Jones Industrial Average shedding significant ground. The U.S. dollar strengthened against other currencies, including the Canadian dollar, which hit a 22-year low.
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Cryptocurrencies Bear the Brunt of Market Turmoil
Cryptocurrencies, often heralded as “digital gold” or safe-haven assets during times of economic uncertainty, paradoxically experienced some of the steepest declines. Bitcoin, the largest cryptocurrency by market capitalization, has fallen by almost 7% within 24 hours, currently trading below $93,000 after briefly dipping to $91,000.
Ethereum fared even worse, plunging over 20% to trade below $2,500, effectively erasing all gains made since September 2024.
The broader altcoin market suffered catastrophic losses, with the combined market cap of cryptocurrencies outside the top 10 dropping 11% and briefly flashing a 20% drawdown.
According to data from Unusual Whales, approximately $2.17 billion was liquidated across the crypto market in the past 24 hours, impacting over 728,000 traders. This liquidity crunch exacerbated volatility, pushing prices lower and triggering cascading sell-offs.
Bitcoin’s dominance, a metric measuring its share of the total cryptocurrency market cap, climbed above 62% as investors fled riskier altcoins in favor of relative stability. However, transaction fees for Bitcoin plummeted to their lowest levels since the 2015 bear market, signaling reduced network activity and waning investor confidence.
"Higher tariffs are also expected to drive up consumer prices, potentially dampening disposable income and discretionary spending, including investments in digital assets," BRN analyst Valentin Fournier explained.
"The prospect of a prolonged trade war introduces significant uncertainty into global supply chains and economies. This unpredictability discourages investment in volatile assets like Bitcoin and Ethereum. However, a sustained tariff war could present opportunities for Bitcoin in the long run," Fournier added.
