It’s another day and another round of our tariffs targeting China. The White House announced its new job on Wednesday, reaching up to 245% in Chinese imports, indicating a significant rise in economic tensions between the two superpowers. The move follows a series of Tatt tariff escalations, with the US citing national security concerns and China’s retaliatory measures as justifications for a massive rise.
The announcement is refreshing, so the full market response is still unfolding, but volatility is expected. There is no doubt that the previous tariff hikes, which include Crypto, caused chaos across the financial markets. The US equity index experienced a significant decline, with the S&P 500 down 3.45%, the NASDAQ down 4.31%, and the Dow Jones industrial average down 2.54%.
Depending on the cryptocurrency, if not worsened, the cryptocurrency had a similar pattern. Bitcoin, for example, fell below $75K, a massive drop since January, when January exceeded $10,000. Prices currently range from $83,000 to $84,000.
Certainly, this was during customs announced in the majority of countries. Eventually they paused for 90 days and regained stability. However, China is exempt, and this time the crypto market may not take much.
What are the possible market impacts of these new Chinese tariffs?
These new tariffs are steep, but their immediate effects may not be as serious as previous rounds. This is mainly because previous tariff announcements, particularly the first-time policy shock, tend to cause more panic than increased follow-up.
Also, unlike before, this is targeted at one country compared to almost the entire previous one. Furthermore, technology products such as smartphones, computer monitors and various electronic components have not been part of these tariffs so far.
Still, if China is retaliating again, if this is more than the scenario’s potential, it could lead to further instability in the crypto and financial markets. Keeping an eye on FED’s statements and bond market behaviors will potentially show how realistic the ripple effects will be.
Meanwhile, some analysts believe that aggressive customs policies are weakening the US dollar (tracking the current weakness in the US dollar compared to the beginning of March). This could benefit Bitcoin and other crypto assets.
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