In April 2025, President Donald Trump announced new import tariffs, marking the beginning of a new escalation of the trade conflict between the US and China.
Introduction to the Trade War
On April 2, 2025, President Donald Trump declared a national economic emergency and enacted new import tariffs. Dubbed 'Liberation Day,' this policy set a baseline 10% tariff on all foreign goods, with a massive 145% rate on Chinese products. China responded immediately by raising tariffs on US imports to 125% and imposing restrictions on the export of rare earth elements.
The Impact of Tariffs on Stock Markets
Markets reacted negatively to the new tariffs. The S&P 500 fell by 15% within a week, and the Nasdaq dropped nearly 20% for the year by April 7. Investor sentiment turned bearish due to the scale of the tariff increases and uncertainty regarding global economic growth. Tariffs raise the cost of goods, squeezing profit margins for companies. The fear factor also increases market volatility, tracked by the VIX index.
Impact on Cryptocurrency and Supply Chains
Cryptocurrency markets also felt the effects of the new tariffs. Bitcoin fell to around $76,000 after the announcement, reflecting investor reactions to economic uncertainty. However, it quickly rebounded to nearly $85,000, highlighting its volatile nature amidst global unrest. The turmoil also affects supply chains across various sectors, including electronics, automotive, and healthcare. Rising tariffs on electronics could lead to significant costs for manufacturers like Apple.
The 2025 trade war between the US and China is having significant impacts on both stock markets and cryptocurrencies, creating serious risks for the global economy and supply chains.
