The trade policies of U.S. President Donald Trump have sparked significant changes in the global economy, affecting the cryptocurrency market.
Trade Wars and Economics
The trade wars initiated by Trump with the imposition of a 25% tariff on goods from Canada and Mexico, and 10% on Chinese goods, have become a major economic issue. Canada and Mexico retaliated with their own tariffs, while China announced plans to sue over these measures. The U.S.'s involvement in roughly $1.6 trillion of trade with these nations has significant implications for the global economy.
Impact on Cryptocurrency Market
Cryptocurrency markets have historically been sensitive to global economic events. Trump's tariff announcements led to an immediate drop in the prices of major cryptocurrencies like Bitcoin and Ethereum. Bitcoin, often viewed as a safe haven or store of value, saw a sharp decline from its peak of $107,000 in January 2025 to around $91,000. Ethereum also faced a sharp drop to its lowest levels at $2,320.
The Role of Tariffs in Crypto Fluctuation
Tariffs can lead to increased inflationary pressure as the cost of goods rises due to tariffs, prompting central banks to raise interest rates to combat inflation. This strengthens the U.S. dollar, which has historically moved inversely to Bitcoin prices.
The trade wars and imposition of tariffs have significantly impacted the cryptocurrency market, causing price drops and increased volatility. Amid uncertainty, investors continue to seek safer assets, as reflected in the price dynamics of Bitcoin and other cryptocurrencies.
