Anndy Lian
The tariff gambit: Markets retreat, crypto finds new footing
The United States announced reciprocal tariffs targeting 14 countries ahead of a critical July 9, 2025, deadline. This move, which marks the end of a 90-day grace period, has reignited fears of a trade war, sending shockwaves through equity markets, bond yields, and commodity prices.
At the same time, the cryptocurrency market, particularly Bitcoin and related investments, presents a mixed picture, with stagnation in Bitcoin’s price contrasted with significant gains in crypto infrastructure stocks like Coinbase.
I’ll weave together the facts, data, and market reactions to offer a detailed perspective on these developments and their broader implications.
The tariff announcements: A bold move with global repercussions
On July 7, 2025, President Donald Trump took to social media to announce a sweeping set of reciprocal tariffs aimed at 14 countries with which the United States maintains significant trade deficits. Effective August 1, 2025, these tariffs build upon an existing 10 per cent baseline rate and introduce additional duties on transshipped goods, which are products rerouted through third countries to evade tariffs.
The announcement included a stern warning: any retaliatory measures by the affected nations would trigger a further 25 per cent increase in tariffs. Among the standout figures are the 25 per cent tariffs imposed on imports from Japan and South Korea, two of America’s closest allies and major exporters of automobiles, electronics, and industrial goods.
The list of targeted countries also includes Malaysia, Kazakhstan, South Africa, Laos, Myanmar, Bosnia and Herzegovina, Tunisia, Indonesia, Bangladesh, Serbia, Cambodia, and Thailand.
Letters sent to the leaders of these nations outlined the new rates and hinted at flexibility, noting that tariffs could be adjusted “upward or downward” based on future bilateral relations. This ambiguity has only heightened the uncertainty surrounding the policy’s long-term impact.
The European Union emerged as a positive outlier in this saga. Unlike the 14 targeted nations, the EU did not receive a tariff letter, and reports indicate that a preliminary deal may be struck this week to lock in a 10 per cent tariff rate beyond the August 1 deadline. This temporary reprieve, as negotiations for a permanent agreement continue, has offered a glimmer of hope amid an otherwise tense situation.
This tariff strategy reflects a calculated gamble by the US administration to address trade imbalances and assert economic dominance. However, it risks alienating key allies like Japan and South Korea, whose economies could suffer significant blows.
The threat of retaliation looms large, and the potential for a tit-for-tat escalation could unravel years of trade cooperation. The EU’s apparent exemption, meanwhile, suggests a pragmatic approach to preserving critical transatlantic ties, though the outcome of ongoing talks remains uncertain.
Market reactions: A retreat from highs and a flight to safety
The financial markets wasted no time reacting to the tariff news. US tariff hikes spark global market turmoil while crypto infrastructure stocks surge, highlighting shifting investor priorities and risks equities, which had been riding a wave of optimism to all-time highs, pulled back sharply. The S&P 500 and Nasdaq each declined by 0.8 per cent, while the Dow Jones Industrial Average shed 1.0 per cent.
Megacap stocks, think tech giants and multinationals with heavy exposure to global trade, bore the brunt of the losses, reflecting their vulnerability to disruptions in international supply chains and higher import costs.
In the bond market, yields ticked upward as investors reassessed risk. The two-year US Treasury note rose by two basis points to 3.895 per cent, and the 10-year yield climbed 4 basis points to 4.39 per cent. This uptick suggests a market bracing for inflationary pressures, as tariffs could drive up the cost of imported goods and ripple through the US economy.
The US Dollar Index, a barometer of the greenback’s strength against major currencies, gained 0.3 per cent, signalling a flight to safety amid the uncertainty.
Commodities also felt the heat. Brent crude oil prices rose 1.0 per cent to US$71 per barrel, bolstered by Saudi Arabia’s unexpected decision to hike prices for its main crude grade in Asia. This move, combined with geopolitical tensions tied to the tariffs, has stoked fears of tighter energy markets in the near term. Gold, a traditional safe haven, held steady at US$3,337 per ounce, offering a rare pocket of stability in an otherwise volatile landscape.
Globally, the picture was mixed. Asian equity indices edged higher in early trading, buoyed by hopes of additional negotiations to soften the tariffs’ blow. However, US equity index futures pointed to a lower open, suggesting that Wall Street’s retreat may deepen in the days ahead.
These market movements underscore the fragility of the current economic recovery. The tariff announcement has punctured the bullish sentiment that had propelled stocks to record levels, exposing the interconnectedness of global markets. The rise in bond yields and the dollar’s strength hint at investor unease, while the oil price jump highlights the broader inflationary risks at play.
For everyday consumers, this could translate to higher prices at the pump and the checkout counter—a tangible reminder of how distant trade policies hit home.
Bitcoin and crypto markets: A tale of stagnation and surprising resilience
Amid the tariff-induced turmoil, the cryptocurrency market offers a fascinating subplot. Bitcoin, the bellwether of the cryptocurrency world, has struggled to regain its momentum after reaching a peak of US$111,000 in May 2021. Since then, it has hovered stubbornly below the US$100,000 mark, with recent trading showing a 1.5 per cent decline over 24 hours.
Tom Lee, managing partner at Fundstrat Global Advisors, attributes this stagnation to profit-taking by early investors. “We have clients that have bought Bitcoin at US$100,” Lee remarked on CNBC’s ETF Edge. “They don’t care if Bitcoin goes to a million; they are probably sellers at around US$100,000.”
This insight resonates with me. Bitcoin’s meteoric rise over the years has created a cohort of holders sitting on astronomical gains. For them, cashing out at US$100,000—still a staggering return—makes sense, especially in a climate of heightened global risk. The psychological barrier of that six-figure threshold, coupled with profit-taking, seems to be capping Bitcoin’s upside for now.
Yet, the broader crypto ecosystem tells a different story. Coinbase, a leading digital assets infrastructure provider, has defied Bitcoin’s lethargy with a remarkable 40 per cent surge in June 2025—its best month since November 2024.
The stock doubled in the second quarter, making it the only S&P 500 constituent to achieve that feat, and capped the period with its first three-month rally since 2023. Several catalysts have fueled this rally: the Senate’s passage of the Genius Act, the successful IPO of Circle, and growing enthusiasm for stablecoins.
The Genius Act, a bipartisan effort to regulate cryptocurrencies, promises to bring clarity and legitimacy to the industry, potentially unlocking greater institutional investment. Circle’s IPO, which raised US$1.2 billion and valued the company at US$12 billion, has spotlighted the rise of stablecoins like USDC, now boasting a market cap exceeding US$50 billion.
Stablecoins, pegged to assets like the US dollar, offer a hedge against crypto volatility, making them increasingly attractive as Bitcoin wavers.
Then there’s MicroStrategy, the self-styled “largest Bitcoin treasury company.” Between April 7 and June 29, 2025, it snapped up 69,140 Bitcoins for US$6.77 billion, at an average price of US$97,906 per coin. Its total holdings now stand at 597,325 Bitcoins, acquired for US$42.4 billion at an average of US$70,982 each—currently worth US$64.71 billion.
Yet, in a rare break from its aggressive buying, MicroStrategy paused purchases during the week of June 30 to July 6, the first such hiatus since early April. The stock slipped two per cent on July 7 as Bitcoin dipped, but the company signaled its intent to keep betting big, announcing a US$4.2 billion preferred stock offering to fund further Bitcoin acquisitions.
To me, MicroStrategy’s strategy epitomises the polarising nature of crypto investing. Its unwavering commitment to Bitcoin as a corporate asset is bold, even visionary, but the pause in buying hints at caution amid the tariff storm. Coinbase’s surge, meanwhile, reflects a market rewarding infrastructure over speculation—a shift that could redefine the crypto narrative in the months ahead.
Broader implications and my take
The tariff announcements carry profound implications beyond the immediate market gyrations. For Japan and South Korea, the 25 per cent tariffs threaten industries like automotive and tech, prompting responses like South Korea’s US$2 billion auto sector aid package and Japan’s pledge to “take appropriate measures.”
Globally, economists warn of disrupted supply chains, higher consumer prices, and slower growth, with the IMF already downgrading its forecasts. In the US, the Federal Reserve faces a dilemma: tariffs could stoke inflation, necessitating tighter policy, yet economic uncertainty might demand restraint.
In my view, the US is playing a high-stakes game that could backfire. The tariffs may bolster domestic industries in the short term, but the long-term cost, strained alliances, retaliatory measures, and inflation could outweigh the gains.
The crypto market’s resilience, particularly in stablecoins and infrastructure, offers a counterpoint to this chaos, suggesting that investors are seeking stability and innovation amid traditional market upheaval.
In conclusion, the tariff news has thrust global risk sentiment into a tailspin, with equities retreating, yields rising, and Bitcoin stalling. Yet, pockets of strength in the crypto space hint at a shifting financial paradigm.
As this story unfolds, the interplay of trade policy, market dynamics, and digital assets will shape the economic narrative for months to come—a saga worth watching closely.
Source: https://e27.co/the-tariff-gambit-markets-retreat-crypto-finds-new-footing-20250708/
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