The 47th president of the United States (aka the 45th) is again using tariffs as a pressure tool. This gives us the opportunity to look at the past and understand how markets reacted back then — and what this might mean for the current situation. 🤔
Take your seat and prepare to self-educate, it’s going to be interesting 😉
The chart on the left shows the dynamics of the S&P 500 with the marks of key events. On the right are the quotes of #BTC, which in those years was not yet so closely linked to the stock market and followed global trends more.
The chronology:
1️⃣ January 2018: the first tariffs and an unexpected blow to the markets
Trump imposes duties on solar panels (30%) and washing machines (20-50%). China is naturally unhappy, but the S&P 500 is not falling because of tariffs. The main factor is rising inflation. The average salary in the United States jumps by 2.9% (the highest since 2009), which makes the markets nervous: players fear a tightening of the Fed's policy and massively fix positions.
Minus 11% in a few days. 😱
For Bitcoin, this was a signal for the beginning of a protracted bearish trend that lasted until the spring of 2019.
2️⃣ March 2018: new duties, new wave of sales
Trump announces tariffs on steel and aluminum. Does that sound familiar? 😉
The markets understand that this could escalate into a full-fledged trade war, and the S&P 500 is falling by 8%.
3️⃣ June 2018: The US and China exchange blows
The Americans are imposing 25% duties on $34 billion worth of Chinese goods, and Beijing is responding in kind. The markets react in advance: minus 3.5%. But already in July, the situation calms down — panic recedes into the background.
4️⃣ September 2018: the heat of the war, the markets can not stand it
The United States is expanding the list of goods subject to duties to $200 billion.
China is responding, but for a smaller amount ($60 billion).
The markets endure until October, and then the S&P 500 collapses by 11% — this was the peak of tension.
5️⃣ December 2018: the last blow — the Fed finishes off the markets
On December 19, the Fed raises the rate and makes it clear that it is not worth waiting for cuts in 2019 (it reminds of December 2024, right?).
The S&P 500 is losing 20%, and Powell urgently needs to change his rhetoric and hint at an early softening. After Christmas, markets bounce back, but the year still closes down by 6%.
What unites 2018 and 2025? 🔥
• Inflation remains a risk: any negative CPI report could force the Fed to tighten policy again.
• The markets are at historic highs (ATH), and there has not been a serious correction for more than two years — just like before the fall of 2018.
• The geopolitical tension between the United States and China is even higher than it was then.
But there are also differences:
• In 2025, the Fed has already started an easing cycle, and inflation is gradually moving towards target levels.
• In 2018, the opposite was true: inflation was only gaining momentum, and the Fed was actively raising rates.
Conclusion: Trump's first trade war seriously hit the markets. 2018 is one of the few ‘red’ years for the S&P 500. And for the crypto, it was generally the worst year in history: #BTC fell by 73.39% (and by almost 80% from the January peaks).
