The recent market downturn was triggered by President Donald Trump's executive order imposing tariffs on imports from China, Canada, and Mexico. This bold move has already sparked retaliatory measures from these countries, leaving the crypto community divided on its overall market impact.
Trump's Tariff B0mbshell 💣
According to a White House statement on February :
- 25% additional tariff on imports from Canada and Mexico
- 10% additional tariff on imports from China
- Canadian energy imports face a reduced 10% tariff
Trump justified these actions as necessary to hold Mexico, Canada, and China accountable for their promises to curb illeg@l immigr@tion and stop the flow of fentanyl and other drugs into the US.
Potential Market Implications‼️
This trade w@r could have far-reaching consequences:
1. Inflation Concerns: Higher tariffs may lead to increased inflation.
2. Interest Rate Hikes: The Federal Reserve might raise interest rates to combat inflation.
3. Risk-Off Sentiment: Investors may shift away from high-risk assets like cryptocurrencies and stocks, favoring traditional safe havens like bonds and term deposits.
A Silver Lining for Crypto?
While the short-term outlook seems bearish, there's a potential upside:
- Countries targeted by US tariffs (China, Mexico, Canada) might turn to cryptocurrencies for international transactions, bypassing the US dollar.
- This could mirror similar moves seen with Russia and Iran, potentially boosting crypto adoption and demand.
What's Next ⁉️
Technically, this could be the final downward wave before a potential market recovery. However, if the trade w@r's impact extends beyond the involved countries and influences the Federal Reserve's 2025 policy, we may be in for a different scenario.
The long-term outlook for cryptocurrencies remains bullish, but in the short term, the market's direction hinges on how this trade situation unfolds. Stay tuned and stay informed!