Tariff Time Again: What New US Tariffs on China Mean for Your Crypto

• A new round of tariff increases from the US to China, up to 245% this time
• The White House states national security and China’s retaliatory measures as the reasons for the increase
• The effect might not be immediate or acute as in some previous rounds

It’s another day, another round of US tariffs aimed at China. The White House announced new duties reaching up to 245% on Chinese imports Wednesday, marking a significant ramp-up in economic tensions between the two superpowers. The move follows a series of tit-for-tat tariff escalations, with the US citing national security concerns and China’s retaliatory measures as justification for the massive rise.

This announcement is fresh, so the full market reaction is still unfolding, but volatility is expected. Previous rounds of tariff hikes definitely caused chaos across financial markets, crypto included. US stock indices experienced notable declines, with the SP 500 falling by 3.45%, the Nasdaq dropping 4.31%, and the Dow Jones Industrial Average decreasing by 2.54%. 

Crypto had a similar pattern, if not worse, depending on the cryptocurrency. For instance, Bitcoin dropped to below $75k, a big decrease from January when it was over $100k. Currently, the price sits in a range of $83k – $84k.  

Granted, this was all during the announced tariffs on the majority of countries. Eventually, those got paused for 90 days, bringing some stability back. However, China was exempt, and there’s a chance the crypto market won’t take that much of a beating this time. 

What’s the Likely Market Impact of These New China Tariffs?

While these new tariffs are steep, their immediate effect might be less severe than some previous rounds. This is mainly because the previous tariff announcements, especially first-time policy shocks, tend to cause more panic than follow-up increases. 

Also, unlike before, this is only aimed at one country, compared to almost the entire planet before. Plus, so far, the tech products such as smartphones, computer monitors, and various electronic parts are not part of these tariffs.

Still, if China retaliates again, which is more than a likely scenario, it might bring further instability to the crypto and financial markets. Keeping an eye on Fed statements and bond market behavior will potentially tell us how real the ripple effect is going to be.

On the other hand, some analysts believe that aggressive tariff policies are weakening the US dollar (which does track, considering the US dollar is weaker now, compared to the beginning of March). This could benefit Bitcoin and other crypto assets, as they become more appealing as alternative stores of value.