Trump imposed tariffs causing market chaos, sparking recession concerns
From Cointelegraph
April 3, 2025 8:56 AM:
US President Donald Trump imposed reciprocal tariffs on April 2, causing market turmoil and sparking debates among crypto observers regarding long-term impacts. Financial markets, including the crypto market, reacted negatively. Bitcoin fell from $88,500 to $83,000, Ether dropped from $1,934 to $1,797, and total crypto market capitalization decreased by 5.3% to $2.7 trillion.
The impact of the tariffs on global markets remains uncertain due to the unclear methodology used by the Trump administration to set the rates. Some predict a potential boom in the crypto market as investors seek alternatives, while others are concerned about the effect on mining profitability and the broader economic implications such as a possible recession.
BitMEX founder Arthur Hayes suggested that the tariffs may decrease the trade deficit but reduce demand for US Treasurys, requiring intervention from the Federal Reserve to stabilize the market. Some analysts believe that market reactions to the tariffs may not be as severe as expected, with potential positive effects on Bitcoin’s price due to increased liquidity.
The tariffs are expected to impact American crypto miners, particularly those importing mining rigs from Asia. Tariffs could lead to a surge in demand for on-shore miners, potentially causing ASIC mining rig prices to increase by 5 to 10 times. Some mining companies are rushing to move rigs out of the export country before the tariffs take effect.
Critics have questioned the Trump administration’s tariff calculations, with some suggesting that the numbers were determined using artificial intelligence. The inclusion of uninhabited places like the Heard and McDonald Islands on the tariff list has raised doubts about the economic rationale behind the tariffs. Some analysts believe that the tariffs could have negative long-term effects on the US economy. At the end of March, Goldman Sachs predicted a 35% chance of a US recession. After Trump signed tariffs, betting markets on Kalshi raised the odds to over 50%. Source: Kalshi
Trump believes tariffs will boost the US economy, giving it a competitive edge with former allies. He argued that maintaining tariffs could have prevented the Great Depression. However, the Smoot-Hawley Tariff Act worsened the Depression, showing the risks of such policies.
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