Tariffs

The United States has recently intensified its trade policies by imposing significant import tariffs from key trading partners, including Mexico, Canada, and China. These measures have sparked concerns about potential trade wars and their implications for global markets and crypto.

Current U.S. Tariff Landscape

On February 1, 2025, President Donald Trump signed executive orders imposing 25% tariffs on imports from Mexico and Canada and an additional 10% on Chinese goods. The administration justified these actions as necessary to address issues such as illegal immigration and the drug trade. In response, Canada and Mexico announced retaliatory tariffs on American goods, while China signaled its intent to challenge the U.S. at the World Trade Organization. Canada and Mexico eventually “bent the knee” and decided not to escalate the tariffs and to cooperate with the US, which calmed global markets slightly.

Historical Context and Potential Outcomes

Trade wars have historically led to economic disruptions. For instance, during the U.S.-China trade tensions between 2018 and 2020, both nations imposed tariffs on each other's goods, resulting in increased costs for consumers and businesses, supply chain disruptions, and heightened market volatility. Economists generally agree that, in the long term, trade wars can slow GDP growth and make countries less competitive internationally.

Impact on Global Markets

The recent tariff announcements have already influenced global markets. Major stock indices experienced declines as investors reacted to the escalating trade tensions. Companies with significant exposure to international trade, particularly in the automotive and technology sectors, faced notable stock price volatility. Additionally, currencies of countries directly involved in the trade disputes, such as the Canadian dollar and Mexican peso, have exhibited increased volatility.

Implications for the Crypto Market

The crypto market has also felt the effects of the escalating trade tensions. Bitcoin, for example, dropped to a three-week low as the risk of a trade war spooked investors and caused a selloff across financial markets.

In previous trade disputes, Bitcoin has sometimes been viewed as a "safe-haven" asset, with its value rising during periods of economic uncertainty. The market is currently pricing a 44% chance of a Fed rate cut on July 30, 2025, which would help support global liquidity and, thus, asset prices. If tariffs were to show weak economic data in the coming months, then we could expect the Fed to cut rates more aggressively, which could help counteract the negative effects of the trade wars. 

Conclusion

The escalation of trade tensions through increased tariffs by the United States and the ensuing retaliatory measures from affected countries have significant implications for global markets and the crypto sector. Historical precedents suggest the potential for economic slowdowns, market volatility, and disruptions across various industries. Despite this, the Fed and other central banks can support global liquidity if we see a deterioration in the economy. This would help support assets and crypto. Overall, whilst there is still uncertainty about how Trump may continue with tariffs, it may be a temporary negotiating tactic that doesn’t have any material impact on markets. As for crypto, we still have the most pro-crypto president in history, and despite any headwinds along the way, crypto remains bullish under a Trump presidency. But this doesn’t mean to buy any kind of crypto. We think it’s imperative to choose the right allocation of crypto as we believe there will be a lot of coins that will eventually die if they haven’t already. At Weekly Wizdom, we diligently choose the right coins that we believe will dominate under a Trump presidency. If you’re interested, subscribe to our newsletter to learn more.