President Donald Trump warned of imposing more severe reciprocal tariffs if European Union and Canada collaborate to cause "economic harm" to the United States, affecting cryptocurrency markets as traders assess potential impacts on the global economy.
<u>What to Know:</u>
- Trump threatened increased tariffs against EU and Canada, expanding beyond his recent 25% tariffs on Canadian and Mexican imports
- Cryptocurrency markets showed mixed reactions with XRP and SOL falling 2% while Dogecoin gained 3.5% over 24 hours
- Analysts remain divided on crypto outlook with some seeing Asian markets as a growth catalyst despite U.S. regulatory headwinds
Trump Escalates Tariff Threats, Crypto Markets Experience Volatility
"If the European Union works with Canada in order to do economic harm to the USA," Trump wrote in a Truth Social post early Thursday in Asian hours, "large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!" The former president's declaration comes just days after reports suggested concerns about tariffs were potentially overblown, with analysts expecting their overall impact to be more measured than initially feared.
In a separate post, Trump declared: "Liberation day in America is coming, soon. For years we have been ripped off by virtually every country in the world, both friend and foe. But those days are over — America first!!!" His statements signaled an expansion of his protectionist trade agenda beyond recent measures.
Earlier this month, Trump had already imposed 25% tariffs on imports from Canada and Mexico, alongside a 20% levy on Chinese goods.
These actions were justified on national security grounds, specifically citing concerns over immigration and fentanyl trafficking. Now, with the European Union and Canada explicitly identified as targets, global markets could face renewed uncertainty.
Tariffs typically disrupt economic stability by increasing costs for imported goods, potentially stoking inflation, and putting pressure on central banks like the Federal Reserve to maintain tighter monetary policy. Such economic conditions could create challenges for Bitcoin and other cryptocurrencies in the near term, as the crypto market often correlates with equities, which tend to underperform during periods of trade uncertainty and heightened geopolitical tensions.
Additionally, a stronger U.S. dollar - potentially bolstered by tariff-driven capital flows - might further suppress Bitcoin prices as investors seek refuge in traditional safe-haven assets like gold or cash reserves.
Trump's latest threats appeared to dampen a previously bullish mood during Asian trading hours, with several major cryptocurrencies showing brief sell-offs.
Market Reactions Mixed as Analysts Remain Cautiously Optimistic
While XRP and Solana both fell approximately 2%, Ethereum and BNB Chain's BNB remained relatively stable. Dogecoin maintained its upward momentum, retracting only slightly from a 3.5% gain achieved over the previous 24 hours.
Outside the top ten cryptocurrencies by market capitalization, Sui Network's SUI posted an impressive 7% surge ahead of the launch of Walrus Network, a data availability protocol built on Sui, scheduled to go live on mainnet later Thursday.
Despite Trump's escalating tariff rhetoric, some analysts believe developments in Asian markets could provide a positive catalyst for Bitcoin prices. "While US regulators begin to cut back on restrictive policies, institutions in Asia have been making waves by releasing new funds, products, and innovations that have been supported by pro-crypto regulations in key jurisdictions," Jupiter Zheng, partner at HashKey Capital, told CoinDesk in a Telegram message.
Zheng expressed optimism about regional growth opportunities, adding, "The next leg of the bull market may find its footing in Asia as the center for growth in the industry." This sentiment highlights the increasingly global nature of cryptocurrency markets, where regulatory and economic developments in one region can potentially offset challenges in another.
BTSE's Jeff Mei offered an even more positive outlook Thursday morning.
"Bitcoin and other cryptocurrencies have recovered over the last few days, even as stock markets dropped in response to US President Trump's announcement of auto tariffs," Mei stated in a Telegram message. He suggested this decoupling from traditional market reactions might indicate a more resilient cryptocurrency sector.
"This shows that the worst could be over for crypto markets this year, and that we could see an upward trajectory in prices as US inflation fears subside and as we move closer towards rate cuts," Mei continued, reflecting a growing sentiment among some market participants that cryptocurrencies might begin charting their own course regardless of broader economic headwinds.
Traders are now closely monitoring the upcoming release of Personal Consumption Expenditure (PCE) data scheduled for March 28.
This economic indicator is particularly significant as it influences Federal Reserve interest rate decisions, which in turn can have substantial impacts on both traditional and cryptocurrency markets. The Fed's monetary policy approach remains a critical factor for investors attempting to navigate an increasingly complex global economic landscape shaped by tariff threats, inflation concerns, and shifting regulatory environments.
Final Thoughts
Trump's threats of expanded tariffs against the EU and Canada have introduced new uncertainty into global markets, with cryptocurrencies showing mixed reactions. While some tokens experienced modest declines, others maintained stability or even posted gains, suggesting potential market resilience. As traders await key economic data and monitor international developments, analysts remain divided on whether Asian market growth can offset U.S. headwinds.