Crypto Markets Plunge 5.3% Amid Trump's 34% China Tariff
2min read Crypto markets experienced a downturn following the declaration of a national emergency by US President Donald Trump, who imposed sweeping tariffs on all countries as part of his latest move in the ongoing trade war. The Trump administration implemented a 10% tariff starting April 5, with some countries facing even higher rates, such as China with a 34% tariff, the European Union with 20%, and Japan with 24%.
During an April 2 speech in the Rose Garden at the White House, Trump stated that the US is charging countries “approximately half of what they are and have been charging us.” The crypto market initially rose with the news of a 10% sweeping tariff but quickly dipped as the full scope of the tariffs became known, leading to widespread losses.
Bitcoin (BTC) had been on a rally, reaching a session high at $88,500, but it dropped 2.6% back to around $82,876. Ether (ETH) also saw a significant drop, falling over 6% from $1,934 to $1,797 following the tariff announcements. The total crypto market cap decreased by 5.3% to $2.7 trillion. The Crypto Fear & Greed Index, which measures market sentiment for Bitcoin and other cryptocurrencies, returned a score of 25, indicating extreme fear, in its latest April 2 update.
Ask Aime: What impact will the new tariffs have on the crypto market?
However, prices have since recovered some of their losses. Bitcoin has regained 0.8% to $83,205, while Ether has climbed back 1.2% to $1,810. The Crypto Fear & Greed Index score has shown an average rating of fear for the last week but has now dipped to extreme fear.
Rachael Lucas, a crypto analyst, noted that the brief surge in the crypto market was due to “uncertainty relief,” followed by a sell-off as the full details of the tariffs were released. She observed that big players took profit on the spike, while smaller investors hesitated. Lucas also warned that if China or the European Union retaliates strongly, another round of panic selling could occur.
US Treasury Secretary Scott Bessent urged US trading partners against taking retaliatory steps, arguing that this could provide a “ceiling” and certainty for markets. David Hernandez, a crypto investment specialist, noted that while the tariff rates were slightly higher than expected, the announcement provided much-needed clarity on the scope and scale of the policy. He suggested that markets thrive on certainty, and with speculation now largely removed, institutional investors may see an opportunity to take advantage of compressed valuations.
Hernandez also speculated that global responses will be key for the market going forward, with Mexico and key East Asian economies, including China, South Korea, and Japan, potentially evaluating countermeasures. The clarity provided by the tariff announcement could be beneficial in the long term, as markets tend to perform better with reduced uncertainty.
