US President Donald Trump’s announcement last week granting a 90-day reciprocal tariff pause led to an unexpected crypto rally. Bitcoin is now trading above $85K at the time of writing.
According to a report on Reuters, President Trump announced a reciprocal tariff pause targeting electronic products except those from China. This seems to have rattled the crypto market, where Bitcoin and the rest of the digital assets were struggling to hold on to the few gains they had made following Trump’s on-again, off-again trade policy.
Reciprocal Tariff Pause Created Market Come Back
Onchain data shows that Bitcoin dipped to lows of $74,000 immediately following the tariff announcement. However, the coin had recouped 11% by Friday last week to return to $82,000, suggesting a brief crypto rally riding on the President’s announcement.
In the same vein, the rest of the crypto market also experienced a comeback, with XRP and Solana rising 20% and 23%, having fallen to $1.66 and $97, respectively. Commenting on the outcome, Youwei Yang, chief economist at crypto mining company BIT Mining, suggested:
“Bitcoin has been highly volatile this week, driven by the back-and-forth around global tariffs.”
China Has Criticized Washington
The 90-day reciprocal tariff pause targeted various electronic products such as laptops, semiconductors, solar cells, flat-panel displays, flash drives, memory cards, and solid-state drives. Analysts have observed that duties on these products remain in place since the pause is only temporary.
Beijing, whose products were exempted from the tariff pause, followed through the country’s Ministry of Commerce that the exemptions were “a small step by the U.S. towards rectifying the misguided approach of unilateral ‘reciprocal tariffs,'” reiterating that China was still reviewing its impact.
China has criticized Washington heavily for implementing the reciprocal tariffs, stating that the US’s actions were “severely disrupting the international economic and trade order” and “harming others without benefiting itself.” China urges the US to:
“Take a significant step towards rectification, completely abandon the erroneous’ reciprocal tariffs’, and return to the right path of mutual respect and resolving differences through equal dialogue.”
Emerging Reprieve Lifted BTC
US President Donald Trump’s tariffs went into effect last Wednesday. Still, a few hours later, he announced the 90-day reciprocal tariff pause that kept the baseline 10% levy intact for most countries except China, whose products are subject to additional tariffs that add up to 145%.
The impact of the reciprocal tariff pause was felt immediately across the financial markets, with the S&P 500 closing the day at 9.5% higher, its best rally since 2008. The crypto space was also happy since the emerging reprieve lifted BTC by 5%, and the emerging crypto rally has persisted since then.
Conclusion
While Bitcoin is up today, trading above $85,000, it remains far from the January all-time-high of $109,000. At the moment, the 90-day reciprocal tariff pause has played a role. However, analyst Yang warns investors to expect market volatility to continue. He says:
“The temporary 90-day pause brought some relief, but the market remains cautious […] while this administration is pro-crypto, the broader crypto market is still searching for conviction, stuck in a bearish chop and waiting for clearer signals to regain momentum.”
Frequently Asked Questions (FAQs)
How do trade tariffs work?
Tariffs are now mainly used to protect domestic industries from foreign competition. Governments do so by increasing the prices of imported goods to persuade consumers to purchase domestic products instead.
How do tariffs affect crypto prices?
Tariffs may not directly impact cryptocurrencies and crypto companies, but cryptocurrencies are dragged down by a general risk-off sentiment from investors who believe digital assets are highly volatile.
Are tariffs good or bad?
The majority of economists see tariffs as bad for the economy because they prevent countries from reaping the benefits of economic specialization.
Appendix: Glossary to Key Terms
Tariffs: A set of taxes charged on goods bought from other countries.
Onchain data: Transactions on a blockchain have been verified and authenticated.
Crypto rally: A period during which prices sustain an upward trajectory due to specific announcements or events.
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