Trump’s War on Tariffs Continues as Bitcoin Slumps

Bitcoin (BTC), the top cryptocurrency by market value and the only macro asset trading over the weekend, remained below $100,000 amidst persistent weakness following former President Donald Trump’s tariff announcement.

In a series of Truth Social posts, Trump defended his decision to impose steep tariffs on major US trading partners, declaring, “THOSE DAYS ARE OVER!” as he vowed to end what he called unfair trade practices by Canada, Mexico, and China.

Acknowledging that Americans might experience "some pain," he insisted the long-term benefits would outweigh the costs.

Trump’s latest executive order enacts tariffs of 25% on Canadian and Mexican goods and 10% on Chinese imports, set to take effect Tuesday.

He argued that these nations have taken advantage of the US through unbalanced trade and weak drug enforcement.

He also criticised the so-called “Tariff Lobby,” accusing it of siding with globalists and foreign competitors.

The US conducts $1.6 trillion in annual trade with Canada, Mexico, and China, but Trump claims trade deficits are draining the economy.

He further warned that the country’s $36 trillion debt cannot shrink while Americans continue subsidising other economies.

Bitcoin Extends Losses as Trump Wages War on Tariffs

Bitcoin has plunged to $95,981.98 at the time of writing, down from its recent high of $109,500, as global financial markets experience a broad downturn, according to CoinMarketCap.

The cryptocurrency has declined 5.26% in the past 24 hours and 5.4% over the past week, with traders rushing to adjust their positions in response to Trump’s tariff announcement.

Historically, February has been a bullish month for Bitcoin, raising questions about whether this year will break the trend.

Amidst what many consider the most unconventional bull market cycle in history, the latest pullback adds another layer of uncertainty to the broader market outlook.

Canada, Mexico, and China Plans Retaliation

Canada wasted no time responding to Trump’s tariff declaration.

Prime Minister Justin Trudeau swiftly imposed a 25% tariff on $155 billion worth of US goods, calling Washington’s move “unacceptable” and vowing to protect Canadian businesses.

His government has targeted key industries reliant on American trade, from agriculture to steel.

However, Trump remained defiant, even suggesting—once again—that Canada should simply become the 51st state.

In a Truth Social post, he dismissed Canada’s economic significance, claiming the US has ample energy, manufacturing capacity, and lumber to sustain itself without Canadian imports.

Meanwhile, Mexico is equally incensed.

President Claudia Sheinbaum condemned the tariffs and unveiled a pre-emptive economic defense plan months in the making.

Her administration is preparing countermeasures, including tariffs and regulatory actions to shield Mexican industries.

Sheinbaum also called for direct negotiations with the US, stressing that cooperation has already yielded progress on migration issues.

While Mexico’s full response remains unclear, economists speculate that US agricultural and energy exports may be the first targets.

The Mexican government hopes to leverage its crucial trade ties to force concessions.

China, despite Trump’s rapport with President Xi Jinping, is taking an aggressive stance.

Beijing has denounced the tariffs as violations of World Trade Organisation (WTO) rules and pledged to file a formal complaint while preparing “necessary countermeasures.”

Analysts warn that China holds significant economic leverage over the US, including the potential restriction of rare earth mineral exports—critical to American technology and defense—or limiting market access for US businesses.

#Trump imposes 10% tariffs on #Chinese goods and #China files a lawsuit at the #WTO... not that it is going to help. Welcome to a trade war on steroids. pic.twitter.com/aIQTEoZE8Q
— Alicia GarciaHerrero 艾西亞 (@Aligarciaherrer) February 2, 2025
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New national security laws also allow Beijing to block foreign business deals at will.

During Trump’s first term, China was the primary target of his trade wars.

This time, he is clashing with allies, a shift that may strengthen Beijing’s global influence.

Chinese officials see an opportunity to deepen trade relations with Europe and other regions, further undermining America’s economic dominance.

This development also aligns with the long-standing BRICS objective, where Russian President Vladimir Putin has repeatedly signaled plans to challenge the US dollar’s supremacy on the world stage.

Will BTC Withstand the Pressure or is it Destined for Doom?

Investors are bracing for heightened inflation as the trade war escalates, prompting a shift toward risk-off assets to hedge against growing economic uncertainty.

The combination of renewed tariffs and mass deportations from the US could further drive up inflation, complicating expectations for swift Federal Reserve rate cuts.

Bitcoin’s recent price weakness appears to mirror these concerns, signalling broader market unease.

The question now is whether BTC can weather the storm or if further turbulence is inevitable.