In the wake of U.S. President Donald Trump imposing import tariffs on good from China, Canada, and Mexico, Bitcoin has seen its first dip below $100,000 since January 27th. The new executive order has drawn immediate retaliation from the three targeted countries, leading to a stark division within the crypto industry regarding potential impacts on the wider market.
Trump’s new order institutes an additional 25% tariff on imports from both Canada and Mexico, alongside a separate 10% tariff on Chinese imports. The tariffs on Canada have been moderated to 10% on energy resources. The intended goal, outlined in February 1st White House statement, is to ensure that Mexico, Canada, and China uphold their end of various agreements and commitments to stem the flow of dangerous drugs into the U.S.
In terms of economic impact, these newly implemented tariffs may cause a spike in inflation, potentially leading to higher interest rates. Such a trend could cause investors to shift their focus from riskier assets, like cryptocurrencies, toward more stable investments such as bonds.
Each of the three targeted countries quickly responded to Trump’s announcement. Canadian Prime Minister Justin Trudeau declared a 25% tariff on $106.5 billion worth of U.S goods. China’s Ministry of Commerce plans to file a complaint with the World Trade Organization (WTO) and introduce their own “countermeasures.” Mexican President Claudia Sheinbaum has instructed her Secretary of Economy to enact defensive tariff and non-tariff measures.
Following these retaliations, Bitcoin’s value stumbled below the significant $100,000 mark for the first time since January 27th, now standing at $99,540. In the four hours prior to this publication, CoinGlass documented around $22.70 million in long positions being liquidated.
Opinions within the crypto industry are divided with regards to these tariffs. While some believe the tariffs would be beneficial for Bitcoin in the long run, others disagree. Cinnaeamhain Ventures partner, Adam Cochran, pointed out that Bitcoin is not adequately detached from global markets for it to be unaffected by a tariff conflict of this scale.