Trump’s Tariff Move Sparks Economic Concerns
On February 27, 2025, President Trump announced a 10% tariff hike on Chinese imports, set to take effect on March 4. The move is part of the administration’s efforts to pressure China into taking stronger action against the illegal drug trade, particularly fentanyl. Trump cited dissatisfaction with China’s handling of the issue as the primary reason for the new tariffs.
China’s Ministry of Commerce swiftly responded, stating it would take "all necessary measures" to protect its economic interests. This signals the potential for retaliatory measures from Beijing, adding further uncertainty to global financial markets.
Crypto Market Reactions
The cryptocurrency market was among the hardest hit sectors following the tariff announcement. XRP and DOGE both saw steep declines of around 10%, reflecting broader investor concerns over increasing geopolitical risks. Bitcoin (BTC) also faced significant losses, dropping below $80,000 to a low of $78,197 before slightly recovering to $81,193. Ethereum (ETH) followed suit, falling by 4% to $2,170.
Analysts suggest the drop is linked to a broader shift away from riskier assets amid the trade war escalation. Susannah Streeter, an analyst at Hargreaves Lansdown, noted that crypto markets tend to be highly reactive to global economic sentiment, and any disruptions in confidence quickly translate into price volatility.
Stock Market and Financial Sector Fallout
The impact of Trump’s tariff escalation was felt beyond crypto markets. ETFs tied to Chinese markets, such as the iShares MSCI China ETF and iShares China Large-Cap ETF, both dropped by over 2%. Major Chinese stocks listed on U.S. exchanges, including Alibaba and JD.com, fell by more than 2%, while PDD Holdings tumbled over 4%.
The electric vehicle sector also took a hit, with Chinese EV manufacturers Nio and Li Auto recording stock declines of approximately 3%. These movements underscore how deeply interconnected the global economy is and how trade policies influence multiple sectors.