The president of the US Donald Trump announced tariffs for 185 countries yesterday and, as expected, the whole crypto market got hit.
Following the news, the Bitcoin price quickly dumped from $87k to below $83k. Altcoins are bleeding too; Ethereum dipped from $1910 to $1800 while XRP plunged from $2.17 to $2.01 now.
So, what exactly happened? Let’s try to understand based on Kobeissi’s report on X.
What you'll learn 👉
Trump’s Massive Tariff Announcement Shakes Markets
President Trump has just announced one of the largest tariff implementations in US history, targeting 185 countries simultaneously. This announcement caused immediate market turmoil, with S&P 500 futures erasing approximately $2 trillion in market cap within just 15 minutes.
The announcement started with a Wall Street Journal report suggesting a 10% baseline tariff would be imposed by the US. However, this was quickly clarified as Trump began outlining numerous other tariffs significantly higher than 10%.
The announcement began with a WSJ report that a 10% baseline tariff would be imposed by the US.
— The Kobeissi Letter (@KobeissiLetter) April 2, 2025
While this was true, markets took it as ALL reciprocal tariffs were 10%.
However, this quickly changed as President Trump began outlining many other tariffs, well above 10%. pic.twitter.com/pzbtqEi5Z6
The market reaction was dramatic. Around 4:26 PM ET, when Trump displayed a poster detailing the tariffs during his announcement, futures were up 2%. By 4:42 PM ET, just 16 minutes later, futures had fallen 4% from their high as Trump listed new tariffs country by country.
Trump explained that these “reciprocal tariffs” would be calculated at half the rate that countries currently charge the US. This is substantially different from a flat 10% tariff across the board. For example, China, which allegedly charges 67% tariffs on US goods, will face a 34% tariff, while the European Union will see a 20% tariff.
The market response was severe. Nasdaq 100 futures indicated the index would open 500 points lower, a 900-point reversal from the beginning of the announcement. After the “Make America Wealthy Again Event” concluded, the White House posted a complete list of tariffs on X, sending futures to new lows with the S&P 500 now indicated to open in correction territory.
With these new tariffs, the US average tariff rate is expected to rise above 10%, exceeding levels seen during World War II. The economic impact could be big, with analysts expecting approximately a 150 basis point reduction in US GDP growth. While the Trump administration aims to generate $600 billion annually from tariffs, experts believe these measures would raise only about half that amount.
Prior to these tariffs being announced, here is what the US average tariff rate looked like.
— The Kobeissi Letter (@KobeissiLetter) April 2, 2025
With the announcement of these tariffs, we will see an average tariff rate that is above 10%.
We are set to see tariff rates are are ABOVE levels seen during World War 2. pic.twitter.com/7m9u7sGagk
There were some notable exceptions: no new reciprocal tariffs were announced on Canada or Mexico, and goods compliant with the USMCA (United States-Mexico-Canada Agreement) will not see new tariffs. Additionally, the previously threatened 25%-50% tariffs on Russia were not imposed. Certain commodities and products like copper, pharmaceuticals, semiconductors, and lumber articles are also exempt from the tariffs.
The timing is imminent: the 10% baseline tariff on all countries takes effect on April 5th, with individualized higher reciprocal tariffs beginning on April 9th. These tariffs will remain until Trump determines that “the threat posed by the trade deficit” has been addressed.
Despite Trump also mentioning upcoming “largest tax cuts in American history” that won’t affect Social Security, Medicare, or Medicaid benefits, markets did not recover their losses. This announcement comes as the US recently posted a historic $300 billion+ 2-month trade deficit, with expectations for the largest 1-week trade deficit in US history in the days before April 5th and 9th.
Read also: Billions In XRP Moved and Locked on Ripple – What’s Behind This?
Bitcoin Price Analysis and Future Outlook
The crypto market is particularly sensitive to macroeconomic developments and global trade tensions, as these factors typically drive investors away from high-risk assets toward safe havens during periods of uncertainty.
According to analyst Ali Martinez, Bitcoin was holding a critical range between $86,900 and $84,800 as the tariff announcement unfolded. Unfortunately, the BTC price has now lost the crucial $84,800 support level which means we could be facing even deeper price corrections in the near term.
With tariffs now in play, #Bitcoin $BTC is holding a critical range between $86,900 and $84,800. Whichever side breaks first on the hourly chart will likely define the next big move. pic.twitter.com/tIRmcVTT9d
— Ali (@ali_charts) April 2, 2025
The break below this key technical level on hourly charts signals potential further downside, as traders and investors adjust their positions in response to the broader economic uncertainty created by these extensive tariff measures.
Follow us on X (Twitter), CoinMarketCap and Binance Square for more daily crypto updates.
Get all our future calls by joining our FREE Telegram group.
We recommend eToro
Wide range of assets: cryptocurrencies alongside other investment products such as stocks and ETFs.
Copy trading: allows users to copy the trades of leading traders, for free.
User-friendly: eToro’s web-based platform and mobile app are user-friendly and easy to navigate.
