Trump's Tariffs Are About to Begin - Bitcoin Falls $86k Again

Trump has officially imposed tariffs on Canada, Mexico and China, sending financial markets plunging and triggering a sell-off in the crypto market, as the Fed lowers its forecast for US economic growth.

In just a few hours, the US will officially impose new tariffs on its three leading trading partners: Canada, Mexico and China. This decision marks a new escalation in tensions in President Donald Trump's trade policy.

Time's up for Canada or Mexico

On February 1, Mr. Trump signed an executive order imposing tariffs on Canada and Mexico, but then postponed it to wait for feedback from the two countries on how to handle fentanyl smuggling and human trafficking into the US. After a 30-day delay, the US President officially implemented a 25% tariff on imports from Canada and Mexico.

Speaking at the White House on Monday afternoon, Mr. Trump reiterated his tough stance that he would not cut tariffs on the two neighboring countries.

"Everything is ready," Mr. Trump emphasized.

Trump: "Tomorrow, tariffs -- 25 percent on Canada and 25 percent on Mexico. And that'll start." pic.twitter.com/gSHwP5jCky

— Aaron Rupar (@atrupar) March 3, 2025

The US President also imposed an additional 10% tariff on Chinese imports, raising the overall tariff on the country to 20%, to control the illegal drug crisis.

Financial markets "collapse"

Immediately after this statement, the US stock market plummeted, leading to a sell-off in the crypto market.

The S&P 500 just had its worst day of 2025. pic.twitter.com/oRHd2jTwKq

— Brew Markets (@brewmarkets) March 3, 2025

Earlier, financial markets reacted quite positively when TSMC - the world's leading contract chipmaker - announced plans to invest $100 billion in the United States over the next four years. They plan to build five new chip manufacturing facilities in Arizona and create thousands of jobs. However, market sentiment quickly reversed when Mr. Trump officially imposed tariffs.

At the same time, the Atlanta Federal Reserve lowered its GDP growth forecast for the first quarter of 2025 from -1.5% to -2.8%, marking a sharp decline from +3.9% just four weeks ago.

Bitcoin (BTC) dropped 10K in price again, "plunging" from $95,000 to $86,062 at the time of reporting, erasing the previous day's increase thanks to the news that Trump established a national crypto reserve fund including BTC, ETH, XRP, SOL and ADA.

Ethereum (ETH) is not doing much better, from $2,550 to $2,130, down 15% in the past 24 hours.

Red also covered the entire altcoin market, the decline amplitude was almost all over 15%.

In just the past 24 hours, the total crypto market capitalization "evaporated" 11% to only $2.9 trillion, approaching the lowest level since November 2021.

Bitcoin Dominance - Bitcoin's market capitalization relative to the entire market - is back above 50%, specifically 58% at the time of writing, after just one day of "ceding" market share to altcoins.

According to data from CoinGlass, the derivatives market recorded $810 million in liquidations in the past 24 hours, mainly from longs.

The Fear and Greed Index is at 15 - "extreme fear" - even more volatile than on February 28, when Bitcoin "broke" the $80,000 mark for the first time since November 2024.

"Responding" to US tariffs

After Mr. Trump's announcement, affected countries have begun to take countermeasures. Canadian Prime Minister Justin Trudeau criticized the US tariffs, emphasizing that they will have a negative impact on the regional trading system.

The Mexican government also expressed concern that the US tariffs would severely impact its auto and electronics exports.

China, which has been hit with tariffs twice in just two months, is expected to retaliate with comprehensive measures, escalating tensions in the trade war between the two countries.