Bitcoin dipped below $100,000 for the first time since Jan. 27, following U.S. President Donald Trump’s decision to impose new import tariffs on goods from China, Canada, and Mexico. The move has sparked immediate retaliatory actions from the affected nations, leaving the crypto market divided over the long-term impact.
Tariffs and Their Potential Impact on Crypto
According to a Feb. 1 statement from the White House, Trump’s executive order enforces a 25% additional tariff on imports from Canada and Mexico, while goods from China will face a 10% tariff. Energy imports from Canada will be taxed at a slightly lower rate of 10%.
The administration framed the move as a measure to hold these countries accountable for commitments related to illegal immigration and the flow of fentanyl and other drugs into the U.S. However, the economic consequences are already being felt, with concerns that the tariffs could contribute to inflation. Higher inflation often leads to increased interest rates, which could push investors toward safer assets like bonds and term deposits—potentially draining liquidity from the crypto market.
Immediate Retaliation from Canada, China, and Mexico
In response to Trump’s announcement, Canada, China, and Mexico wasted no time in striking back.
- Canada’s Prime Minister Justin Trudeau announced a 25% tariff on $106.5 billion worth of U.S. goods, signaling a firm stance against the new trade barriers.
- China’s Ministry of Commerce confirmed it would file a complaint with the World Trade Organization (WTO) and implement “corresponding countermeasures.”
- Mexican President Claudia Sheinbaum stated in a post on X that her administration is ready to activate “Plan B,” which includes both tariff and non-tariff measures to protect Mexico’s economic interests.
Bitcoin’s Reaction and Market Sentiment
Following these retaliatory measures, Bitcoin slipped below the key $100,000 level, hitting a low of $99,111 before slightly recovering to $99,540 at the time of publication, according to CoinMarketCap.
Market data from CoinGlass also revealed that around $22.7 million in long positions were liquidated within four hours of the tariff announcement, underscoring the volatility triggered by the geopolitical uncertainty.
Crypto Industry Divided on Long-Term Impact
The crypto community is split on whether these tariffs will have a lasting effect on Bitcoin and the broader digital asset market. Some analysts believe the uncertainty could slow down the current bull cycle, while others see it as a temporary dip.
Dan Gambardello, founder of Crypto Capital Venture, dismissed the idea that Trump’s tariffs could derail the ongoing market rally.
“I cannot believe there’s a popular opinion floating around that Trump’s tariffs and his memecoins ended the bull cycle,” Gambardello remarked.
While the immediate impact of Trump’s trade policy has rattled Bitcoin, the market will be watching closely to see if investors return to riskier assets once the dust settles.