- Bitcoin (BTC) reacted with a price drop following reports that the US could impose a 50% tariff on the European Union from June 1.
- Some market experts have also explained that escalating trade tensions rather favour Bitcoin in the long run.
US President Donald Trump made a dramatic entry into major headlines after imposing a 25% tariff on imports from the European Union, as featured in our previous news article. Months later, Trump has recommended that a whopping 50% tariff should be imposed on them starting June 1.
According to his social media post, the decision is to mitigate the efforts of the EU, which was created to take advantage of the United States in trade. Additionally, Trump hinted that the Union has been very difficult to deal with, filing unfair and unjustified lawsuits against American corporations.
Shedding more light on this, the US president accused the EU of establishing trade barriers, ridiculous corporate penalties, VAT taxes, monetary manipulations, non-monetary trade barriers, etc. According to him, this has caused a trade deficit of more than $250 million annually with the US.
About 24 minutes before this post, Trump had established that iPhones made outside the US could face at least a 25% tariff. Meanwhile, this comes soon after a trade deal breakthrough was recorded between the US and China, as discussed earlier.
Stock and Crypto Market Reacts as Bitcoin Falls to $107k
Immediately after Trump’s posts, the S&P 500 lost 0.4% of its value. According to The Kobeissi Letter, it fell below the 5,800 level to 5,750. The likes of Dow Jones and Nasdaq also declined, marking an overall cautious approach by investors.
In the crypto market, Bitcoin’s bullish momentum fell short after securing a new all-time high price at $11,970, declining by 2.61% in the last 24 hours. Currently, the asset trades at $107k, after broad market liquidation caused the total market valuation to fall by 2.7%.
Interestingly, things are expected to get better as the EU is reported to have started negotiations with the US as a bloc. According to Ireland’s Taoiseach (Prime Minister), Micheál Martin, negotiation is currently the “best and the only sustainable way forward.”
For Senior Counsel of Akin Gump Strauss Hauer & Feld LLP, Josh Teitelbaum, both parties have quite good reasons for taking their respective positions.
Trump is not wrong that the EU has been less forthcoming than other countries, but the EU also has good reason to be reluctant to engage in this kind of exercise, and so they are at an impasse. Trump’s frustration reflects that underlying dynamic.
Over the years, global trade wars have been reported to be a good catalyst for Bitcoin’s growth. As detailed in our previous news brief, Binance CEO Richard Teng suggests that Bitcoin could appeal to investors as a non-sovereign store of value in the long run despite its short-term reactions.
Similarly, analyst Ben Sigman believes that as the global financial system trembles due to escalating trade tensions, Bitcoin begins to “fill in the gap, ” as indicated in our previous blog post.
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