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Tariff Shock Rattles Markets, Bitcoin Reverses After Initial Rally
Markets responded cautiously to yesterday’s tariff announcement, which revealed a 34% tariff on Chinese goods and a 10% minimum baseline on all imports. Bitcoin initially climbed to $88.3K on the headlines but sharply reversed to $85.2K as the specific rates were detailed. It later fell to $82.5k, signalling a market still unnerved by the scope of this policy shift.
The S&P 500 also drifted lower, while gold and Treasury yields moved modestly—suggesting this was less a panic reaction and more a “measured de-risking” in response to persisting uncertainty. The speech itself aligned closely with prior messaging from the executive branch, reiterating tariffs as a strategic tool to support the U.S. economy. However, key questions remain around the implementation timeline, potential retaliation, and broader economic impact.
With ambiguity still clouding the outlook, de-risking seems to be driven not just by the tariff announcement: indeed, macro signals have already been contradictory. New orders and employment data in the latest ISM release both pointed toward contraction (45.2 and 44.7 respectively), while the Prices paid index surged at 69.4 from past expectations at 64.6, and from 62.40 in February—already reflecting early cost pressures from import expectations.
Economists are increasingly attributing weak consumer sentiment—seen in both University of Michigan surveys and recent PMI data —to tariff fears. Retaliatory moves are likely to amplify the pressure. Meanwhile, Q1 import figures show a sharp front-loading of trade: total imports in January jumped 25% YoY to $317bn, and Primary Metal Manufacturing imports rose more than 4x to $43.7bn.
Energy markets are also in the spotlight: oil prices are retreating on global growth concerns, even as Trump has floated the idea of raising import taxes on countries that purchase Russian or Venezuelan oil—another potential driver of stagflationary pressures.
All of this sets the stage for a volatile April, especially after China’s announcement of a 34% retaliatory tariff on U.S. imports. Yet, some positive news emerged today from the U.S. Bureau of Labor Statistics, which reported the addition of 228,000 jobs in March—well in excess of forecasts of 140,000 new jobs. And while this has provided some support to prices, the ongoing trade war remains the dominant concern and likely to dominate the narrative for the coming days.
Digital assets on a Federal move
Meanwhile, the deadline for federal agencies to submit reports on their authority to transfer assets into the Strategic Bitcoin Reserve is the 5th of April. Any move of coins on-chain to U.S. Treasury-controlled wallets, or signals of early implementation, could trigger renewed market activity.
Against this backdrop, the market narrative continues to shift toward “higher for longer” interest rates, as the Fed may prioritize inflation control over labour market support. Volatility is likely to last.
