Bitcoin Plunges as Trump's Tariffs Spark Market Turmoil

Bitcoin's price took a significant dip on Tuesday, falling below $82,000, as fears of escalating tariffs wiped out recent gains. The cryptocurrency briefly rebounded to around $83,740 but remained down 7% on the day and nearly 16% over the past month.

President Donald Trump's 25% tariffs on Mexico and Canada took effect on Tuesday, sparking market volatility and uncertainty. The U.S. began imposing sweeping levies on imports from its two largest trading partners, while also doubling tariffs on Chinese imports to 20%. In response, China announced up to 15% tariffs on certain U.S. goods, and leaders in Mexico and Canada vowed retaliatory measures.

Bitcoin had surged to a high of $94,800 on Sunday following Trump's renewed calls for a "crypto strategic reserve." However, the growing trade conflict erased those gains, with Bitcoin, Ethereum, and Solana all experiencing significant price drops. As of 12pm ET, Bitcoin, Ethereum, and Solana had fallen 7%, 8.5%, and 12.5% respectively, according to data from CoinGecko.

The uncertainty surrounding Trump's tariffs also impacted traditional markets. On Tuesday, the S&P 500 fell 1.3%, with the index showing a 2.22% year-to-date fall as of Monday.

Economists have differing views on the potential impact of Trump's tariffs. Some warn that they could stoke inflation, while others believe they could spur economic growth. Within the cryptocurrency sphere, market participants are closely watching how policy moves could affect risk assets broadly.