Trump's April Tariffs May Spark 17.5% Bitcoin Drop

US President Donald Trump is set to announce a new round of reciprocal tariffs on April 2, with the aim of reducing the country’s trade deficit. The announcement comes after a series of aggressive tariff policies implemented by the Trump administration, which have had significant impacts on various markets, including the cryptocurrency market. In February, when Trump announced import tariffs on Canada, Mexico, and China, the cryptocurrency market experienced a notable decline, with Bitcoin dropping by at least 17.5%. This raises questions about how the upcoming tariffs on April 2 could affect the crypto market, particularly top cryptocurrencies like Bitcoin.

The US has been running consistent trade deficits since 1976, with the largest trade deficit in the world. In January, the US Balance of Trade increased from -98.06 USD Billion to -131.38 USD Billion. The top countries contributing to the US trade deficit include China, Mexico, Vietnam, Ireland, Germany, Japan, South Korea, Canada, Thailand, India, Italy, Switzerland, Malaysia, and Indonesia. In 2024, the largest deficit was with China ($270.4B), followed by Mexico ($157.2B), Vietnam ($113.1B), Ireland ($80.5B), Germany ($76.4B), and others. Trump’s recent statement indicates a strong intent to address these trade imbalances through reciprocal tariffs, primarily targeting countries with the largest trade surpluses and the highest barriers to US goods.

Rumors suggest that the Trump administration may initially adopt a less aggressive approach, potentially excluding sensitive sectors such as autos, semiconductors, and pharmaceuticals. This strategy could mitigate some of the immediate economic impacts while still signaling a commitment to addressing trade deficits. However, the overall market reaction to these tariffs remains uncertain. Previous tariffs implemented in February led to a significant decline in the Bitcoin market, with the price dropping from $102,314.57 at the start of the month to $84,400 by the end. As of now, the Bitcoin price stands at $86,683, indicating that the market has not yet fully recovered from the February drop.

If the April 2 tariffs are implemented aggressively, stock and bond markets could react negatively, potentially spilling over to the cryptocurrency market. This could lead to further declines in top cryptocurrencies like Bitcoin and Ethereum. Conversely, if the tariffs are narrowed or delayed, markets may experience a relief rally. Investors could see reduced market uncertainty, leading to a recovery in top cryptocurrencies. The overall impact on the crypto market will depend on the specifics of the tariff plan and the broader economic response.