Sophia’s Thoughts on a Tariff Timeline
Trade war tensions continue to drive a sharp sell-off in equities, while crypto markets have declined more modestly. What is the path forward for the markets from here?
These are Sophia's Thoughts:
Markets tumbled as President Trump escalated his tariff agenda, sending equities deep into correction territory while crypto held firmer ground.
A steady drumbeat of tariff announcements has rattled global markets, fueling recession fears and intensifying investor uncertainty.
Crypto’s next move will depend on how macro forces like Fed policy and trade negotiations unfold, with both risks and opportunities ahead.
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🚀 Last week’s market performance
The crypto market continued its sell off this week as the tariff war continues escalating. The market lost 6.4% while Bitcoin (BTC) fell 4.3%. The best performing coin of the week was EOS (EOS), which gained 24.4%, after announcing its partnership with Canadian exchange VirgoCX to facilitate cross-border payments. The worst performing coin this week was Immutable (IMX) which fell 24.5%.
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🩸What happened this week?
Markets opened April with heavy losses as President Trump escalated his tariff campaign, sparking a broad risk-off sell-off. Equities bore the brunt: the S&P 500 has fallen over 12% since April 2, dragging its year-to-date performance to over -15%. The Nasdaq slipped into bear market territory, down over 20% on the year, while the Dow Jones also posted steep declines.
The catalyst was a string of aggressive trade actions. This week alone, President Trump rejected a proposed “zero-for-zero” trade agreement from the EU and is threatening to impose 50% tariffs on Chinese imports unless Beijing backs down by April 8. Global markets also reacted sharply; Japan’s Nikkei 225 and Europe’s STOXX 600 have erased their 2025 gains. Safe-haven assets surged: gold topped USD 3,100 per ounce, and U.S. 10-year Treasury yields dipped to 4.1% as investors fled equities.
Crypto weathered the storm better than traditional markets. Bitcoin briefly wicked to USD 74,400 on April 7 but rebounded to close in the positive above USD 79,000. This relative strength has sparked discussion that Bitcoin may be starting to decouple from equities, with some traders pointing to capital outflows from China and a weakening yuan as potential tailwinds. Arthur Hayes, Co-Founder and former CEO of BitMEX, noted that if the Public Bank of China proceeds with monetary easing, it could boost Bitcoin—just as similar dynamics did in 2013 and 2015.
⏱️ A Tariff Timeline
The current market chaos stems from a steady escalation of President Trump’s tariff agenda. Here’s how it unfolded:
February 1, 2025: Trump confirms plans for 25% tariffs on Mexico and Canada, and 10% on China, sparking early market jitters.
February 4, 2025: Tariffs on Canada and Mexico take effect, with China’s partially implemented.
March 4, 2025: Tariffs expand to steel, aluminum, and autos, targeting all nations. The S&P 500 begins to slide below USD 5,900; Bitcoin holds above USD 90,000.
April 2, 2025: “Liberation Day” tariffs hit, imposing 25% duties on key imports. Markets tumble; S&P 500 drops over 4% in a single day; crypto market cap falls 15% since March. Panic continues into the weekend.
April 6-7 2025: Trump rejects EU trade concessions and threatens 50% tariffs on Chinese goods by April 8.
Each escalation adds to uncertainty, hammering equities as fears of inflation, slower growth, and global retaliation mount. Goldman Sachs now places the odds of a U.S. recession at 45%, while JPMorgan sees a 60% chance of a global downturn in 2025. Echoing this, consumer confidence has fallen to a four-year low. Federal Reserve Chair Jerome Powell warned that new tariffs risk pushing inflation higher and complicating future rate cuts, raising the bar for the central bank to act unless there is clear evidence of economic deterioration.
💹 Where Does This Leave the Markets?
Crypto’s path forward is being shaped by a tug-of-war between hope and hazard. On one hand, expectations for monetary easing are rising, with CME FedWatch now putting the odds of a May Fed rate cut at 51.5%, up from just 19% a week ago. Lower borrowing costs could reignite appetite for risk assets like crypto. On the other hand, Polymarket shows a 62% probability of a U.S. recession this year—signaling that even a dovish Fed may not be enough to offset broader economic stress. So, where does this leave us?
“From the investors’ perspective, I wouldn’t expect a clear line of travel from here—it will likely be up and down as the news flow dictates,” said Michael Field, chief European markets strategist at Morningstar. “Europe will likely release a statement in the next week, and it might be more the China approach than the Japan approach.” That uncertainty underscores how the path forward for crypto and the broader markets will hinge on how the tariff situation evolves in the coming weeks.
If the Fed cuts rates at the upcoming meetings and we see incremental trade wins, the crypto markets could catch a bounce. But as long as the China standoff lingers, macro volatility will likely continue to cast a shadow over crypto markets. For now, investors should watch both Fed signals and tariff headlines closely—the next move in crypto might not be about crypto at all.
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