104% tariff effect rattled global markets Tuesday as President Trump’s announcement of steep duties on Chinese imports sent both stocks and cryptocurrencies tumbling. Bitcoin (BTC) and Ethereum (ETH) dropped more than 7% within hours, mirroring the broader market sell-off driven by heightened U.S.-China trade tensions.
The new tariffs—set at 104% on a wide range of Chinese goods—represent a major escalation in trade policy, more than quadrupling the rates imposed in 2018. According to Reuters, the duties target advanced technology and industrial components, sparking fears of prolonged supply chain disruption and higher consumer prices.
“Digital assets are now responding to macroeconomic shocks in real time,” said Dr. Elaine Lee, senior market strategist at Goldman Sachs. “The 104% tariff effect highlights crypto’s growing correlation with traditional risk assets during geopolitical stress.”
The immediate reaction in crypto markets was severe. Bitcoin slid below $46,000, its lowest level in two months, while Ethereum touched a 12-week low. Data from Coinglass indicated over $150 million in leveraged positions were liquidated within 24 hours, underscoring the sharp risk-off sentiment.
This synchronized downturn extended beyond crypto, with the Stoxx 600 index in Europe falling 1.2% and U.S. equity futures sliding before market open. Analysts point to a tightening link between global economic policy shifts and crypto price swings. Bloomberg data shows a 68% correlation between S&P 500 drops and crypto sell-offs during major tariff announcements.
Market strategists warn that unless trade negotiations stabilize, volatility could persist. Institutional investors are reportedly increasing allocations to stablecoins and safe-haven assets such as gold, indicating reduced risk appetite in both equity and digital markets.
The long-term implications remain uncertain. While some analysts view Bitcoin’s decentralized nature as a hedge against inflationary pressures, others caution that abrupt policy changes can overwhelm its “safe haven” narrative. If trade tensions deepen, both traditional and digital markets may face sustained instability.
As investors brace for further developments, the 104% tariff effect serves as a stark reminder: cryptocurrency markets are no longer insulated from geopolitical shocks—they are moving in lockstep with the global financial system.