- President Trump’s pro-crypto policies bring relief to investors, but aggressive tariffs on Canada, Mexico, and China spark fears of rising inflation
- Cryptocurrencies like Bitcoin, Ethereum, and XRP plummet as investors brace for the economic impact of Trump’s trade measures
- The Federal Reserve halts interest rate cuts, signaling concerns over potential inflation spikes caused by higher import costs
President Trump has issued a handful of pro-crypto policies during his first two weeks in office. The new take on the market coming from the White House has prompted a brief sign of relief by digital asset firms and investors.
But the underlying question rising these days is whether Trump’s overly aggressive international trade policies are going to hurt investors even more than the pro-crypto stance the President has taken since day 1.
Last week Trump imposed heavy tariffs on Mexican and Canadian imports. Taking effect this Monday, now all imports coming from the two countries neighboring the U.S. are charged 25% taxes.
The President also imposed 10% tariffs on all Chinese goods—a measure that makes a little bit more sense given China’s strong competitiveness in international trade.
The Trumpflation Effect
Risky assets, a.k.a stocks, cryptocurrencies—took a heavy hit as investors cashed out in fear of the new measures causing a ripple effect on the up-until-now lowering inflation rates. Bitcoin fell by over 4% in a day—while Ethereum and XRP lost a whopping 17% in value in only 24 hours.
Perhaps preemptively, the U.S. Federal Reserve decided to stop lowering interest rates after three consecutive rate cuts. The action came on the first FOMC meeting interest rate decision under the Trump administration.
Donald Trump protested the Fed’s decision, demanding that Chair Jerome Powell continue to decrease interests.
However, the Fed’s and the overall investor’s fears are far from unfounded. The sudden spike in imported goods from Canada, Mexico, and China could be more than enough to drive inflation higher in the U.S.
Local production may not be enough to provide the entirety of American consumers. If so, the rising costs of products are likely to increase overall spending, and given the demand is likely to not decrease drastically, this could cause a perfect catalyst for growing inflation rates.
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