- Trump’s aggressive tariffs sparked a global trade war, with China banning U.S. investments, signaling escalating tensions between major economic players
- The U.S. stock market suffered a historic collapse, losing $3.25 trillion, with tech giants, financial institutions, and consumer-facing companies seeing double-digit declines
- Cryptocurrencies displayed unexpected resilience, with Bitcoin holding above $80,000 and XRP gaining traction following Coinbase’s CFTC filing for XRP futures contracts
The first week of April was certainly a week to remember. Perhaps not the kindest recollection investors may have moving forward, this period was marked by major economic events that led to serious repercussions in the financial markets.
Trade War Arises
By Monday, the People’s Republic of China made it clear that the nation would retaliate against Donald Trump’s tariffs by effectively banning local companies from investing in America. The move kickstarted the new wave of protectionism in modern macroeconomic politics, giving us a hint of what was going to happen the following day.
On April 2nd, Donald Trump officially announced his “Liberation Day” program. On that date, the U.S. President revealed its foreign trade policy plan, hitting almost the entire world with tariffs ranging from 27% to 36%, alongside a 10% base import duty on all goods entering the U.S.
Japan, the European Union, China, South Korea, and India—major players in global exports—are now facing steep tariff increases under Trump’s new trade policy, disrupting key industries.
China now faces a total tariff burden of 54%, with a fresh 34% increase stacking on top of its existing 20% duty. The European Union is dealing with a 20% tariff, while Japan and South Korea are seeing hikes to 24% and 25%, respectively.
Stock Meltdown Amidst Tariffs Plan
The United States stock market took most of the fallout after Liberation Day. Only two days later, trillions of U.S. dollars vanished from the sector, igniting a complete meltdown of the financial landscape.
At first, the most affected companies were those who rely most on Asian imports like tech giants Apple and Nvidia. Electric vehicle manufacturer Tesla also took a big hit, with the TSLA stock losing almost 11% on April 4th.
The financial sector soon followed suit, with banking stocks facing intense sell-offs as investors reevaluated risks. JP Morgan saw an 8.05% decline, while Berkshire Hathaway dropped 6.91%, reflecting growing concerns over liquidity and economic stability.
Federal Reserve Chair Comments on Fallout
Later in the week, Federal Reserve Chairman Jerome Powell issued a public statement — sharing his insight into what to expect from the American economy in 2025.
Powell admitted that the new international tariff policy will likely lead to higher inflation and slower economic growth. Although not explicitly sharing his opinion on the matter – arguing that the FED’s role is simply to manage monetary policy and maintain economic stability, Powell emphasized the importance of adapting to evolving global trade dynamics.
Crypto Market More Resilient Than Expected
Leading up to Liberation Day, expectations of a good-performing cryptocurrency market were already very slim. However, now three days after the event it is safe to assume that digital assets have faired a lot better than stocks, at least for now.
Bitcoin lost about 4.47% in value since April 2nd. The world’s largest digital asset was able to retain its surplus of $80,000 per coin — even managing a 0.5% increase over the last seven days.
Ripple’s XRP delivered an even stronger performance during that period, now reaching breakeven since April 2.
This surge comes after Coinbase filed with the CFTC to launch XRP futures contracts, signaling increased institutional interest and confidence in the asset.
That’s not to say crypto came out unscathed. Since April 2nd, the entire cryptocurrency market capitalization saw a decrease of 3.92% — effectively erasing over $100 billion from the market.
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