President Donald Trump’s sudden threat to impose 100% tariffs on China sent shockwaves through both traditional and digital asset markets, triggering a massive selloff in stocks and causing a sharp plunge in the price of Bitcoin. The move has reignited fears of a global trade war, prompting investors to flee from riskier assets in a search for safety.
The reaction on Wall Street was immediate and severe, with the Dow Jones Industrial Average shedding 879 points as an estimated $2 trillion in market capitalization was erased. The panic was not contained, with London’s FTSE 100 also declining and U.S. stock futures pointing towards continued losses. This widespread fear reflects the deep interconnectedness of the global economy and its sensitivity to U.S.-China trade relations.
The cryptocurrency market, often touted as a hedge against traditional financial turmoil, was not immune. Bitcoin tumbled 8% in the immediate aftermath of Trump’s post on Truth Social. The digital currency later staged a partial recovery, rising 4% after China responded with a firm warning but refrained from announcing specific retaliatory measures, offering a glimmer of hope that a full-blown crisis might be averted.
The catalyst for this market turmoil was Trump’s accusation that China’s new export controls on rare-earth minerals were a “very hostile” move. In response, Beijing’s commerce ministry defended its policy as legitimate and warned of “resolute measures” if the U.S. proceeds with the tariffs. The ministry’s statement that it is “not afraid” of a trade war did little to calm jittery investors.
As the dust settles, the market is left to grapple with deep uncertainty. While Trump and other U.S. officials have since made more conciliatory statements, the credibility of the tariff threat remains a key question. Investors are now closely watching for Beijing’s next move, which will likely determine whether this is a temporary scare or the beginning of a prolonged period of economic conflict.