On Tuesday afternoon, early gains in U.S. equities and digital assets evaporated as the White House confirmed that the tariff rate on Chinese imports will surge to 104%. The escalation marks a dramatic turn in the U.S.-China trade war, far exceeding the previously threatened 50% level.
Market Reaction: Stocks Waver, Crypto Dips
By 2 p.m. Eastern Time, most of the morning's advances across the NYSE, Nasdaq, Dow Jones, and S&P 500 had been wiped out. The cryptocurrency market declined 2.5% over the past 24 hours, bringing its total market capitalization to $2.43 trillion. Bitcoin (BTC) briefly dropped to $76,500 before recovering and reclaiming the $77,000 threshold. Gold remained below the $3,000 mark, trading at $2,981 per ounce.
Trump's Ultimatum and China's Response
President Donald Trump's tariffs are set to take effect at midnight unless reversed. Earlier Tuesday, Trump stated that China could face tariffs as high as 50% unless it withdrew its retaliatory measures, but the White House later doubled that figure to 104%, according to CNBC. China has responded with threats of 34% counter-tariffs and appears unwilling to yield. On Truth Social, Trump mentioned having a "great call" with South Korea's acting president and claimed that China is eager to strike a deal. "China also wants to make a deal, badly, but they don't know how to get it started," Trump said. "We are waiting for their call. It will happen."
However, the New York Times reported that Chinese President Xi Jinping shows no sign of retreating. The Ministry of Commerce accused the United States of "blackmail" and vowed to "fight to the end." Trump has long criticized China for unfair trade practices including intellectual property theft, forced technology transfers, and export subsidies.
Fed Official Warns Tariffs Are 'Way Bigger' Than Expected
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, remarked that policymakers may need to act swiftly, adding that the tariffs are "way bigger" than he had anticipated. "We just lived through and learned what happens when inflation is raging out of control," Goolsbee said in an interview. On Polymarket, the probability of an emergency rate cut by the Fed climbed 3 percentage points on Tuesday.
The trade confrontation is fueling widespread concern across global financial markets. Analysts warn that a 104% tariff would severely disrupt bilateral trade and could stoke U.S. inflation, potentially forcing the Fed into an earlier easing cycle. The crypto market, as a risk-on asset, remains under short-term pressure, though some investors view Bitcoin as a hedge against traditional market uncertainty. The next few hours will determine whether the tariffs take effect and set the tone for subsequent market movements.