Tuesday's early gains in equities and digital assets evaporated as the White House confirmed that the tariff rate on Chinese imports would rise to 104%. Bitcoin (BTC) briefly tumbled to $76,500 before recovering and reclaiming the $77,000 level. The broader cryptocurrency market dropped 2.5% over the past 24 hours, bringing its total valuation to $2.43 trillion. Gold also weakened, slipping below the $3,000 mark to trade at $2,981 per ounce.
Escalation of Trade Conflict
President Donald Trump's tariffs are set to take effect at midnight unless reversed, according to CNBC. Earlier Tuesday, Trump warned that China could face tariffs as high as 50% unless it withdrew its retaliatory measures — a figure that has since doubled. The White House confirmed that the U.S. tariff rate on Chinese imports would leap to 104%. China has responded with threats of 34% counter-tariffs and appears unwilling to yield. On Truth Social, Trump mentioned having a “great call” with the acting president of South Korea 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. We are waiting for their call. It will happen,” he wrote.
The New York Times reported that Chinese President Xi Jinping shows no intention of retreating. His Ministry of Commerce accused the United States of “blackmail” and vowed that Beijing would “fight to the end.” From an economic perspective, Trump has consistently accused China of unfair trade practices, including intellectual property theft, coerced technology transfers, and the use of export subsidies.
Institutional Commentary and Market Signals
Austan Goolsbee, president of the Chicago Fed, remarked that policymakers might need to act swiftly, adding that the tariffs are “way bigger” than he had expected. “We just lived through and learned what happens when inflation is raging out of control,” Goolsbee said in an interview with Illinois Public Radio. On the prediction market Polymarket, the probability of an emergency rate cut by the Federal Reserve climbed 3 percentage points on Tuesday, reflecting growing anxiety among traders.
Market participants remain highly cautious. If the tariffs take full effect as announced, global risk assets could face renewed selling pressure. Cryptocurrencies, as high-beta assets, are expected to experience heightened volatility in the near term. Analysts will be watching for any signs of de-escalation or further retaliation from Beijing.