The White House on Tuesday confirmed that the tariff rate on Chinese imports would climb to 104%, as President Donald Trump doubled down on his trade war with China. The announcement wiped out early gains across U.S. equity markets, with the S&P 500, Nasdaq, Dow Jones, and NYSE all drifting back into negative territory by afternoon. The cryptocurrency market also suffered, dropping 2.5% over 24 hours to a total valuation of $2.43 trillion.
Bitcoin Recovers After Flash Dip to $76.5K
Bitcoin (BTC) briefly plunged to $76,500 before staging a recovery, crossing back above $77,000. Gold, a traditional safe haven, fell below $3,000 to trade at $2,981 per ounce. The tariff escalation, set to take effect at midnight unless reversed, has spooked investors across asset classes. Earlier in the day, Trump stated China could face tariffs as high as 50% unless it withdrew retaliatory measures — but the figure has since doubled to 104%.
China Vows to 'Fight to the End'
China responded with threats of 34% counter-tariffs and appeared unwilling to yield. In an editorial published Tuesday, The New York Times reported that China's President Xi Jinping showed no intention of retreating from the confrontation. The Ministry of Commerce accused the United States of “blackmail” and vowed that Beijing would “fight to the end.” Meanwhile, Trump posted on Truth Social that he had a “great call” with the acting president of South Korea, and claimed China wants to make a deal “badly.” He added, “We are waiting for their call. It will happen.”
Fed Rate Cut Probability Surges as Policymakers Express Concern
Austan Goolsbee, president of the Chicago Federal Reserve, warned that policymakers might need to act swiftly, noting 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 Fed climbed 3 percentage points on Tuesday. Traders are now pricing in a higher likelihood that the central bank will step in to cushion the economic blow from the escalating trade war.