By Nermeen Nabil Khear 
Just minutes after President Trump announced 25% tariffs on the European Union (EU), the S&P 500 erased over $500 billion in market value.
Meanwhile, Bitcoin dipped below $84,000 for the first time since November. Is there a relation between Trump’s war and the behavior of Bitcoin’s price?
Trump’s Tariffs Set to Shake Markets and Spike Inflation
At around 12:30 PM ET, President Trump answered questions about tariffs, making it clear that 25% tariffs would be announced “very soon.” He stated that the EU “was formed to screw the US” and confirmed that tariffs would begin on April 2nd, a day later than originally planned. Here’s what’s coming: 25% tariffs on Canada and Mexico, 25% tariffs on the EU, 10% tariffs on China, and potentially 100% tariffs on BRICS countries.
The trade war is back:
Minutes after President Trump announced 25% tariffs on the EU, the S&P 500 erased $500+ BILLION of market cap.
Meanwhile, Bitcoin just broke below $84,000 for the first time since November 11th.
What’s next? Let us explain.
(a thread) pic.twitter.com/dE5gFOULOP
— The Kobeissi Letter (@KobeissiLetter) February 26, 2025
These tariffs could send inflation soaring, as many goods will cost more. For example, the 25% tariff on Canadian and Mexican imports would add roughly $3,000 to the cost of some of the 16 million cars sold annually in the US. Food prices are also expected to rise, given that Mexico supplies over 60% of the fresh produce to the US. Inflation expectations have already climbed from 2.7% to 4.3%, and they could double from recent lows.
A Historic High in Tariffs
The average US tariff rate could climb above 20%, the highest in over 30 years. With additional tariffs on the EU, rates may hit levels not seen since the 1940s. Meanwhile, the Volatility Index (VIX) is up over 30% since February 14th, signaling choppy waters ahead for investors.
Here is a chart of US inflation expectations since the trade war headlines began.
One year inflation expectations are up from ~2.7% to ~4.3% and could easily DOUBLE from their lows.
We could see an average tariff rate of 20%+ in the US, the highest rate in 30 years. pic.twitter.com/qM9rUQvBSV
— The Kobeissi Letter (@KobeissiLetter) February 26, 2025
Interestingly, while gold has risen by 10%, Bitcoin has fallen by 10%. Historically, Bitcoin has been seen as a hedge against uncertainty, but this time, the tables have turned.
What Comes Next?
So, will President Trump strike another deal? We’ve seen this playbook before. When he initially announced tariffs on Mexico and Canada, many thought they were here to stay—until he cut a deal. We believe the EU tariffs could follow the same pattern.
While markets remain volatile, it’s worth noting that these tariffs might not last for years. Instead, they could be a bargaining chip in negotiations. Until then, buckle up—it’s going to be a bumpy ride.
Overall, we believe risky assets will continue to see increased volatility into Q2 2025.
With Bitcoin in a bear market and the S&P 500 down -4% from its high, we are trading it.
Volatility is the new normal.
Follow us @KobeissiLetter for real time analysis as this develops. pic.twitter.com/9mIH6JJpWX
— The Kobeissi Letter (@KobeissiLetter) February 26, 2025
With the S&P 500 down 4% from its high and Bitcoin in a bear market, traders are bracing for more swings. The trade war is back, and Wall Street is watching every move.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted risk tolerance levels of the writer/reviewers, and their risk tolerance may be different than yours. We are not responsible for any losses you may incur due to any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments, so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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