The US-China trade war got crazier as the new US tariffs on $200 billion of Chinese imports and China’s retaliatory move came into effect today. According to the Goldman report, things are going to get worse where the market cap can be expected to lose $6 trillion. The US stock market is already starting to feel the effect of tariffs today. Now, what role Bitcoin and crypto will play here.
Fresh wave of tariffs hit both sides today
Currently Bitcoin and crypto market is showing some deep reds. However, if we take a look at world level, chaos is only growing bigger and noisier as the ongoing trade war between the US and China just got even more severe.
The trade war between the two biggest economies has taken a turn for the worse as China retaliated with 5 and 10 percent tariffs on US goods. The Chinese local media channel accused the US of engaging in “trade bullyism” and further reported:
“It has brazenly preached unilateralism, protectionism, and economic hegemony, making false accusations against many countries and regions, particularly China, intimidating other countries through economic measures such as imposing tariffs, and attempting to impose its own interests on China through extreme pressure.”
The US tariffs on $200 billion of Chinese imports and the retaliatory move by China comes into effect from today.
Goldman Sachs Warns of Dire Consequences
Now, Goldman Sachs analyst has stated in its research note that all of China’s goods and services might be subject to tariffs soon:
“Following President Trump’s threat of further escalation, we now think the probability that all imports from China will ultimately be subject to tariffs has risen to 60 percent.”
However, Trump is working with other trading partners viz. Mexico, Canada, and Europe reducing trade tension there. But tariffs will only lead to a rise in price that means,
“The effects on inflation are clearer: The measures announced to date look set to push up U.S. core [personal consumption] inflation by around 0.1pp, and about twice that if the next round of China tariffs materializes.”
According to the World Trade Organization (WTO), the global trade is coming off its high growth rate. Moreover, this year growth continued despite trade tension but it might not be the case further on, as per the Goldman data.
A few days ago only, the chief strategist of Goldman, David Kostin has warned of a bear market and loss of more than $6 trillion in market cap with S&P dropping 25% if the US levies 10% tariffs on all imports.
Earlier in June, Barclays has evaluated that the earnings would reduce 10% as costs spike and corporate profits drop, should the US impose 10% tariffs on all global imports.
Trade war will only intensify further, more tariffs coming to next year
The Wall Street is already expected to take a hit as today these tariffs get into effect. US futures stock indexes though moderately, are lower as a result. It has been suggested the sentiments from US equity futures will bleed onto Wall Street.
Meanwhile, there seems to be no silver lining on the horizon as it is expected that more tariffs will be imposed as Trump has warned of a 25% rise from 2019 start unless a deal is stricken between the two countries.
What could it mean for Bitcoin & crypto market?
As this trade war intensifies, the traditional stock market will be taking a hit along with currencies. Moreover, the trade war also fuels the impending market crash coming in 2020. With the traditional market taking a severe hit, it is a possibility Bitcoin and crypto market would be actively seen as the alternative investment option and hedge against this crisis.
Countries with high inflation and devaluing currencies are already turning to Bitcoin and cryptos. Moreover, a number of Wall Street giants and institutional interest have entered the crypto market. So, we just might see more money coming into the market.