Below is a guest article from Agne Linge, the head of growth in WeFi.
Over the past few months, the encryption industry has celebrated a clear supportive transformation in the American organizational space. Optimism was well established – the American president has his property MCoin EME, SEC has already pledged to reduce the enforcement of the encryption, and earlier last month, the White House released it Executive encryption In order to establish organizational clarity.
According to the Trump period, the Securities Displacement Authority also implemented SAB 122 – What is said to pave the way to adopt encryption. There is also a strong boost towards a file Bitcoin Reserve Not only in the United States but globally.
Despite this optimism, last week it was clear that Crypto is now more likely to have total economic factors than ever. On the day President Trump announced the definitions of China, Canada and Mexico, the encryption market lost two billion dollars, according to Coinglass data.
Some experts refer to this The original references exceeded 10 billion dollars – Many worse than the qualifiers during the FTX repercussions. Factors including “Buy rumors and sell news“Perhaps he was playing in the encryption market.
Currently, there is a short stop of applying the customs tariff, as Trump agreed to postpone the Kinda and Mexico tariff for a month. If implemented, these definitions may increase the risk of stagnation by interpreting consumer spending and increasing economic uncertainty.
Definitions as an incentive for economic shrinkage
Definitions act as a tax on imported goods. The intended purpose is to protect local industries by making foreign products relatively more expensive. However, this protectionist comes at a cost. When the tariffs raise the prices of goods, consumers tend to reduce their spending.
It leads almost consumer spending 68 % of the US GDPTherefore, any continuous decrease in consumption can push the general economic activity below the threshold needed to avoid stagnation.
Also, employment on all sides will take a big blow. The 25 % definitions that have been discussed can lead to a 0.25 % job loss in the United States. The effect will be much greater for other aspects, with Canada and Mexico expecting See up to 3 % job losses.
In my opinion, the imposition of this customs tariff can have severe heterogeneous effects. Deutsche Bank is analytical They have also argued that the continuous definitions against Canada and Mexico – one of the largest commercial partners in the United States – will be “much larger in economic size” than the repercussions of Britain’s exit from the European Union in the United Kingdom.
Due to the weight of consumer spending in the United States and the sensitivity of these economies adjacent to the transformations in the sizes of trade, it is not an exaggeration that Canada and Mexico can turn the recession in the coming months if the 25 % tariff is carried out.
The escalation of the trade war and its broader impact
Many stakeholders expect that these moves will harm international trade flows, increase production costs, and increase prices in all fields. With local and international companies scrambled to control supply chains, the uncertainty that accompanies such political transformations can lead to an increase in economic activity.
Last week, the encryption markets witnessed the fluctuations caused by these policies. When Trump agreed to postpone the Kinda and Mexico tariff for a month. Bitcoin price recovery From 92,000 dollars to more than $ 100,000.
However, relief was short -term when China It fell with a range of its customs tariffs, and the price of the cryptocurrency fell to about 96,000 dollars within hours. This fast fast dynamic highlights how sensitive markets of tariff news have become.
The risks of inflation and the federal reserve dilemma
Federal reserve officials have also expressed their concerns about the inflationary capabilities of large -scale definitions. While they stopped linking these policies explicitly to the upcoming monetary policy decisions, the warnings are important.
previously Chairman of the Federal Reserve at Chicago Austan Golsby It expressed a number of supply chain threats regarding the implementation of the definitions. The definitions raise the costs of import, and since these costs are transferred to consumers, inflation is accelerating.
This scenario is concerned, given that inflation disturbs real income and can exacerbate the stagnation by reducing consumer spending in general. Federal Reserve dilemma severe.
On the one hand, the central bank seeks to control inflation by tightening monetary policy.
However, the excessive aggressive position on interest rates can worsen the negative effects of the economic slowdown caused by customs tariffs.
Gold remains the basic origins of safe
While digital assets such as Bitcoin have struggled to maintain stability amid high trade tensions, safe traditional assets have seen an increase in demand. according to Data from Kobeissi messageThe gold reached the highest level ever on February 3.
The gathering in gold prices reflects the instinct of investors to search for a shelter amid fluctuations in the market and inflation pressure. The dynamics behind this transformation are somewhat simple. With definitions raising consumer prices and undermining global trade, investors have become cautious about economic expectations in the long run.
With the risk of stagnation and the possibility of increasing tightening criticism, the relative stability of gold makes it an attractive advantage.
We look forward
The coming weeks will be decisive. If the United States continues in this path to impose an aggressive tariff without making meaningful commercial concessions, we may see well inflation and market fluctuation.
At the same time, we can anticipate the recession in the main partners’ economies. Political makers – and investors alike – realize that the costs of commercial protectionism go beyond the direct field of international trade.
Ultimately, while some may argue that these definitions can eventually force negotiate trade terms, evidence indicates that the risk of recession – and the damages associated with consumer confidence and global liquidity – are very large that cannot be ignored.
Mentioned in this article
