Cryptocurrency investors expected the tariff chaos to end on July 9, but the reality proved otherwise. Following Trump’s tax law approval, markets surged amidst concerns of a widening U.S. budget deficit. Yet, even more significant events lie ahead in the upcoming week.
A Pivotal August for Cryptocurrencies
August carries immense importance for investors, promising to eclipse the events of July 9. It’s essential to focus not on Trump’s words but on his actions. Current statements and previously sent tariff letters indicate a weakening dollar and a more insular U.S. Trump aims to transform imports mechanism to address the budget deficit without much intention for agreements.
The terms are straightforward: any country wishing to engage with the U.S. must open its market and eliminate tariff rates or accept higher U.S. tariffs. Furthermore, countries with major manufacturing hubs and popular brands should shift production back to the U.S. Trump’s extensive demands suggest agreements might be far-fetched.
While this was being written, Trump commented:
“Japan seeks a weak currency. I’ve had very different discussions with Chinese President Xi.
I have no ties to Epstein.
China and Japan dominate through weak currencies. A low dollar boosts tariff value. We might consider secondary sanctions for Russia if needed. The EU may have to reduce tariffs.
There’s limited room for maneuver on steel and aluminum. Most trade deals are reaching completion. Many agreements define customs tariff rates through letters. Some letters mention 10% or 15% tariffs. If I reduce tariffs on steel for one, I must do it for all. There’s not much chance with Canada; I could apply one-sided tariffs. There are limited negotiations, and I’m not focusing on a deal with Canada.
We’ll send about 200 tariff letters. Tariff revenues are intended as rebates to Americans.”
Impacts of August Developments
By the end of next week, we may see a climate shaking cryptocurrencies with 200 different tariffs. While an EU agreement remains crucial, severe tariffs on almost 200 countries are likely to return as goods inflation for U.S. consumers.
Agreements with Japan, Indonesia, and Vietnam massively favored the U.S. Similar agreements elsewhere might lift cryptocurrencies with interest rate reduction excitement. However, Trump’s overarching message is clear: he’ll impose undesirable tariffs on countries that don’t meet his demands. With less than a week for negotiations, cryptocurrencies are headed into a period of high volatility.
