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President Donald Trump is contemplating declaring a national economic emergency to implement a universal tariff program targeting both allies and rivals. These tariffs could be enforced under the International Economic Emergency Powers Act (IEEPA) and aim to reshape global trade balances.
Trump’s Tariff Strategy
According to reports from CNN, Trump plans to use the IEEPA to impose tariffs aimed at rebalancing global trade. These tariffs are designed with a focus on the manufacturing sector in the U.S. Trump prefers this method because the IEEPA allows for swift implementation without the need for extensive national security justification.
Supporters of the tariffs argue that this move could rebuild American industrial capacity and strengthen the economy. However, the uncertainty surrounding the scope and implementation of these tariffs may impact global financial markets and influence behaviors in emerging sectors like the cryptocurrency market.
“I believe the president has broad authority to impose tariffs for various reasons, with legal bases available.” – Kelly Ann Shaw, Assistant to Trump on International Economic Affairs
Fed and Inflation Outlook
Christopher Waller from the Fed addressed inflation risks associated with Trump’s tariff proposals. Waller indicated that although inflation is expected to remain above the Fed’s 2% target by late 2024, a gradual decline is anticipated in 2025. He mentioned that the likelihood of tariffs leading to persistent inflation is low.
“I want more rate cuts in 2025, but the pace will depend on inflation progress. I do not expect tariffs to have a significant impact on inflation.” – Christopher Waller
The Fed lowered interest rates by 25 basis points in December 2024, with expectations of further cuts based on inflation rates. A supportive monetary policy stance in 2025 could boost liquidity and investment flows, including in the cryptocurrency market.
Impact of Tariffs on the Cryptocurrency Market
If the Fed is poised to lower interest rates further, investors seeking better returns may turn towards the cryptocurrency market. Typically, interest rate cuts increase risk appetite, benefiting assets like cryptocurrencies.
However, Trump’s tariff policies could lead to broader trade uncertainties, indirectly affecting the crypto market through shifts in global economic confidence.
Trade disruptions may diminish trust in traditional financial systems, encouraging a shift towards decentralized digital assets like Bitcoin 
$103,310 and Ethereum 
$2,472. Conversely, if tariffs create unexpected inflationary pressures, the Fed might halt rate cuts or consider increases, potentially dampening optimism in the crypto market.
Fed policies and general economic concerns have been primary causes of declines in the cryptocurrency market. Rising yields on U.S. Treasury bonds and the Fed’s hawkish stance have siphoned capital from cryptocurrencies, triggering risk-averse sentiment.
These developments indicate ongoing uncertainty regarding the future direction of cryptocurrency markets. Investors must remain vigilant regarding the ripple effects of both Trump’s tariff strategies and the Fed’s monetary policy decisions on market volatility.
