A look back - and forward

On 2 April 2025, President Trump proclaimed "Liberation Day" and announced comprehensive tariff increases:

• Basic tariff: A general import duty of 10% on all imports into the USA
• China: A total combined tariff of 104% on Chinese products
• European Union: An additional duty on EU imports

These measures finally came into force on 9 April 2025 and led to immediate reactions from the countries affected. China in particular announced retaliatory tariffs, which further exacerbated the situation in this trade war.

Market reactions are noticeable worldwide

The announcement of the tariff increases had a significant impact on the global financial markets: the S&P 500 briefly fell below the historic 5,000-point mark, the Nasdaq Composite lost over 11% virtually overnight and the SPI lost almost 13% within a week. Even traditional US government bonds, which are usually used as a hedge in such situations, corrected along with equities.

However, just a few hours after the new US tariffs came into force, President Trump announced a 90-day suspension of the tariff increases - with the exception of China. While most countries only face a basic tariff of 10% on imports, tariffs on Chinese goods have been raised to 125%. The surprising pause in tariffs provided noticeable relief on the stock markets. Nevertheless, the risk of a further escalation in trade policy remains, meaning that the medium-term market outlook remains characterised by ongoing uncertainty.

Bitcoin also under pressure

Digital assets were also affected by this market turbulence. On the weekend following the customs announcements in particular, Bitcoin (BTC) temporarily corrected to around USD 74,750. Ethereum (ETH) and other altcoins suffered even higher percentage losses in the double-digit range. Compared to other asset classes, BTC has held up remarkably well so far. Since the announcement of the tariffs on 2 April, Bitcoin has gained more than 1.6% against the US dollar (as at 16 April). Most other major share indices, whether in the US, Europe or China, have so far been unable to recoup their losses. Only gold is up even more strongly at 5.7 %.

^{Source: Tradingview.com}

What does the customs policy mean for cryptocurrencies?

Of course, the tariff policy also has medium and long-term effects on digital assets. The development of US inflation figures is particularly important here. If inflationary pressure increases as a result of price rises caused by new tariffs, the prices of cryptoassets as risk assets are likely to come under pressure if inflation persists.

Experts continue to disagree on the actual impact of the new tariffs on inflation. While some refer to the much-cited survey by the University of Michigan, according to which consumers expect inflation to rise, investment analysts at the US bank Goldman Sachs anticipate a significant rise in inflation.

^{Source: Goldman Sachs}

The other side refers to an inflation indicator that is also closely watched by the US Federal Reserve: the so-called "5-year Forward Inflation Breakeven Rate". This signals the opposite - namely falling inflation expectations.

_{Source: Bianco Research}

If there is no noticeable rise in inflation, but the economy slips into recession due to increased uncertainty, this is likely to create headwinds for risky investments - and therefore also for digital assets.

Assessments of the recession also continue to diverge. The probability of a recession in the USA is still estimated at around 50:50. Analysts at the investment company PIMCO assume that every one percentage point increase in the average effective tariff rate will reduce US economic growth by around 0.1 percentage points.

Trade war as an opportunity?

However, the trade war could also be an opportunity for digital assets such as Bitcoin. The USA has had a trade deficit for years - in other words, it imports more than it exports. But this deficit has a flipside: it is accompanied by an equally large capital surplus. The income that exporting nations generate from trade with the USA is often reinvested in the US financial market. This has therefore been particularly attractive and successful for decades - in a sense, it has served as a global savings vehicle.

As it is the declared aim of the US government to significantly reduce the US trade deficit, this would also have an impact on capital flows. Fewer US imports also mean less money invested by other countries in US assets. The capital surplus would shrink and with it the central role of the US financial market as an investment magnet. In this scenario, the question arises: where will global savings go?

_{Source: Tradingview.com}

Bitcoin could provide a possible answer. As a neutral, cross-border and scarce digital form of investment, it potentially offers itself as a new international savings and investment instrument. It is becoming apparent that more and more companies are discovering Bitcoin as a new savings instrument. With a total of 95,431 newly purchased BTC in the first quarter of this year, Bitcoin treasury companies recorded the highest quarterly demand to date.

Important legal information

_{This publication is intended for information and marketing purposes only, and does not constitute investment advice or a specific individual investment recommendation. It is not a sales prospectus and does not constitute a request or an offer or a recommendation to buy or sell investment instruments or investment services, or to engage in any other transaction. Maerki Baumann & Co. AG does not provide legal or tax advice. Investors are therefore advised to obtain independent legal or tax advice concerning the suitability of such investments, since their tax treatment depends on the personal circumstances of the investor in question and is subject to change at any time. Maerki Baumann & Co. AG holds a Swiss banking license issued by the Financial Market Supervisory Authority (FINMA). Please note that Maerki Baumann & Co. AG does not provide legal or tax advice. The above information should not be considered as such. It is only an initial assessment without any claim to completeness or correctness. For a final and legally binding assessment, please contact a tax expert.}
 

Editorial deadline: 16 April 2025

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