In March 2025, President Donald Trump finalized a decree imposing a 25% tariff on Canada and Mexico, increasing tariffs on China by an additional 10%, causing the cryptocurrency market to erupt in red. Bitcoin (BTC) plummeted from $95,000 to $86,062, dragging altcoins into the price storm. This tariff shockwave shook the entire financial world.
Trump’s Shocking Tax Policy
On March 1, 2025, Donald Trump left global markets stunned by signing a new tariff decree, marking a tough turn in his economic policy. With this decision, he imposed a 25% tariff on goods from Canada and Mexico and increased tariffs on Chinese imports by an additional 10%, bringing the total tariff on China to 20%. Trump defended the decree as a necessary measure to combat fentanyl smuggling and human trafficking across the Canada-Mexico border, along with the influx of illegal drugs from China into the U.S.
The process leading to this decree was tumultuous. On February 1, 2025, Trump signed a preliminary version but delayed it for 30 days to allow Canada and Mexico to implement border control measures. When these countries failed to meet expectations, he immediately finalized the tariffs without leaving room for negotiation. In a speech at the White House, Trump firmly stated, “They had their chance, but now time is up.”
The shock of this policy also lies in its timing. The Federal Reserve’s Atlanta branch recently lowered its GDP growth forecast for Q1 2025 from -1.5% to -2.8%, a significant drop from the previous +3.9% just weeks earlier. Trump’s targeting of the three major trading partners—Canada, Mexico, and China—during a fragile U.S. economy turned this decree into an economic “bomb,” raising concerns about a global crisis. From trading floors to government meetings, Trump’s 25% tariff decree became the focal point of controversy and anxiety.
From Bitcoin to Altcoins – Cryptocurrency Market in Flames
Trump’s tariff shockwave turned the cryptocurrency market into a sea of red. Bitcoin, the “flagship” of the crypto world, led the decline, plummeting from $95,000 to $86,062 within 24 hours, erasing previous gains fueled by Trump’s rumored plan to establish a national cryptocurrency reserve fund with BTC, ETH, XRP, SOL, and ADA. Not just Bitcoin suffered; the entire altcoin ecosystem was also engulfed in disaster. Ethereum (ETH) fell by 15%, from $2,550 to $2,130, while coins like XRP, SOL, and ADA also plummeted with average declines exceeding 15%.
The devastation spread across the market. The total cryptocurrency market capitalization evaporated by 11%, from its peak to just $2.9 trillion—the lowest since November 2021. Bitcoin’s dominance surged to 58%, indicating investors hastily sought safer havens in the crypto world amidst the chaos. Data from CoinGlass recorded $810 million in derivative liquidations within 24 hours, mostly from long positions, pushing the Fear and Greed Index to 15—a level of extreme fear not seen since Bitcoin broke below $80,000 at the end of February 2025.
From small investors to large funds, no one escaped this “red fire” storm. Hopes for a new growth phase for cryptocurrencies, thanks to Trump’s previously friendly gestures, evaporated under the pressure of the 25% tariff decree, leaving the crypto market in ruins.
Impact of Tax Policy and International Reactions
Trump’s tax policy not only directly affected the cryptocurrency market but also triggered a chain reaction globally. The 25% tariff on Canada and Mexico, along with increased taxes on China, threatened to disrupt global supply chains. Canada is a major source of wood and energy, Mexico contributes cars and components, while China provides cheap consumer goods. Disruptions from these three major partners could cause global commodity prices to soar, pushing inflation in the U.S. higher. U.S. stocks immediately plummeted—Dow Jones lost 800 points, Nasdaq fell by 3%—triggering a wave of selling off risky assets like cryptocurrencies, from Bitcoin to altcoins.
International reactions further intensified the situation. Canada immediately spoke out, with Prime Minister Justin Trudeau calling the decree an “unfair blow,” warning of significant losses to North American trade if no solution is found. Mexico expressed concerns as its automotive and electronics sectors—backbones of its economy—faced the risk of being strangled by the 25% tariff. China, with a total tariff of 20%, is expected to retaliate strongly, reigniting the U.S.-China trade war that never truly cooled.
These reactions not only increased pressure on the U.S. economy but also directly affected global financial markets. If Canada reduces wood exports, Mexico cuts car supplies, and China limits raw materials, inflation in the U.S. could force the FED to adjust interest rates, adding more pressure on stocks and cryptocurrencies. In this context, from Bitcoin to altcoins, investors hastily withdrew capital to seek safer havens.
Market Outlook After the Shock
Trump’s 25% tariff shock raises multiple scenarios for the cryptocurrency market in the coming period. In the short term, the outlook is bleak. Bitcoin risks breaking below $80,000—the lowest since November 2024—if panic persists. Altcoins, with lower liquidity, face even greater risks of deeper declines as investors turn away from risky assets to protect their capital. The instability from Canada, Mexico, and China’s reactions, combined with the FED Atlanta’s GDP forecast of -2.8%, further pressures the crypto market, making it difficult for it to recover quickly.
However, in the long term, there is still hope. If Trump’s decree achieves its goal of controlling drugs and smuggling, the U.S. economy might stabilize, creating conditions for Bitcoin and altcoins to rebound. Previously, the market had hoped for friendly crypto gestures from Trump, such as a national reserve fund, and if he reduces tensions with neighboring countries, confidence could return. But if the trade war escalates, with Canada, Mexico, and China retaliating strongly, the cryptocurrency market could enter a prolonged “winter,” pushing Bitcoin and altcoins into unprecedented difficulties.
Investors now need to closely monitor Trump’s moves and international reactions. A positive signal—such as a tariff delay or reconciliation talks—could be a lifeline for the market. Conversely, if tensions do not ease, Bitcoin and altcoins will face dark months, requiring patience and new strategies to weather this shock.
Trump’s March 2025 tariff lock-in has sent Bitcoin and altcoins into chaos, with the cryptocurrency market in disarray amidst tariff tensions and economic instability. International reactions have exacerbated the shock, leaving a future full of uncertainty. According to Digicash Blog, this is evidence that cryptocurrencies cannot withstand major policy “storms”; whether they will recover remains unanswered.