Bitcoin and Other Cryptocurrencies Slump as Trump's New Trade War Emerges

The price of Bitcoin has taken a dive as President Donald Trump's new trade war with Canada, Mexico, and likely China has cryptocurrencies slumping.

The price of Bitcoin took a hit on Monday as President Donald Trump’s new trade war with Canada, Mexico, and likely China had cryptocurrencies slumping.

Over the weekend, Trump announced new taxes on imports from the U.S.’s top trade partners. Imports from Canada and Mexico will be taxed at 25 percent, while Chinese goods will be taxed at 10 percent. Trump made an exception for Canada’s energy exports, which the U.S. heavily relies on, and issued a lower 10 percent tariff.

He also reiterated a threat to issue tariffs on imports from the European Union, which said it would “respond firmly” to any action. Canada has already announced its own retaliatory tariffs on U.S. goods, starting with a 25 percent tariff on $20.4 billion in goods. Mexico said it will announce retaliatory tariffs but has not released any further details. China has said it would challenge the tariffs at the World Trade Organization.

While cryptocurrencies aren’t directly impacted by tariffs, they can be affected by the economic uncertainty that can arise as a result. During such times, investors are more likely to want to snatch a profit when they can from volatile assets and opt for more stable alternatives.

Bitcoin has shed 2,622 points, or 2.68 percent, to $95,059. Just a few days ago, Bitcoin was valued at over $105,559. Tesla CEO and senior Trump adviser Elon Musk’s favorite meme coin, Dogecoin, is down nearly 5 percent, and the president’s own $TRUMP meme coin—which he announced late last month—has fallen nearly 16 percent. First Lady Melania Trump’s own meme coin, $Melania, is down 12 percent.

Ethereum is down nearly 10 percent, Solana has fallen 7 percent, and XRP has dropped 8 percent. Cardano is also down over 11 percent. The global cryptocurrency market capitalization fell 8 percent over the last 24 hours, according to CoinGecko.

Shares of crypto exchange operator Coinbase (COIN), which has been on a recent Bitcoin buying spree, have seen its stock shed more than 7 percent in pre-market trading.

It’s not just crypto that’s sinking. The Dow Jones Industrial Average and S&P 500 are set to open lower when the market begins.

“These announcements have come as a shock to many investors who expected tariffs would only be imposed if trade negotiations failed,” Goldman Sachs (GS) said in a note to clients on Monday.

Goldman estimates that Trump’s tariffs would knock its S&P 500 earnings per share down by about 1 percent to 2 percent for every 5-percentage-point increase in the tariff rate. Without factoring in any secondary impacts, the bank sees a 2 percent to 3 percent hit to S&P 500 companies’ earnings per share.