Canada’s 50% US Tariffs to Shake Crypto Market as Trade War Escalates

Canada has retaliated against the United States with tariffs of up to 50% on different American goods. Affecting about $27.6 billion worth of US products, including steel, aluminium, electronics, and household goods, the tariffs have further escalated the already strained relationship between the two countries. Amid this escalating trade war, the crypto market has found itself in a difficult situation, with the growing tensions poised to influence investor sentiment.

How will the US-Canada trade war impact the crypto market?

Canada’s retaliatory tariff measures have started taking effect today, covering about $27.6 billion in US imports. The move follows the Trump administration’s decision to impose 50% tariffs on $20 billion worth of Canadian goods. In response, Canada took action to match the US tariffs “dollar for dollar.” Canada’s Prime Minister Mark Carney stated, “We’re ready to sit down and and strike that deal when the Americans are ready.”

Canada’s US tariffs range from 15% to 50% depending on the nature of products. For example, US goods such as milk, perfume, video game consoles, golf clubs, fishing rods, steel, aluminum, jackets, and T-shirts will have an import tax of 50%. On the other hand, products like cheese, carpets, stoves, and air conditioners will face a 25% duty. Forklifts and industrial molds will be subject to a 15% tariff.

Notably, the tariff’s impact on the crypto market is mainly based on investor sentiment. While the trade war escalates, investors may take a more cautious stance on risky assets like Bitcoin. Thus, during increased trade tensions, traders may reduce exposure to the crypto market, putting pressure on digital asset prices.

Fresh disputes further strain US-Canada dispute

Significantly, the trade tensions between the US and Canada are showing no signs of cooling down. Earlier this month, US Trade Representative Jamieson Greer had issued a warning against Canada, hinting at a possible ban on certain Canadian products if the country further retaliates.

Another major incident occurred on Monday, when US President Donald Trump threatened to stop American business with the Canadian aircraft maker Bombardier. If the company wants to continue its ties with the US, it is required to move its manufacturing operations to the United States.

In addition to these moves, the US has criticized Canada several times. In his Truth Social posts, Trump has described the Canada-US exchange rate as “unacceptable.” Another post included a map showing Canada, Mexico, and Greenland under the US flag. This means that the US is increasingly becoming aggressive about its neighbouring countries amid the escalating trade war.

Why did the crypto market lose momentum?

Following days of positive trend, the crypto market has once again fallen to the bearish zone, with top assets losing their momentum. Currently, the global crypto market is valued at $2.68 trillion, down by about 0.5% in a day.

Major coins like Bitcoin, Ethereum, and XRP are also showing a notable downtrend. Bitcoin had managed to stay above the critical $80k for several days. But now, the sentiment has changed, with BTC slipping to $78,868, falling by about 1% over the past 24 hours. Although Ethereum and XRP haven’t experienced notable falls, their current prices are significantly lower than the recent highs.