Tariff shock: Could Trump initiative trigger a global recession?

​To push the global economy into a recession, it usually takes a truly massive shock. Since World War II, there have been only two such events — the 2008–2009 financial crisis and the COVID-19 pandemic in 2020. However, the tariffs introduced by Donald Trump on what he called “Liberation Day” may very well become the catalyst for another economic collapse.

"Liberation Day" and is trillion-dollar consequences

On April 2, U.S. President Donald Trump announced the introduction of “reciprocal tariffs” on all imports. Branded as “Liberation Day,” the initiative includes the following: a baseline 10% tariff on all imported goods into the United States, effective April 5. Starting April 9, “reciprocal tariffs” — higher rates targeting specific countries — will come into effect. Among the hardest hit are China (54%), Vietnam (46%), Japan (24%), South Korea (25%), and the European Union (20%). Certain goods, including automobiles and electronics, are subject to additional levies.

According to Evercore estimates, if the average tariff reaches 29%, the total annual cost to U.S. importers could exceed $1 trillion — or approximately $7,300 per household. This could lead to rising prices, product shortages, and a sharp drop in consumer demand.

Additionally, restricted access to the world’s largest consumer market could seriously impact export-dependent economies such as Germany, China, and Mexico. Given the complexity of global supply chains, even partial implementation of this tariff policy could cause significant disruptions worldwide.

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Global leaders respond

World leaders wasted no time reacting to Trump’s announcement. China denounced the tariffs as a violation of international trade norms. The Chinese Ministry of Commerce warned that the measures would cause serious disruptions to global supply chains and vowed to take countermeasures. Analysts cautioned that this move could further escalate U.S.-China trade tensions and add inflationary pressure to the American economy.

Canada responded with strong criticism as well. Prime Minister Justin Trudeau pledged to defend the interests of Canadian workers and hinted at potential retaliatory tariffs.

Taiwan, which is now subject to a 32% tariff (excluding semiconductors), expressed regret over the decision and said it would seek direct talks with Washington. Taiwanese authorities also noted that earlier U.S. technology restrictions on China had contributed to the trade imbalance that Trump now seeks to resolve through tariffs.

European Commission President Ursula von der Leyen commented on the U.S. actions:

“This is a major blow to the world economy. The global economy will suffer significantly, uncertainty will increase, and protectionism will intensify. The consequences will be dire for all,” she said.

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Market panic

The market reacted immediately: futures on the Dow, Nasdaq, and S&P 500 dropped between 2% and 4% before the trading session even opened. European and Asian indexes followed suit, also heading downward. In the foreign exchange market, the U.S. dollar strengthened as investors fled to safe-haven assets, while gold surged to new highs.

Analysts at JPMorgan believe that if the current U.S. rhetoric continues without negotiations, the trade confrontation may escalate into a full-scale economic war. In that case, global GDP in 2025 could decline by 1.5–2% compared to current forecasts, with the recession affecting the U.S., EU, and Asian economies.

Trump’s tariffs hit crypto

Initially, the cryptocurrency market responded positively to the announcement of a 10% base tariff, as investors viewed it as a sign of a moderate approach. However, once the full scope of the initiative became clear — including significantly higher rates for specific countries — market sentiment quickly turned. A broad sell-off followed.

Ethereum dropped by more than 6%, falling from $1,930 to $1,800. The total crypto market capitalization shrank by 5.3% to $2.7 trillion. The Crypto Fear & Greed Index fell to 25, signaling “extreme fear” among investors.

Bitcoin briefly rallied to $88,500 but then lost over 5%, dropping to around $82,800. Later, prices began recovering some losses. As of the morning of April 3, Bitcoin had rebounded to $83,200, while Ethereum climbed back to $1,800.

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This recovery may indicate that, despite the pressure, the market retains resilience and adaptability. At the same time, some investors see the correction as an opportunity to enter positions at lower prices.

Mining under pressure

The new tariffs have become a serious threat to Bitcoin mining. ASICs — the specialized devices required for mining — are predominantly manufactured in China and Taiwan. The increased tariffs are expected to raise their prices and complicate logistics.

It’s important to remember that block rewards remain fixed and do not allow miners to offset rising operational costs. In the short term, this could lead to market consolidation and an increase in the share of larger players.

“Rising ASIC prices may force some U.S. miners out of the market and reduce network difficulty — potentially increasing profitability for those who can survive,” says Darcy Dobaras, CFO of Hive Digital.

Could this be an opportunity?

Despite widespread pessimism, some market participants see potential upside in the current developments. The exit of weaker players could improve overall mining efficiency. At the same time, rising tariff revenues may allow the U.S. government to purchase more Bitcoin through a budget-neutral strategy — one that doesn’t rely on taxpayer funds.

If part of the tariff income is allocated toward building a sovereign cryptocurrency reserve, it could become a new tool for strengthening financial resilience.

Some investors also believe that the growing economic uncertainty and a weakening dollar will drive renewed interest in decentralized assets like BTC. This could benefit the crypto market in both the medium and long term.

What’s next?

Will the new tariffs remain a political maneuver or evolve into a systemic policy with long-term consequences? That remains to be seen. What’s already clear, however, is that the unfolding trade confrontation between the U.S. and the world’s largest economies could fundamentally rewrite the rules of global commerce.

The uncertainty created by these tariffs is forcing investors to reassess their strategies. Some are betting on short-term volatility, while others are preparing for structural shifts in the global economy. Given current trends, international trade, cross-border supply chains, and sensitive industries such as automotive and technology are all in the high-risk zone.

For the crypto market, this moment represents not just a challenge, but also an opportunity. Despite the pullback, the market has gained much-needed clarity: institutional players now better understand the scope and intent of the new policy. This opens a window of opportunity — both for strategic entry at lower valuations and for rethinking the role of decentralized assets.

In the long term, these tariffs might even work in favor of certain cryptocurrencies — positioning them as alternative assets beyond the control of governments and central banks.