Crypto Markets Slide as Trump’s EU Tariff Threat Sparks Trade War Fears

Crypto markets faced a sharp decline Friday, shedding 4.3% of their value and losing over $100 billion in a single day, following U.S. President Donald Trump’s proposal for steep 50% tariffs on the European Union.

The announcement, which caught investors off guard, reignited concerns about a potential global trade war, sending waves through both digital and traditional financial markets. Bitcoin, the leading cryptocurrency, fell 4% after reaching an all-time high of $112,000 on Thursday. By Friday, its price had dropped to $107,000 as market sentiment shifted.

Ethereum, the second-largest cryptocurrency, saw a steeper decline, losing 5% of its value to trade at $2,553. Other major cryptocurrencies, including Solana and Dogecoin, experienced losses ranging from 4% to 8%, reflecting widespread unease among investors.

The President’s tariff proposal, announced as a response to what he described as unfair trade practices by the EU, added fuel to already tense negotiations between the two economic powers. Trump criticized the EU for its trade barriers and corporate penalties, accusing the bloc of exploiting the United States. In a post on Truth Social, he stated that the European Union was formed primarily to gain an advantage over the U.S. in trade and described ongoing discussions with European leaders as challenging.

The proposed tariffs, set to take effect on June 1, follow earlier import taxes imposed on April 2 targeting more than 50 countries, including European nations. While compromises have been reached with countries like the United Kingdom and China, negotiations with the EU have proven more contentious.

Global Markets Feel the Impact

The ripple effects of Trump’s announcement extended beyond cryptocurrencies, with European stock markets also taking a hit. The German DAX and French CAC indices each dropped 2% on Friday, reflecting investor concerns about the economic fallout of a potential trade conflict.

The interconnected nature of global markets amplified the impact, as fears of disrupted trade flows and higher costs weighed heavily on investor confidence. For cryptocurrency investors, the timing of the announcement was particularly jarring, coming just as Bitcoin and other digital assets had been riding a wave of optimism. The sudden shift underscored the vulnerability of cryptocurrencies to macroeconomic developments, particularly those involving major economies like the U.S. and the EU.

As negotiations between the U.S. and the EU continue, the prospect of a broader trade war hangs overhead. Investors are now closely monitoring developments, aware that any escalation could further disrupt markets. For now, the crypto sector remains on edge, with prices reflecting the uncertainty surrounding global trade relations.