Rumors of reduced US tariffs on China have sent ripples through the crypto market, sparking speculations of a potential uptrend. Influential voices like Bill Ackman have hinted at both China and the United States’ renewed thoughts on tariffs. This article studies the possibilities of Trump’s tariff easing and its potential impact on the crypto market.
US Tariff Easing: A Potential Boost for Crypto Market
American hedge fund manager Bill Ackman suggests that both the US and China are highly incentivized to reduce tariffs to more reasonable rates (10-20%). Reportedly, a pause in tariffs, such as for a 180-day period, could pave the way to negotiations, potentially boosting the crypto market. According to Ackman, reduced US tariffs could attract more companies to invest, likely increasing the adoption of cryptocurrencies.
How the US Tariffs Will Damage China’s Economy?
Ackman fears that the US tariff plans could significantly worsen the Chinese economy. This is more understood while analyzing the recent crypto market crash that followed Trump’s tariff announcement.
If the tariff persists, companies with supply chains in China will rapidly relocate to other countries like India, Vietnam, Mexico, and the US. Such a move could prompt companies to question China’s reliability for long-term sourcing and production. Ackman stated,
The longer tariffs persist, the more companies will relocate their supply chains out of China. This could lead to increased investment in countries like India, Vietnam, and Mexico. As Ackman notes, “the cake is already baked” – companies will no longer feel comfortable relying on China for a major portion of their supply chain.
In addition, tariffs are particularly damaging to small companies that rely heavily on China for goods and other services. It could also result in a prolonged uncertainty in the crypto market.
Thus, Ackman’s argument suggests that China’s long-term view in trade negotiations could be damaged by the US tariffs. Time is indeed on the US side, and China needs to negotiate a deal quickly to mitigate economic consequences. A pause in tariffs could be a step towards a mutually beneficial agreement. A tariff reduction could spark a bullish rally in the crypto market, echoing the positive sentiment seen after Trump’s recent comments on delaying tariffs.
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