Global Market Turmoil as Trump Launches Trade Tariffs: Dollar, Gold Soar, Bitcoin Faces Decline

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Investors Flee to Safe Assets Amid Growing Trade War Tensions

The financial markets have been sent into turmoil following U.S. President Donald Trump’s decision to impose tariffs on products from Canada, Mexico, and China. The move, which marks the beginning of what many are calling a "tariff war," has led to a surge in demand for traditional safe-haven assets like the U.S. dollar and gold, while the cryptocurrency market, particularly Bitcoin, faces significant losses.

On February 3, 2025, global financial markets braced themselves as Trump announced new tariffs to take effect on February 4. The tariffs include a 25% tax on Canadian goods, a 25% tariff on all Mexican products, and a 10% tariff on Chinese imports. In response, Canada has vowed to impose a 25% retaliatory tariff on approximately 155 billion CAD worth of U.S. goods, while Mexico has yet to reveal the full scope of its countermeasures. China, in turn, is expected to announce its own retaliatory steps in the coming days.

As the tariffs loom, investors are seeking refuge in more stable assets. The U.S. dollar has surged, reaching a 22-year high against the Canadian dollar, with the exchange rate climbing to 1.4793 USD/CAD. Meanwhile, the Mexican peso has also plunged, hitting its highest level against the dollar since November 2021, at 21.2924 MXN/USD.

The global gold market is seeing similar movement, as investors flock to the precious metal amidst the uncertainty. Gold futures for April delivery reached a record high of $2835 per ounce by the end of January, continuing its upward trajectory after surpassing $2800 earlier in the month. Experts predict that gold could reach $3000 per ounce by the end of 2025, driven by ongoing geopolitical tensions and economic instability.

Oil prices also saw a significant jump, with West Texas Intermediate (WTI) crude oil rising by 1.88% to $73.89 per barrel, and Brent crude up by 0.96%, reaching $76.4 per barrel.

However, the cryptocurrency market, particularly Bitcoin, is not immune to the effects of the ongoing trade war. As of February 3, 2025, Bitcoin’s price had dropped to $93,991, marking a 6.4% decline in just 24 hours. This follows a decline from its high of $105,000 at the end of January. Despite Bitcoin being viewed by many as a long-term hedge against inflation and economic instability, it is increasingly being seen as a risky asset in the short term. Analysts warn that, under the pressure of Trump’s tariff policies, Bitcoin could dip below $80,000, further challenging its appeal as a safe-haven investment in these turbulent times.

As the trade war unfolds, investors are keeping a close eye on how it will impact various asset classes and how these global tensions might shape financial markets moving forward.

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