The Impact of Trump's "Liberation Day" Tariffs on April 2: Price of XRP, BTC, SOL Rise Up?

Financial markets showed positive signs early Monday following reports suggesting that the upcoming tariffs announced by former President Donald Trump—set to be implemented on April 2—might be more measured than initially expected.

Bitcoin traded at around $87,280, marking a 3.49% increase over a 24-hour period, while Solana's SOL token surged nearly 6.52% to $140.06.

These gains reflect an improved risk appetite, fueled by speculation that the tariffs may be more targeted rather than broad-based.

Key economic events in the coming days include Friday's release of the Personal Consumption Expenditures (PCE) index, the Federal Reserve's preferred inflation gauge, and the Senate Banking Committee’s hearing with SEC nominee Paul Atkins and Comptroller of the Currency nominee Jonathan Gould on March 27.

Market participants are closely watching these developments, as they could further influence sentiment leading up to Trump's tariff announcement.

The "Liberation Day" Tariffs: A Pivotal Economic Event

Trump has positioned the April 2 tariff rollout as a significant milestone, dubbing it "Liberation Day". The tariffs are expected to target nations that impose trade restrictions on the United States, aligning with Trump’s long-held stance on trade fairness.

According to economic analyst Alex Krüger, the significance of this event could surpass any Federal Open Market Committee (FOMC) meeting, with potential market reactions varying from a sharp rally to a steep decline, depending on the final details of the tariff policy.

While Trump’s previous tariff measures in February caused widespread market volatility—dragging down stocks and cryptocurrencies—there is cautious optimism that the upcoming tariffs will be more selective.

Officials close to the matter suggest that the new measures may not encompass all industries and could provide exemptions for key trading partners. This targeted approach may help mitigate some of the fears of an all-out trade war.

The Impact of Past Tariff Announcements on Markets

Historical trends suggest that markets react sharply to tariff policies. In February, Trump introduced a 25% tariff on Canadian and Mexican imports and a 10% tariff on Chinese goods, causing an immediate 8% drop in the total cryptocurrency market capitalization.

Bitcoin plummeted from around $105,000 to nearly $92,000. Similarly, U.S. equities suffered, with the S&P 500 declining by 7% and the NASDAQ falling 10% amid inflationary concerns and recession fears.

If the "Liberation Day" tariffs follow a similar trajectory, extreme volatility could ensue, particularly in risk-sensitive assets like cryptocurrencies and technology stocks.

Economists warn that a broad tariff implementation could lead to a 10-15% market correction, exacerbating financial instability.

The Global Response to Trump's Trade Policies

The anticipation of the tariffs has already stirred reactions from major global economies. Chinese Premier Li Qiang has indicated that Beijing is preparing for "shocks that exceed expectations."

Australian Treasurer Jim Chalmers described Trump's approach as "seismic," highlighting the potential for significant economic disruptions.

Meanwhile, Mexico’s President Claudia Sheinbaum has taken proactive steps to de-escalate tensions by collaborating with the U.S. on immigration and drug control measures.

However, analysts believe these efforts may only provide temporary relief, as Trump's broader trade agenda remains aggressive.

The Federal Reserve’s Stance on Tariffs and Inflation

Despite Trump's tariff strategy, the Federal Reserve has maintained a dovish stance, retaining its forecast for two interest rate cuts this year.

The Fed views the inflationary effects of tariffs as transitory and believes that rate cuts will help stabilize the economy.

However, the central bank has acknowledged an increase in economic uncertainty due to the impending tariff measures.

The Road Ahead: Market Speculation and Policy Uncertainty

As April 2 approaches, investors are grappling with the potential outcomes of the tariff announcement. Some experts suggest that Trump may include sector-specific tariffs targeting industries such as automobiles, semiconductor chips, pharmaceuticals, and lumber.

If auto tariffs are included, they could significantly impact global supply chains, particularly for European and Japanese manufacturers.

While Trump has hinted at possible exemptions for certain allies, the specifics remain unclear.

Kevin Hassett, Director of Trump’s National Economic Council, has downplayed fears of widespread tariffs, suggesting that the market is overestimating their impact. However, uncertainty continues to loom over global trade and financial markets.

Conclusion: A Defining Moment for Trade Policy

Trump’s "Liberation Day" tariffs mark a pivotal moment in U.S. trade policy, with far-reaching implications for global markets. Whether these tariffs will be narrowly focused or broadly applied remains to be seen.

If they are implemented aggressively, they could fuel economic turbulence, while a more measured approach might reassure investors and stabilize financial markets.

With cryptocurrencies and equity markets responding to every development, traders and policymakers alike are preparing for potential volatility.

As the world awaits Trump's final decision on April 2, the balance between economic protectionism and market stability hangs in the balance.