The Trump administration introduced new tariffs and expanded existing ones, which resulted in increasing trade tensions among major partners like China, the European Union, and Mexico. Global financial markets are significantly impacted by these actions, which causes increased economic uncertainty and volatility. These tariffs are aimed at a range of products, from aluminium and steel to cars and various electronic components. Unsurprisingly, some countries have responded with counter-tariffs on US exports, which could potentially trigger a big trade war.

This back-and-forth has resulted in increased trade barriers, which are slowing down economic growth—a trend that’s evident in recent macroeconomic indicators, including the Conference Board consumer sentiment index. Consequently, forecasts for US GDP growth have been adjusted downward due to the impact of these tariffs. The automotive sector, which relies heavily on imported parts, is also feeling the pinch, with Ford Motor Co. recently announcing a significant cut in expected dividends.

How trade barriers are turning Bitcoin into a global safe haven

Donald Trump’s recent actions prove that his attitude towards his tariffs is very consistent and goal-oriented, which has sparked a ‘contrarian’ positive outlook for cyclically resistant investment assets, where Bitcoin (BTC) occupies a special position. With rising tariffs and inflation worries, more people are turning to alternative, discorrelated assets, which are broadly viewed as a safeguard against both inflation and impending economic instability in general. 

Historically, Bitcoin has proven to be quite resilient during tough economic times. For instance, during market upheavals—like the banking sector turmoil we saw in 2023 following the collapse of Silicon Valley Bank—Bitcoin evidently experienced price surges, hinting at a “flight to safety” trend being formed robustly and meaningfully. However, to date, such trends remain mostly perceptional and, therefore, unfortunately, hard to quantify and algorithmize. 

Having said that, the fact that the US is still at the forefront of various innovative efforts in cryptocurrency and AI somewhat mitigates the broader implications of the tariff situation. Recently, Senator Cynthia Lummis (R-WY) put forth a legislative proposal suggesting that the US should acquire one million BTC, representing about 5% of the total fixed supply. This initiative is expected to spark a new wave of significant activity in the crypto market.

The combination of supportive government policies for crypto and the expectation of more tariff actions will likely create a complex but potentially very favorable market sentiment for Bitcoin. Once again, investors, swayed by these developments, are starting to see Bitcoin as a safe haven with the potential for sustained growth in a post-tariff landscape. The current market vibe, shaped by Trump’s tariff strategies and the prospect of long-term shifts, makes Bitcoin look like a low-downside-high-reward investment opportunity.

AI and robotics: Winners in the tariff war

Meanwhile, AI-aided automation and robotics are on the rise as increasing import costs from China push American manufacturers to cut labor costs. Similarly, countries like Vietnam and India are reaping the benefits as global companies relocate their manufacturing operations from China to avoid tariff-related expenses. Additionally, I see a lot of promise in sectors like AI, nuclear energy, and other manufacturing industries, which have the chance to set up operations in the United States.

Integrating AI and automation within manufacturing industries can drive greater adoption of Bitcoin as a secure and efficient method of financial transactions, incorporated into metaverse and web3 ecosystems. Furthermore, the demand for AI technologies to support automated processes will likely surge, presenting new investment opportunities in the AI sector. Most importantly, the synergy between AI-aided automation, robotics, Bitcoin, and AI investments has the potential to reshape the future of the manufacturing and technology industries, which will drive even more attention to Bitcoin.

Tariffs, trade wars, and rising risks: What investors should watch out for

Trade barriers may—at least initially—disrupt certain supply chains, increase business costs, and reduce export demand due to retaliatory tariffs. Instability in one major market or economy due to trade tensions can spill over to other countries and regions, creating a global ripple effect. This can lead to lower investment, reduced hiring, and overall slower economic expansion, potentially even triggering a recession where gold and alternative assets like Bitcoin would definitely play special risk aversion roles, making their increasingly anti-correlative Betas more and more attractive for ordinary investors to “join the club.”

It is important to keep the focus on the long term and invest in industries with high potential, such as AI, nuclear energy, healthcare, and rare earth metals. There may be some transitory, recoverable meltdown because the market is overvalued due to years of way-too-buoyant liquidity and overrated optimism. Still, if companies decide to quickly move to make production in the US and replace costly outsourcing, they have a great future due to the huge domestic market in this world’s largest economy.

To navigate the challenges of this shaky market, both private investors and institutions can use a variety of diversification strategies. One effective approach is asset class diversification, which involves spreading investments across different types of assets like stocks, bonds, real estate, commodities, and certainly alternative options like Bitcoin and other cryptocurrencies. Additionally, it’s important to consider both developed and emerging markets while using various investment strategies—like value investing, growth investing, or dividend investing—which normally yield different results in different market conditions. 

Final words

Currently, the market’s reaction to Trump’s tariffs suggests that Bitcoin is becoming more discorrelated to broader macroeconomic and geopolitical factors and, hence, more appealing regarding both asset-protection and investment portfolio hedging purposes. Historically, Bitcoin demonstrated notable resistance to economic cycles and episodes of banking system instability. Now, it offers a legitimate test of its suitability as a risk aversion tool for real-world economic troubles. Its inclusion in the U.S. strategic reserve further underpins this thesis.

John Murillo

John Murillo is the chief dealing officer of B2BROKER, a global fintech solutions provider for financial institutions. John is a seasoned trading professional with more than 20 years of experience in capital markets. Throughout his professional life, John has managed broker-dealer business, performed risk management for trading desks with high volumes, and worked with institutional clients worldwide to deliver tailored liquidity solutions. He has been part of B2BROKER since its early days, ensuring the company grows and functions effectively. At B2BROKER, he is responsible for all the facets of liquidity, ensuring client setups are seamless before going live and enhancing internal risk management procedures. Treasury operations, creating strategic services, and expanding international market presence are also among his duties.