Markets enter ‘new phase’ amid tariff hikes and macroeconomic uncertainty

Cryptocurrencies and tech stocks have entered what analysts are calling a “new phase” of the global trade war, as tensions between the United States and China surge following the White House’s announcement of sweeping new tariffs on Chinese imports. Market observers say the reaction has less to do with industry-specific developments and more with broader economic uncertainty and fragile investor sentiment.

New Tariff Measures Spark Market Jitters

The White House, in a fact sheet published on April 15, revealed that some Chinese imports could be subjected to tariffs as high as 245%. The measures include a 125% reciprocal tariff, a 20% tariff aimed at addressing the fentanyl crisis, and Section 301 tariffs ranging from 7.5% to 100% on selected goods.

These sweeping penalties mark a sharp escalation in the ongoing trade dispute between the world’s two largest economies, with market analysts warning that high-value sectors such as tech and pharmaceuticals are now firmly in the crosshairs.

Crypto and Equities Highly Correlated

According to Aurelie Barthere, Principal Research Analyst at crypto intelligence platform Nansen, the crypto and equities markets are now experiencing a new dimension of the trade war. “We are now in a new phase of the trade war, with the focus on high-added-value sectors, Tech (and Pharma), and the zeroing in on US-China,” she told.

Barthere added that US and non-US equities, along with crypto, have been closely correlated since November 2024, a relationship that has only intensified during the current market correction. “Investors are de-risking, especially expensive assets,” she explained.

Hope for Recovery Hinges on Diplomacy

While markets remain volatile, Nansen analysts predict a 70% chance of a bottoming-out by June 2025, provided tariff negotiations take a more conciliatory tone. The recent appointment of Li Chenggang as China’s new chief trade negotiator has added another layer of interest. Chenggang, known for his hardline stance and prior experience dealing with the Trump administration, is expected to play a key role in shaping the next phase of US-China trade discussions.

All Eyes on Powell and Fed Policy

As inflationary pressures persist and geopolitical risks mount, attention is now turning to US Federal Reserve Chair Jerome Powell’s upcoming address at the Federal Open Market Committee (FOMC) meeting on May 6.

Market participants are anxiously awaiting any signals regarding the central bank’s stance on interest rates. Analysts at Bitfinex note that a hawkish tone could further dent risk assets like Bitcoin, while a neutral or balanced message might help soothe investor nerves.

“Crypto is reacting to macro news not because fundamentals have changed, but because positioning is thin and confidence is sensitive,” Bitfinex analysts said, highlighting the recent 30–40% rebound in lower market cap crypto assets.

In the weeks ahead, investor focus is likely to remain fixed on global trade developments, central bank policy, and the fragile balancing act between risk and recovery.