The threat comes after China’s Ministry of Commerce quietly expanded export controls over rare earth minerals on Thursday.
Bitcoin Tumbles as Trump’s Tariff Threat Sparks Market Sell-Off
Donald Trump’s words can move markets, and that’s exactly what happened on Friday morning when the president warned China it would face “a massive increase of tariffs” if it followed through on its plot to expand export controls on rare earth minerals. Bitcoin saw a precipitous 2.53% drop on the news, and stocks also slid into the red.
“They want to impose Export Controls on each and every element of production having to do with Rare Earths,” Trump wrote, before explaining how his administration plans to counter China’s move. “One of the Policies that we are calculating at this moment is a massive increase of Tariffs on Chinese products coming into the United States of America.”
China quietly announced an expansion of its rare earths export controls on Thursday, just weeks before the country’s president, Xi Jinping, is set to meet with Trump in South Korea for the Asia-Pacific Economic Cooperation (APEC) summit, which kicks off at the end of October. Many see China’s move as a strategic play to gain leverage before the meeting.
The East Asian nation is the world’s largest producer of rare earths, boasting 90% of global production. The minerals in question are used in a wide variety of key products such as electric vehicles, smartphones, and medical devices. Export controls require companies to first receive government permission before selling goods containing rare earths outside of China. Thursday’s announcement by the country’s Ministry of Commerce applied those controls to five more minerals.
But now, with Trump fuming over the announcement, the long-awaited meeting in South Korea may not take place, and Trump’s tariff threat, if actually implemented, may have negative ramifications on the economy and on bitcoin.
“I never thought it would come to this but perhaps, as with all things, the time has come,” Trump said. “Ultimately, though potentially painful, it will be a very good thing, in the end, for the U.S.A.”
Overview of Market Metrics
Bitcoin was down 2.53% at $117,655.04 at the time of writing, according to Coinmarketcap data. The cryptocurrency was also down 3.61% over seven days and has been fluctuating between $117,624.44 and $122,509.66 since Thursday.
Twenty-four-hour trading volume rose 6.48% to $77.09 billion, and market capitalization fell 2% to $2.35 trillion. Bitcoin dominance, however, climbed 0.17% to 59.46% at the time of reporting.
Total bitcoin futures open interest dropped 2.76% to $87.02 billion based on data from Coinglass. Bitcoin liquidations rose to a total of $180.98 million, with longs taking a $140.20 million hit due to Friday morning’s sudden sell-off. Short sellers made up the remaining portion of liquidations, losing a smaller but still significant $40.78 million.