Donald Trump has once again struck the market with a fresh spree of tariffs. The US president has levied 25% tariffs on the European Union, followed by deploying an additional 10% tariffs on China. Minutes after the aforementioned tariff announcement, the cryptocurrency market felt the aftereffects of it, with Bitcoin plunging below $80K price levels. Are Trump’s tariff spree ideations spelling trouble for the US economy? Let’s find out.
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Trump’s Tariff Strategy: A Blunder or a Boon?
Donald Trump is currently on an aggressive tariff spree. The 47th US president is currently busy imposing tariffs on nations, levying 25% and 10% tariffs on imports from the EU and China, respectively. Trump’s tariff decision had a massive global effect, with markets tumbling down due to the rising trade war fears.
At the same time, Trump has also levied taxes on Mexico and Canada, sparking issues for US automakers.
Per a post by the Kobeissi Letter, the United States’ decision to impose tariffs is especially concerning for the US economy automakers as it would raise costs for the auto manufacturers. For instance, this tariff would end up adding $3000 to some 16 million cars sold in the US each year.
At the same time, the tariff will also be impacting the food prices, as Mexico is responsible for supplying nearly 60% of the fresh produce to the US.
“For example, a 25% tariff on Canada and Mexico raises costs for US automakers. This tariff would add ~$3,000 to the price of some of the ~16 million cars sold in the US each year. Food costs are set to rise as well, with Mexico supplying over 60% of fresh produce to the US.”
What’s even more telling is the Volatility Index, $VIX.
Even as the S&P 500 has traded near or at all time highs this month, the $VIX has been rising.
It’s now up over +30% since February 14th and continues to rise.
Volatility is here to stay. pic.twitter.com/10Il5aSrpI
— The Kobeissi Letter (@KobeissiLetter) February 26, 2025
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Volatility Index Peaks to New High
The Volatility Index, popularly referred to as the VIX index, has also peaked at a high of -30% since February 14, 2025.
The VIX index generally measures how much the market is going to fluctuate in the next 30 days.
“What’s even more telling is the Volatility Index, $VIX.Even as the S&P 500 has traded near or at all-time highs this month, the $VIX has been rising. It’s now up over +30% since February 14th and continues to rise. Volatility is here to stay.”
What’s even more telling is the Volatility Index, $VIX.
Even as the S&P 500 has traded near or at all time highs this month, the $VIX has been rising.
It’s now up over +30% since February 14th and continues to rise.
Volatility is here to stay. pic.twitter.com/10Il5aSrpI
— The Kobeissi Letter (@KobeissiLetter) February 26, 2025
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