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Trump Ups the Ante on China While Bitcoin & Gold Shine Bright

Last Updated March 4, 2021 2:39 PM
Gerelyn Terzo
Last Updated March 4, 2021 2:39 PM

By CCN.com: China had to see this one coming. After China President Xi Jinping revealed his intentions to slap fresh tariffs on $75 billion in U.S. goods, President Trump raised the stakes, revealing in a tweetstorm that two could play that game. He decided to increase the tariff rate on $250 billion worth of Chinese goods to 30 percent from 25 percent. In addition, whatever was left on the $300 billion tariff list for Sept. 1 will now see a rate of 15 percent instead of 10 percent.

As Charles Schwab’s Chief Investment Strategist Liz Ann Sonders points out, this rift between the U.S. and China presidents is no longer just a “skirmish.”

Shine Bright

Stocks were already reeling before Trump’s tweetstorm, and now investors have the weekend to dread how bad things will be at the market open on Monday. Instead, investors have begun to turn their attention to a couple of other asset classes, including bitcoin – which seemingly is on its way to becoming a safe-haven asset – and established safe-haven asset gold. Those who haven’t done so yet would notice that bitcoin and gold are trading in the green.

The bitcoin price is hovering at $10,407, up approximately 2 percent after dipping below the $10,000 level yesterday.

Similar to bitcoin, the gold price has similarly pulled back recently in what some market strategists would describe as a correction. But today gold is trading like a true safe-haven asset, adding 2 percent to $1,526  with $1,600 within reach, gold bulls say.

Trump and Jinping aren’t the only ones disagreeing. Bitcoin and gold investors are generally at odds with one another, competing for the safe-haven mantle. The last time U.S./China tensions escalated, the bitcoin price provided little solace. This time around, it’s showing more maturity as an asset.

Before President Trump even revealed that he would lift the tariffs on China, Attorney Jake Chervinsky published a “list of reasons to hold bitcoin,” saying it “keeps growing.” President Trump’s tweets are included on the list alongside the hashtag #safetyinsats.

But what seems to rattle investors more than anything is not so much the size of the tariffs but the uncertainty tied to the trade war. It wasn’t too long ago that President Trump called President Jinping his friend, and now he apparently considers the Chinese president (not to mention Fed Chairman Jerome Powell) an enemy. How quickly things change.

Bitcoin and gold are watching from the sidelines but they are not trading at the whims of the trade war and, in fact, have proven to trade in mostly an uncorrelated manner to the stock market.