Who is stirring up the global market? Analyzing the double slump in crypto and stocks under Trump’s new tariff policy

Author: Spicy Rich

Translation: TechFlow

Original Title: Trump Trade War Resurfaces: Macro Factors Behind the Dual Crash of Crypto and Stocks

Why did the stock market and cryptocurrencies crash today? — Bitcoin, Dow Jones Index, S&P 500 Index, and Nasdaq Index all plummeted.

The worst day since April.

Here are the main reasons behind the current market pain.

Main Triggers

U.S. President Trump posted on the social platform Truth Social, mentioning the possibility of imposing "massive" new tariffs on goods from China.

At first, I thought all this was over.

We all know, tariffs = stock market/crypto crash.

But unfortunately, it’s not over yet.

Tariffs are like extra taxes on imported goods, which make it more expensive for American consumers to buy products.

Trump stated that these tariffs could be as high as 60%, and even up to 100% for certain goods. He also mentioned the possibility of canceling his meeting with Chinese President Xi Jinping.

This news scared investors, as it sounded like the beginning of another major trade war between the U.S. and China.

Why Did Trump Say This?

This is a response to actions taken by China.

China has introduced new regulations restricting the export of rare earth minerals—these rare earths are crucial materials for manufacturing tech products such as computer chips, electric vehicle batteries, and even weapons.

In addition, starting from October 14, China imposed fees on U.S. ships docking at its ports, launched an antitrust investigation into Qualcomm, and stopped purchasing U.S. soybeans.

These measures have made American companies worry that their supply chains could be affected.

Many U.S. tech companies rely on Chinese components to produce products like smartphones, computers, and electric vehicles.

If rare earth minerals become difficult to obtain, production will slow down, costs will rise, and innovation will be hampered.

This has made investors concerned about future profits, leading them to sell off stocks in these industries.

Broader Economic Impact

Tariffs could trigger inflation—because companies will pass on the extra costs to consumers, causing prices to rise.

If trade shrinks, companies may reduce hiring or investment, and economic growth could slow down.

In the worst-case scenario, if the situation escalates, it could lead to a recession.

Another Contributing Factor

The U.S. government shutdown has entered its 10th day, adding to the uncertainty.

Without funding, key services are forced to pause, and important economic data (such as employment reports) will also be delayed.

This makes it difficult for investors and the Federal Reserve to make informed decisions, further intensifying overall concerns.

Why Was This Drop So Severe?

Trading mechanisms played a role.

When bad news arrives, automated trading systems and large investors quickly start selling.

This triggers "stop-loss orders"—automatic sell orders used to limit losses—which sets off a chain reaction and amplifies the market decline.

Short selling increased, algorithms triggered stop-loss orders, and options expiration further intensified the drop.

Concentrated positions in tech stocks were quickly unwound—a typical momentum reversal that occurs after a post-election market rally.

What Happens Next?

This could be a negotiation tactic ahead of the leaders' talks.

If the issues are resolved, the market may rebound.

But if tensions persist, expect continued market volatility, rising costs affecting everyone, and pressure on global economic growth.