China has declared that it will sharply increase tariffs on certain US imports from 34% to 84%, with this change taking effect on April 10 at 12:01 P.M. local time.
This significant escalation is a direct reaction to the US government’s recent move to hike tariffs on Chinese products just two days prior.
The Chinese authorities stated:
“The US’s approach of escalating tariffs against China is another error that seriously violates China’s legitimate rights and interests while undermining the rules-based multilateral trading system. “
The announcement had minimal effect on Bitcoin, which is currently trading at $76,298, experiencing a 4% decline in the last 24 hours.
Is China considering a shift from US dollars to Bitcoin?
At the same time, China is not only responding with tariffs but is also taking subtle actions within the financial landscape.
Reports suggest that the People’s Bank of China (PBOC) has directed major state-owned banks to cut back on purchasing US dollars, particularly for domestic trading.
Moreover, there are increasing indications that China might start liquidating its US Treasury holdings.
China remains the second-largest foreign holder of American debt instruments, with assets exceeding $760 billion. A significant sell-off could lead to increased borrowing costs for the US, especially with a Treasury auction approaching.
Venture capitalist Chamath Palihapitiya proposed that the rumored asset sales could be a tactical ploy to create uncertainty. However, he recognized that should China follow through, the implications could be considerable, potentially leading the US to postpone its bond issuance.
As traditional markets brace for additional volatility, investors are exploring alternative avenues for security.
Bitcoin, frequently regarded as a safeguard during financial upheaval, is back in the spotlight. Analysts suggest that prolonged trade conflicts and diminishing trust in fiat currencies could drive more funds into digital assets.
Sina G, co-founder of crypto investment firm 21st Capital, remarked:
“Bitcoin isn’t just a hedge anymore. It’s evolving into a necessity in a world seeking stability beyond the dominion of any one nation.”