The EU plans to impose 93 billion euros in tariffs on the US and Canada, and the crypto market faces geopolitical shocks.

A European Union diplomat revealed that if the EU and the United States fail to reach an agreement, retaliatory tariffs will automatically take effect from February 6. European Council President Charles Michel stated that the EU is “ready at any time to defend itself against any form of coercion.”

Financial markets responded swiftly, with European Stoxx 50 index futures down 1.3%, S&P 500 futures down 0.8%, as investors flocked to safe-haven assets such as gold and the Swiss franc.

01 Event Background: Greenland Dispute Sparks Escalation of Trade Conflict

The US-EU trade dispute stems from Trump’s obsession with Greenland. On January 17, Trump announced on social media that starting February 1, a 10% tariff would be imposed on US-bound goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland.

The US president claimed that the tariff rate would increase to 25% from June 1 until the parties reach an agreement on the US’s “comprehensive and thorough purchase of Greenland.”

In response, several European countries announced they would send troops to Greenland to participate in Denmark-led military exercises called “Arctic endurance.” This move further intensified tensions, prompting the Trump administration to threaten more severe trade measures.

Eight European countries issued a joint statement criticizing the US threat to raise tariffs, saying it undermines transatlantic relations and could lead to a dangerous vicious cycle. Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden, and the UK jointly signed this statement.

02 EU Counterattack: €93 Billion Tariff List to Take Effect Soon

Facing Trump’s tariff threats, multiple EU countries are considering imposing tariffs on €93 billion worth of US goods or restricting US companies’ access to the EU market.

This tariff list was drafted last year but was temporarily suspended to avoid a full-scale trade war between the US and EU, with the suspension valid until February 6. On the 18th, representatives from the 27 EU member states held a meeting at the EU headquarters to discuss whether to restart the list and whether to activate counter-coercion tools.

A European diplomat described Trump’s strategy as “pure mafia tactics,” but the EU hopes to call for calm publicly and give Trump a “way down.”

European Commission President von der Leyen posted on social media that she had calls that day with NATO Secretary General Stoltenberg, French President Macron, UK Prime Minister Stamer, German Chancellor Mertz, and Italian Prime Minister Meloni.

03 Market Volatility: Traditional Finance and Crypto Markets Under Dual Pressure

Trump’s tariff threats immediately triggered a chain reaction in financial markets. European Stoxx 50 futures fell 1.3%, and S&P 500 futures dropped 0.8%.

Automaker stocks were hit hard, with Porsche, Volkswagen, and Mercedes-Benz Group shares all falling more than 3%. Citigroup strategists estimate that a 10% tariff on Europe could reduce European earnings per share by 2 to 3 percentage points.

For the cryptocurrency market, this geopolitical tension also has a significant impact. The risk-averse sentiment in traditional markets often spills over into the crypto space. Although cryptocurrencies are sometimes viewed as safe-haven assets, during periods of large-scale risk aversion, they may also face selling pressure.

As of January 19, mainstream cryptocurrencies experienced price fluctuations. Please note that the following are general market price trends, Gate exchange users should check the platform’s real-time data for accurate quotes:

• Bitcoin (BTC): Showing oscillating trends, with market closely watching geopolitical developments
• Ethereum (ETH): Price volatility increased, with trading volume significantly up within 24 hours
• Other major tokens: Most exhibit risk asset characteristics related to stock markets

04 Trading Strategies: Risk Management and Diversification

During this period of geopolitical uncertainty, investors need to adjust their trading strategies to cope with potential market volatility.

Closely monitor changes in correlation between traditional markets and crypto markets. Historical data shows that under extreme risk-averse sentiment, cryptocurrencies may become more correlated with traditional risk assets.

Consider increasing stablecoin allocations as a buffer during market turbulence. Stablecoins can serve as a temporary “safe harbor,” helping to maintain some asset value amid sharp market swings.

Pay attention to risk-hedging assets on the Gate platform. Some cryptocurrencies, such as Bitcoin, have historically shown correlations with traditional safe-haven assets like gold, which warrants special attention during turbulent times.

Set reasonable stop-loss and take-profit points. During periods of high geopolitical risk, markets may experience extreme volatility, making risk management crucial.

The specific impact of geopolitical tensions on the crypto market depends on how traditional investors position crypto assets. If investors see crypto purely as speculative risk assets, geopolitical risks may lead to capital outflows from the crypto market.

Geopolitical Impact Analysis on Crypto Markets

05 Historical Comparison: Performance of Crypto Assets During Trade Conflicts

Looking back at recent trade tensions, cryptocurrencies have shown complex price behaviors. During the US-China trade war of 2018-2019, the crypto market experienced sharp fluctuations, with Bitcoin’s price fluctuating over 10% in a single day.

Unlike traditional safe-haven assets like gold, cryptocurrencies have not yet established a consistent safe-haven property. In some geopolitical crises, crypto prices rose; in others, they declined in tandem with stocks and other risk assets.

If the EU’s countermeasures are implemented, they could have far-reaching effects on global trade. According to Bloomberg Economics research, if Trump enacts a full 25% tariff threat, target countries could see up to a 50% reduction in US exports, with Germany, Sweden, and Denmark being most affected.

06 Long-Term Perspective: Geopolitical Risks and the New Normal for Crypto Markets

Geopolitical risks have become an unavoidable factor in the crypto market. For long-term investors, understanding how these macro forces shape the future of crypto assets is crucial.

ING Chief Investment Strategist Vincent Juvyns said, “If we look strictly at the increased tariffs, the economy can absorb it, but the potential for division within the Western world could bring consequences of an unmeasurable scale.”

The crypto market may be forming a new pricing model where geopolitical risk premiums become an important component of asset prices. As crypto assets become increasingly linked with traditional financial systems, this correlation may further strengthen.

Future Outlook

EU Trade Commissioner Dombrovskis held an emergency meeting with US Trade Representative Tai, attempting to find a solution before the tariffs take effect on February 1. Von der Leyen also stated on social media that the EU remains willing to engage constructively with the US on all issues of mutual concern.

The Davos World Economic Forum opened on January 19, where world leaders will discuss trade, security, and geopolitical tensions. Trump will meet face-to-face with several leaders of countries he has targeted for tariffs. An EU diplomat said, “Ultimately, tariffs are a blunt instrument, hurting both sides.”