Global markets turned risk-off on Tuesday after US Treasury Secretary Scott Bessent openly reaffirmed the Trump administration’s willingness to use tariffs as a primary geopolitical weapon. His statements reignited fears of trade-driven inflation just as crypto markets were showing signs of stabilization.
Bitcoin fell back below $90,000, while Ethereum slipped under $3,000, as investors reassessed macro risks following Bessent’s remarks at the World Economic Forum in Davos.
Tariffs Framed as Leverage, Not a Last Resort
Speaking at Davos, Bessent made clear that tariffs remain central to US foreign-policy strategy. He described them as an effective tool rather than a temporary measure.
The language signaled that the White House expects resistance from allies and is prepared to escalate if necessary. Markets interpreted this as confirmation that trade friction risks are rising again, particularly between the US and Europe.
Bessent also revealed a concrete timeline, noting that President Trump could impose a 10% tariff as early as February 1 if Denmark and allied countries refuse to cooperate on Greenland.
Beyond geopolitics, Bessent defended tariffs as economically effective and dismissed concerns that they would backfire domestically.
However, this stance clashes with recent research showing that US consumers absorb the vast majority of tariff costs.
New data from European and US economists indicates that tariffs act more like a hidden consumption tax, tightening household liquidity over time.
That dynamic matters for crypto. Reduced discretionary spending and higher price pressures directly weaken speculative capital flows, particularly into high-volatility assets.