US Treasury Secretary Revives Trade-War Inflation Risk at Davos as Crypto Sinks

Core Viewpoint - Global markets are experiencing a risk-off sentiment due to US Treasury Secretary Scott Bessent's reaffirmation of the Trump administration's use of tariffs as a primary geopolitical tool, raising concerns about trade-driven inflation and impacting cryptocurrency markets [1][2]. Group 1: Tariffs as a Geopolitical Tool - Bessent emphasized that tariffs are a central component of US foreign policy, framing them as an effective strategy rather than a last resort [2]. - He indicated that President Trump could impose a 10% tariff as early as February 1 if Denmark and allied countries do not cooperate regarding Greenland, signaling a potential escalation in trade tensions [3]. Group 2: Economic Implications of Tariffs - Bessent defended the economic effectiveness of tariffs, claiming they have generated "hundreds of millions of dollars" in revenue, despite contrasting research indicating that US consumers bear most of the tariff costs [5]. - New data suggests that tariffs function more like a hidden consumption tax, which could tighten household liquidity over time, affecting discretionary spending and speculative capital flows into high-volatility assets like cryptocurrencies [6]. Group 3: Impact on Cryptocurrency Markets - Following Bessent's remarks, Bitcoin fell below $90,000 and Ethereum slipped under $3,000, as investors reassessed macroeconomic risks associated with rising trade tensions [1].