It’s a risk-off day in Asia as traders look to Beijing’s response to U.S. President Donald Trump’s sweeping reciprocal tariffs on China and other Asian nations.

On Wednesday, Trump announced reciprocal tariffs on imports from 180 nations, including higher taxes on trading partners identified as worst offenders, such as China and the European Union.

Trump imposed a new 34% tariff on goods from China in addition to the existing 20% tax, bringing the total levy to 54%, the highest for any nation. Meanwhile, the latest action did not affect Canada and Mexico.

Observers say the ball is now in China’s court, and the nature of its retaliation could determine the market reaction.

“Everything now depends on China. If China devalues the Yuan in response to today’s large, additional US tariffs, that sets off a global risk-off that hits EMs first and then – if it persists – spills back to the US. China has so far kept a very low profile. That may now end,” Robin Brooks, managing director and chief economist at the International Institute of Finance, said on X.

Early Thursday, Beijing urged the U.S. to lift tariffs while vowing retaliation immediately. Meanwhile, the Chinese yuan dropped to a seven-week low of 7 RMB/USD alongside losses in the Asian equities and an impending death cross on bitcoin (BTC).

Letting the yuan depreciate, which makes Chinese goods more attractive in international markets, is one way to counter Trump’s tariffs. That said, it could spell trouble for carry (currency) trades and scare financial markets, as observed in 2015 and 2018.

Besides, potential intervention by the People’s Bank of China (PBoC) to stall a rapid yuan decline can boost the dollar index, inadvertently weighing over risk assets, including stocks and cryptocurrencies.

It’s no coincidence that Asian equities traded in the red at press time, with Japan’s Nikkei hitting an eight-month low. The U.S. stock futures fell over 2%, pointing to risk-off mode.

Bitcoin (BTC), the leading cryptocurrency by market value, traded near $83,300, having dropped from $88,000 to $82,500 following Trump’s tariffs announcement, according to CoinDesk market data.

The 50-day simple moving average (SMA) of the cryptocurrency’s spot price appears on track to cross below its 200-day SMA, confirming what is known as the “death cross” bearish technical pattern.

Though it has a mixed record of predicting price trends, the latest cross happening against the backdrop of escalating trade tensions warrants attention – more so, as options pricing now shows bias for puts or downside protection out to the June end expiry, according to Deribit and Amberdata.