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On April 2, U.S. President Donald Trump announced a series of tariffs that sent the market into chaos and left cryptocurrency observers divided over their potential long-term effects.

At a special event at the White House, Trump signed an executive order claiming emergency powers to impose reciprocal tariffs on all countries that levy tariffs on U.S. goods, with a minimum tax rate of 10%.

The long-term impact of these new taxes on the global market remains unclear. The vague approach the Trump administration used in determining tariff rates has exacerbated this uncertainty.

Some believe that as investors seek alternatives to traditional investments, the crypto market will thrive. Others point out that tariffs could impact mining equipment, hindering profitability. Many are still concerned about the broader implications of the tariffs and the potential for an economic recession.

Trump's tariffs "provide certainty" to the market

As soon as the tariff news broke, financial markets immediately crashed, and the crypto market was no exception.

Bitcoin (BTC) nearly reached an intraday high of $88,500 but fell by 2.6%, retreating to around $83,000. Following the tariff announcement, Ethereum (ETH) immediately dropped from $1,934 to $1,797, and the total market capitalization of cryptocurrencies decreased by 5.3% to $2.7 trillion.

After Trump's tariff order, cryptocurrencies showed red across the board. Source: Coin360

Some market analysts remained unfazed. Trader Michaël van de Poppe wrote that the tariffs "won't be as bad as everyone expects."

"The uncertainty is gone. Gold prices will drop. 'Buy the rumor, sell the news,'" he said. "Altcoins and Bitcoin will rise. 'Sell the rumor, buy the news.'"

BitMEX founder Arthur Hayes stated that while tariffs may reduce the trade deficit, a decrease in exports could limit demand for U.S. Treasury bonds, necessitating domestic intervention by the Federal Reserve to stabilize the market.

He said, "The Fed and the banking system must step up to ensure the Treasury market operates smoothly, which means 'cutting reserve requirements.'"

"Brrrr"—referring to the Fed printing more money—was a theory Hayes previously proposed, suggesting that increased liquidity entering the market could be beneficial for Bitcoin's price.

What about cryptocurrency miners?

U.S. cryptocurrency miners may have little reason to feel optimistic about the tariffs, as they are directly affected by the price increases on goods imported from Asia (i.e., cryptocurrency mining equipment).

Mitchell Askew, chief analyst at mining-as-a-service company Blockware Solutions, stated, "Tariffs have a huge impact on Bitcoin miners. Offshore supply is expected to be squeezed, increasing demand for domestic miners. If this coincides with Bitcoin's run, we could see ASIC (mining equipment) prices soar 5 to 10 times like in 2021."

Blockware CEO Mason Jappa noted that the tariffs will have a "significant impact" on the Bitcoin mining industry. "Currently, most Bitcoin mining servers are imported from Malaysia/Thailand/Indonesia. Drilling rigs that have already landed in the U.S. will become more valuable," he wrote.

Some mining companies have been eager to move mining equipment out of exporting countries before the tariffs take effect. On April 3, Lauren Lin, hardware director at Bitcoin mining software company Luxor Technology, told Bloomberg that her company was in a "mad scramble."

She said, "Ideally, we could rent a plane to get the machines over—just trying to be as creative as possible to get these machines out."

Tariff policy doubts: "Ridiculous calculations" and recession concerns

The convenient tariff percentage chart displayed at the White House signing ceremony led many to question how the Trump administration arrived at these numbers and why certain countries were chosen.

James Surowiecki, editor of the Yale Review, wrote that the government did not actually calculate the tariff rates plus non-tariff barriers to determine their rates, but rather "just divided our trade deficit with that country by their exports to us."

"What a ridiculous thing."

Some even proposed a theory that the government used ChatGPT to calculate the countries and numbers. NFT collector DCinvestor stated that he was able to almost completely replicate the list using prompts on generative AI.

"I was able to replicate it in ChatGPT. It even told me that this idea had never been formally articulated anywhere before, and it was something it came up with. 'The Trump administration is using ChatGPT to decide trade policy,'" he said.

Also noteworthy: some smaller countries and regions on the White House list. According to Forbes, the complete list imposes a 10% tariff on Heard Island and McDonald Islands in response to their 10% tariff on the U.S.

Heard Island and McDonald Islands are uninhabited, barren, and among the most remote places on Earth, located 1,600 kilometers from Antarctica. No one lives there; there is no trade.

Heard Island, a snow-covered rock. Source: Wikipedia

The questionable mathematical calculations and content composition of this tariff list have led many to question the economic decision-making logic of the U.S. government.

Nigel Green, CEO of global financial consulting giant deVere Group, told Cointelegraph that the president is "peddling economic illusions."

"This is a seismic day for global trade. Trump is destroying the post-war system that has made America and the world more prosperous, and he is doing so with reckless confidence," he said.

Adam Cochrane, a partner at Cinneamhain Ventures, stated that when tariffs target industries that also have existing production to offset the increased costs of imported goods, tariffs "are effective for most of these industries."

"The U.S. does not have these, nor does it have factories, nor labor to offset it, nor raw materials. So you ultimately end up paying more for the same goods."

At the end of March, Goldman Sachs had already predicted a 35% chance of a U.S. economic recession. After Trump signed the order, bets on Kalshi's market increased to over 50%.

Betting markets are not optimistic about the U.S. economy. Source: Kalshi

Trump believes that the tariffs will "make America great again" and give the U.S. economy an advantage in competition with former allies and trade partners. In his signing remarks, he argued that if tariffs are maintained, the Great Depression of the 1930s would not have occurred.

The Smoot-Hawley Tariff Act, which raised tariffs during the Great Depression, is widely regarded as a factor that worsened the Great Depression and has become synonymous with disastrous economic policymaking.

Related articles: Mining executives: Trump's tariffs may lower Bitcoin mining machine prices outside the U.S.

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