# Introduction
After Trump returned to the White House, he quickly fulfilled his tough promises regarding tariffs made during his campaign, sparking an unprecedented tariff storm, described by outsiders as igniting "Tariff War 2.0," which led to severe turbulence in both traditional financial markets and the cryptocurrency market. Bitcoin and the entire cryptocurrency market experienced a significant decline under this pressure, with many crypto projects facing tough challenges. This article will analyze the specific measures of Trump's new tariff policy, the macro transmission mechanism, the future direction of U.S. tariff policy, and its profound impact on the crypto market, helping investors gain a comprehensive insight into the risks and opportunities involved.
# Trump's Tariff Policy Since Returning to the White House
February: Throwing Out the Tariff Big Stick
(1) Targeting North America: On February 1, the U.S. announced a 25% tariff on all imported goods from Canada and Mexico (with a 10% tariff on Canadian energy resources) to pressure the two countries to strengthen border security, immigration control, and combat drug smuggling. Canada immediately announced a 25% retaliatory tariff on billions of dollars worth of U.S. products, and Mexico also planned to implement retaliatory measures.
(2) Targeting China: On the same day, Trump announced a 10% tariff on all Chinese goods exported to the U.S., effective February 4. This move was claimed to be aimed at pressuring China to take action to curb the smuggling of drugs like fentanyl into the U.S. Trump also signed an executive order to eliminate the previously existing tax exemption for low-value goods (under $800) from China and Hong Kong, meaning these small packages would also be subject to the new 10% tariff. These initial measures marked the beginning of the Trump administration's new tariff policy.
March: Tug-of-War Over Tariff Negotiations
(1) NAFTA Tariff Turmoil: On March 4, the Trump administration officially imposed a 25% tariff on all goods produced in Mexico and Canada. Canada immediately announced a corresponding tariff on U.S. products, and Mexico also indicated it would formulate retaliatory measures, triggering concerns over a new round of trade war. Just one day later, on March 5, Trump temporarily exempted tariffs on Canadian and Mexican automobiles for one month to alleviate pressure on the three major U.S. automakers. On March 6, Trump signed an executive order to postpone the tariffs on Mexico and Canada until April 2 to allow for continued negotiations. Consequently, Canada and Mexico delayed their planned countermeasures. Despite this brief easing, on March 7, Trump threatened to impose new tariffs on Canadian lumber and dairy products, criticizing Canada for long imposing high tariffs on U.S. agricultural products and stating that the U.S. would respond with equivalent tariffs. Trump explicitly stated, "There will be more changes and adjustments regarding tariffs in the future," highlighting the aggressive and volatile nature of the Trump administration's tariff policy, which shook the stable foundation of North American free trade relations in a short period.
(2) Return of Steel and Aluminum Tariffs: The Trump administration also reinstated high tariffs on global steel and aluminum products in March. Starting March 12, the U.S. reimposed a 25% tariff on imported steel and a 10% tariff on aluminum (based on national security reasons under Section 232), effectively a "return" of measures implemented during Trump's first term. In response, the European Union imposed retaliatory tariffs ranging from 4.4% to 50% on U.S. steel and aluminum products starting April 1.
April: Escalation of the Tariff War
"Liberation Day" Universal Tariff: On April 2, Trump announced a new round of tough tariff measures at the White House, referred to as the "Liberation Day" tariffs. He signed two executive orders regarding "reciprocal tariffs":
(1) Universal Taxation: Starting April 5, an additional 10% "universal" tariff would be imposed on all imported goods from 185 countries worldwide. This means that, with few exceptions, the U.S. increased the ad valorem tax on the vast majority of imported products by 10%. U.S.-Mexico-Canada Agreement (USMCA) partners Canada and Mexico were temporarily exempted from this 10% universal tariff, and small e-commerce packages (under $800) were also exempted to reduce the impact on daily consumption.
(2) Reciprocal Tax Increase: For economies with significant trade deficits with the U.S., a higher reciprocal tariff rate would be imposed on top of the 10% base rate, effective April 9. Specific countries and rates include: China 34%, EU 20%, Japan 24%, South Korea 25%, Taiwan 32%, India 26%, Thailand 36%, etc. Additionally, a 25% tariff would be imposed on all imported automobiles and parts, effective April 3, aimed at promoting the "repatriation" of the automotive industry to the U.S. This round of tariffs nearly encompassed all major trading nations globally, with an unprecedented scope and high rates, described as dropping a "tariff nuclear bomb."
Source: https://www.bbc.com/
Such a dramatic increase in tariffs undoubtedly triggered strong shocks globally, with countries expressing readiness to retaliate: On April 3, the EU and Canada clearly stated they were "prepared to take retaliatory measures," while Japan sought exemptions; on April 4, China announced a 34% tariff for reciprocal retaliation. Subsequently, Trump threatened to add an additional 50%, bringing the total to 104% when combined with the previously imposed 20%. On the same day, China announced further countermeasures, stating that starting April 10, it would impose an additional 50% tariff on all U.S. imports, raising the total tariff rate to 84%. A comprehensive trade conflict emerged between the U.S. and major economies represented by China.
Less than 24 hours after the U.S. officially imposed high reciprocal tariffs on dozens of trading partners, Trump suddenly changed his stance. On April 9, Trump announced that, given that representatives from over 75 countries had contacted U.S. representatives for consultations, he would suspend the implementation of new tariffs for 90 days, during which the universal tariff would be reduced to 10%, with the suspension measures taking immediate effect. The 90-day tariff suspension would not apply to tariffs against Mexico and Canada. At the same time, the tariffs on Chinese goods would be raised from 104% to 125%.
# The Transmission Mechanism of Tariff Policy's Impact on the Crypto Market
Trump's new tariff policy not only changed the international trade landscape but also affected the cryptocurrency market, including Bitcoin, through multiple macroeconomic channels. Tariffs, as an important macro policy tool, can trigger a chain reaction in economic growth, inflation, capital flows, exchange rates, and market sentiment, which in turn transmits to the prices of crypto assets. The specific mechanisms are as follows:
Economic Slowdown and Inflation Concerns: Large-scale tariffs are equivalent to increasing taxes on imported goods, directly raising costs for businesses and consumers. This will elevate inflationary pressures and drag down economic growth. Rising inflation expectations combined with economic slowdown are dangerous signals for the market, leading investors to often turn to traditional safe-haven assets. In fact, amid rising tariff uncertainties, investors have favored gold over emerging assets like Bitcoin this year: in early April, international gold prices briefly surpassed the historical high of $3,150 per ounce. Although Bitcoin is viewed as "digital gold" that hedges against inflation, market performance shows that its speculative attributes temporarily overshadowed its safe-haven attributes, with inflation-driven safe-haven demand primarily flowing into traditional assets like gold.
Tightening Dollar Liquidity and Cash Demand: The trade war disrupts global supply chains and trade exchanges, potentially leading to tightening dollar liquidity. A decline in imports and exports will reduce the supply of dollars under trade, while trade uncertainties make businesses and investors more inclined to hold cash, increasing demand for dollars. In this situation, some institutions and investors may be forced to liquidate assets to raise dollar cash. Investors in a declining stock market environment may sell off cryptocurrency holdings for cash. This selling pressure exacerbates the downward trend in cryptocurrency prices. Safe-haven sentiment may also push up the dollar exchange rate, putting pressure on Bitcoin prices denominated in dollars. Currently, under the impact of tariffs, market expectations suggest that the Federal Reserve will lower interest rates earlier to support growth, leading to a sharp decline in U.S. Treasury yields (the yield on 10-year U.S. Treasury bonds fell by 20 basis points after the tariff news). Changes in interest rate expectations also affect funding allocation preferences: safe-haven funds flow into the bond market and dollar assets, relatively weakening the willingness to allocate to high-risk assets.
Market Risk Appetite and Sentiment Shift: Large-scale tariffs are seen as significant negative news, directly shaking global investors' risk appetite. The trade tensions triggered by Trump's tariff policy have caused market uncertainty to soar, leading investors to prefer to "sell first and observe." The decline in the stock market is highly correlated with the decline in Bitcoin, with TradingView data showing a correlation coefficient of 0.66 between Bitcoin prices and the S&P 500 index, indicating that under severe risk shocks, Bitcoin is currently viewed as a risk asset rather than a safe haven by the market. The uncertainty brought by the tariff policy has also weakened the previously optimistic sentiment in the market. Trump had previously released friendly signals towards cryptocurrencies during his campaign and early presidency, causing Bitcoin to soar to about $109,000 by the end of 2024. However, the shadow of the tariff war quickly loomed, and as trade prospects worsened and economic downward pressure increased, the market's risk aversion sentiment gained the upper hand, significantly diminishing the previous upward momentum of crypto assets.
Source: https://newhedge.io/bitcoin/us-equities-correlation
Historical Trends and Changes in Crypto Asset Positioning: The cryptocurrency market's response to trade conflicts has changed compared to a few years ago. When Trump first launched the trade war in 2018, some investors viewed Bitcoin as a tool to hedge against uncertainty, which drove its price from a low of about $3,700 to $13,000, showcasing a "rising against the wind" trend. However, the current market is more mature and more strongly linked to mainstream markets. In this round of tariff shocks in 2025, Bitcoin did not replicate the strong performance of 2018 but instead fell alongside stocks. This indicates that the investor structure and market positioning of Bitcoin are changing: the proportion of institutional investors is increasing, and trading behavior resembles that of risk assets like tech stocks rather than operating completely independently. This change also highlights the increasing integration of the cryptocurrency market within the global financial system.
# Analysis of Cryptocurrency Market Performance After the Tariff Policy Announcement
The trends of Bitcoin and the cryptocurrency market in the first quarter of 2025 were highly correlated with the rhythm of Trump's tariff policy, with changes in trading volume and capital flows reflecting a shift in investor sentiment from optimism to caution. Under such macro pressure, the cryptocurrency market entered a phase of low adjustment in the short term.
February Optimism Cools: From the end of 2024 to early 2025, buoyed by Trump's election and his proclaimed support for digital assets, Bitcoin continued the bull market from the previous year, briefly surpassing the $100,000 mark. However, as news of tariffs began to emerge in early February, Bitcoin's price quickly turned downward, and the entire cryptocurrency market started to decline significantly. By the end of February, Bitcoin's price had dropped about 28% from its January peak, entering a technical bear market. Throughout February, the total market capitalization of global cryptocurrencies shrank by over $1 trillion. It can be said that the crypto market experienced a "cooling" during the first round of tariff turmoil.
March Volatility and Consolidation: As March began, the Trump administration's tariff policies on Mexico, Canada, and steel and aluminum products were full of twists and turns, leading to fluctuating market sentiment. After news of the North American tariffs being temporarily effective and then postponed emerged in early March, Bitcoin fluctuated around the $80,000 mark. On one hand, the postponement of tariffs on allies provided some comfort to the market, leading to a brief rebound in risk assets; on the other hand, Trump's frequent hardline statements made investors hesitant to enter the market aggressively. Throughout March, Bitcoin's price oscillated widely in the $75,000-$90,000 range.
"Liberation Day" Tariffs Trigger April Turmoil: At the beginning of April, the news of Trump officially signing the comprehensive tariff executive order became the catalyst for a new round of severe market fluctuations. On April 2, the day the comprehensive tariff plan was announced, Bitcoin's price initially experienced a short-term spike—rising to about $87,400, seemingly misinterpreted by some funds as a buying opportunity driven by inflation benefits—but then plummeted sharply, hitting a low of around $82,000, with an intraday volatility exceeding 6%. By April 9, Bitcoin continued its downward trend, with its price plunging to $74,508, marking the lowest point of the year.
Source: https://www.hotcoin.com/en_US/trade/exchange
According to CoinMarketCap data, on the day of the tariff announcement on April 2, there was a net outflow of about $8.6 billion from global cryptocurrency-related investment products (such as ETFs), with Bitcoin ETFs alone experiencing a net outflow of $8.7 billion in a single day. This indicates that institutional funds quickly withdrew to seek safety upon the announcement. Additionally, the entire cryptocurrency market saw its market capitalization evaporate by about $500 billion during the week of tariff news disturbances. Meanwhile, CME Bitcoin futures open interest declined, suggesting that some institutional investors reduced their risk exposure. These signs all indicate that in the risk-averse environment triggered by the tariff policy, funds are temporarily flowing out of the cryptocurrency market, leading to tightening liquidity.
# Direction of Tariff Policy and Outlook for the Cryptocurrency Market
At the beginning of 2025, the global economy was already in a situation of slowing growth and declining inflation. After experiencing a rate hike cycle in 2024, inflation in the U.S. had cooled, but growth momentum weakened, with the European economy hovering on the edge of stagflation and emerging markets like China struggling to recover. The outbreak of a comprehensive trade war at this time added further gloom to the fragile recovery outlook.
5.1 Future Direction of U.S. Tariff Policy
Trump may use extreme pressure as a negotiating chip, moderately lowering some tariffs after forcing trade partners to make concessions in exchange for political gains. For example, tariffs on Canada and Mexico may be canceled or reduced after both sides reach an agreement on immigration and drug issues; tariffs on EU automobiles may be postponed through new trade negotiations; tariffs on China may see some "phased cancellations" in exchange for China expanding purchases or opening its market.
The Trump administration emphasizes that tariff revenues can be used to support domestic industries and infrastructure, and it is likely that through negotiations, some tariffs on certain goods may be slightly adjusted. However, high tariffs in key areas such as new energy and semiconductors are expected to remain entrenched for the long term. If the economy significantly deteriorates in the second half of 2025, it is possible that the Trump administration will be forced to adjust its tariff strategy.
5.2 Impact of U.S. Tariff Policy on Monetary Policy
Under the impact of tariffs, the deteriorating growth outlook is expected to force the Federal Reserve to loosen its policy earlier than originally planned. Investors anticipate that the Fed may begin to cut interest rates in the second half of 2025. Analysis from JPMorgan Private Bank indicates that the market expects the Fed to lower rates to around 3.5% by the end of the year, believing that growth risks will outweigh inflation risks as the main driver of lower yields. However, on one hand, the trade war raises concerns about recession, while on the other hand, inflation driven by tariffs limits the central bank's room for easing. This policy dilemma increases uncertainty in the market outlook.
If tariffs remain in place for the long term, high import taxes would impose a stagflation shock on the U.S. economy. If all tariffs are implemented, the resulting price increases could put the Fed in a dilemma: cutting rates might stimulate inflation and asset bubbles, while not cutting rates would lead to significant economic downward pressure. If trade negotiations make progress and some tariffs are lifted, it could improve growth expectations and alleviate inflation pressures, opening up room for the Fed to cut rates, which would benefit various assets, including Bitcoin.
5.3 Future Direction of U.S. Tariff Policy and Its Potential Impact on the Cryptocurrency Market
If trade tensions can be alleviated in the short term, global risk appetite may rebound, and cryptocurrencies could see a new round of upward momentum. Especially if the Fed can successfully cut rates or even resume quantitative easing to release liquidity, Bitcoin and Ethereum, which have undergone deep adjustments, are expected to strengthen again. Given Trump's relatively friendly stance towards cryptocurrencies, if the economy improves, he may be more willing to embrace crypto technology to attract investment, such as promoting regulatory reforms for digital assets and approving more compliant products for listing.
Conversely, if the trade war persists or worsens, the global economy may fall into recession, leading to a downturn in traditional financial markets. In such an environment, cryptocurrencies will likely continue to decline alongside risk assets in the short term. However, after undergoing a trial, Bitcoin has the opportunity to reprove its value storage function amid turmoil. When countries embark on competitive easing and fiat currency credibility is undermined, Bitcoin, as a scarce asset unaffected by central bank overissuance, may gain a new round of funding favor.
# Conclusion
In the short term, the impact of tariff policy on the cryptocurrency market is predominantly negative, with the market struggling to find a bottom amid risk-averse sentiment; in the medium term, the impact will depend on the evolution of the trade war and the effectiveness of macro hedging policies, with the cryptocurrency market likely to maintain a high volatility and consolidation pattern; in the long term, it will drive the global economic and financial system to develop in new directions, during which Bitcoin and the overall cryptocurrency assets may gain unexpected strategic opportunities.
Regardless of the outcome, this round of tariff shocks provides an opportunity for the crypto industry to test its resilience: whether Bitcoin can truly become "digital gold" will be tested over a longer cycle. If the global economy trends towards fragmentation due to protectionism, Bitcoin has the potential to become a value anchor and hedging tool connecting various economic systems.
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Risk Warning
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