What is a Tariff?

A tariff, known as “customs duty” in Chinese, is a tax imposed by a government on imported goods. It is one of the most important policy tools in international trade, directly influencing product prices, domestic industry protection, and international relations. In the era of economic globalization, tariffs were initially marginalized as countries favored free trade agreements to reduce barriers. However, with rising geopolitical tensions and economic nationalism, tariffs have once again become a focal point for global markets.

Figure:https://cn.nytimes.com/usa/20250409/trump-tariffs-greer/

In April 2025, the U.S. government imposed an additional 104% tariff on Chinese goods, officially triggering a new round of trade wars. This move not only shook traditional financial markets but also raised concerns about the future of the crypto market.

The Role and Mechanism of Tariffs

Tariffs primarily serve the following purposes:

1. Protecting Domestic Industries
   When foreign products are too cheap and local industries face competitive pressure, governments impose tariffs to raise import prices, shielding domestic businesses.

2. Increasing Government Revenue
   Tariffs are a form of taxation, directly boosting national revenue, especially in economies with high import volumes.

3. A Tool for Diplomatic and Trade Negotiations
   Tariffs are often used as leverage in political and economic negotiations, such as pressuring other countries to open markets or change policies.

However, tariffs also have downsides:

• Higher import prices increase consumer costs.

• May trigger trade retaliation, leading to a spiral of escalating tariffs.

• Long-term inefficiencies in global supply chains and weakened economic growth.

Escalating Tariffs in the U.S.-China Trade War

In April 2025, the U.S. officially imposed an additional 104% tariff on Chinese imports, claiming it was to “protect American manufacturing.” Yet, this aggressive move ignited market panic:

• Stock Market Crash: The S&P 500 briefly fell below 5,000 points, hitting a one-year low.

• Tech Stocks Plunge: Apple, Microsoft, and other giants reliant on Chinese supply chains saw their stocks drop over 20%.

• Global Market Cap Evaporation: Within just four days, global stock market value shrank by more than $10 trillion.

This demonstrates how high-tariff policies can trigger chain reactions, reshaping global capital flows and market sentiment.

How Tariffs Affect the Crypto Market

Even Bitcoin, once considered a “decentralized” safe-haven asset, was not spared from tariff-related volatility. Recent data shows:

• Bitcoin dropped below $75,000, hitting a one-month low.

• Total crypto market cap fell to $2.5 trillion, down 35% from its peak.

• The Fear & Greed Index plunged to 17, indicating extreme pessimism.

While crypto assets are not directly affected by tariffs (since they don’t cross borders physically), global investor risk aversion, liquidity shifts, and systemic risks in tech sectors still significantly impact crypto prices.

Moreover, large Bitcoin holders (e.g., institutional investors like Strategy) may be forced to sell due to heightened volatility, exacerbating the downturn.

Image:https://www.gate.io/trade/BTC_USDT

How to Navigate a High-Tariff Era

Diversify Asset Allocation: Investors should avoid overexposure to risky assets and allocate to safe havens like gold, bonds, and stablecoins.

Monitor Policy Shifts: Tariff policies are ultimately a result of geopolitical bargaining; tracking negotiations and diplomatic developments helps adjust strategies in time.

Capitalize on Volatility: For experienced traders, tariff-induced volatility may present arbitrage and hedging opportunities.

Reassess Crypto’s Role: Bitcoin’s “digital gold” narrative must withstand macroeconomic shocks—investors should remain cautiously optimistic.

Conclusion

Tariffs, an age-old economic term, are now reshaping the global market landscape. From U.S.-China trade tensions to global capital flight, every tariff adjustment impacts Bitcoin and the broader crypto market. While cryptocurrencies have yet to prove themselves as safe havens, their performance during this crisis will shape their future valuation.

As policies stabilize and markets adjust, the ripple effects of tariffs may also usher in a new cycle of crypto reevaluation.