Editor’s Note: In the context of escalating global trade wars and frequent tariffs, cryptocurrencies, with their decentralized, censorship-resistant, and borderless characteristics, are once again demonstrating their potential as a “safe haven in chaos.” History and current events show that tariffs often lead to economic recessions and market turbulence, while cryptocurrencies are quietly building a new economic system that is not bound by traditional rules, offering individuals greater sovereignty and choice.

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As trade wars reshape the global economic landscape, cryptocurrencies have once again been given the opportunity to prove their role as a “safe haven in turmoil.”

Background Introduction

“Madness is rare in individuals—but in groups, parties, nations, and epochs, it is the rule.” — Friedrich Nietzsche

The market is currently turbulent. As Singapore’s Prime Minister, Heng Swee Keat, stated, the United States is essentially abandoning the economic system it helped establish. The structures that once formed the foundation of the global economic system are now being gradually dismantled. If the situation remains unresolved, we can reasonably expect more things to collapse.

Cryptocurrency has always been a macro-driven asset. One of the key points repeatedly emphasized by Bitcoin supporters this year is “sovereignty.”

Bitcoin, as an asset, is a hedge against geopolitical uncertainty—because it is the hardest form of money, even “harder” than gold (in theory). However, so far, this theory has not materialized. The price movement of Bitcoin resembles a high-beta asset like Nasdaq, which has been far outpaced by gold during turbulent times.

Will this time be different?

A Brief Talk About “Tariffs”

If you want to witness what “intellectual masturbation” looks like, just open Twitter—especially in these turbulent times when everyone suddenly becomes a macroeconomics expert.

I won’t stir your brain into a mess, so let’s first look at some basic facts and conclusions.

Tariffs, in essence, create inefficiencies, raise consumer prices, distort free market mechanisms, and trigger retaliatory economic actions, ultimately escalating conflicts.

A typical example occurred in the 1980s. At that time, U.S. President Ronald Reagan, although initially imposing tariffs on certain industries, later realized their drawbacks. In a 1987 radio broadcast, Reagan candidly stated, “Protectionism is ultimately destructionism; it leads to unemployment.”

Why Tariffs Are Not a Good Thing

Firstly, the actual tariff levels implemented by the Trump administration are the highest in over 100 years— but the reasons to oppose them go beyond just that:

Economic Impact and Inflation

Ultimately, tariffs are taxes on imported goods, and this money is paid by domestic importers, but it is usually passed on to consumers. Both historical and contemporary examples repeatedly show that tariffs directly lead to higher consumer prices.

For instance, the Tax Foundation in the U.S. states that recent U.S. tariff policies will increase the average tax burden on each household by over $2,100. The Yale Budget Lab has even estimated that this figure could rise to $3,800 annually. UBS has also predicted that a 10% across-the-board tariff could lead to a 10% drop in the stock market.

Misunderstanding of Trade Deficits

Supporters of tariffs often cite “too large a trade deficit” as a reason for imposing them, but in reality, a trade deficit does not equate to an economy being in trouble or being “exploited.”

The essence of a trade deficit is simply that a country imports more than it exports. This situation is often due to strong domestic consumer demand, a strong currency, or the country having a comparative advantage in services rather than goods exports.

For example, the U.S. has maintained a large surplus in high-value-added service sectors like finance, technology, and advanced manufacturing. Now, imposing tariffs to “balance” the goods trade deficit—especially when many countries can’t even afford U.S. products—will only lead to U.S. consumers paying more for nothing.

Countries like Cambodia and Kiribati are typical examples. Their trade deficits exist because these countries are too poor to buy U.S. goods, not because they are engaging in so-called “unfair” trade practices.

Historical Lessons from Tariffs

Historically, protectionist tariffs have often led to economic decline rather than prosperity.

A typical example is the 1828 Tariff Act and the infamous 1930 Smoot-Hawley Tariff Act. The latter sparked a series of retaliatory tariffs, resulting in a sharp decline in global trade and exacerbating the economic suffering caused by the Great Depression.

Economists generally agree that history has repeatedly shown that tariffs tend to cause more harm than good.

Even President McKinley, who is often seen as the “inspiration” for Trump’s tariff policies, began to oppose tariffs toward the end of his term, acknowledging their negative impact on the economy.

Inefficiency and the Employment Myth

Supporters of tariffs often claim they can “revitalize manufacturing” and “bring jobs.” But the reality is that modern manufacturing is highly automated and capital-intensive. Even if factories are brought back to the U.S., they no longer require as many workers.

As global automation continues to rise, imposing tariffs to bring manufacturing back home will not create the “job boom” that politicians often promise.

In reality, most manufacturers simply absorb higher costs or slightly adjust their supply chains to shift to other countries with lower costs but somewhat less efficiency. These actions have not led to significant job creation in the U.S.

The unintended consequence is often economic stagnation or even decline. For example, Argentina implemented protectionist policies during the Peronist era, and as a result, it slid from being one of the wealthiest countries in the world into long-term economic decline, from which it has yet to recover.

Strategic Risks in Global Trade

Tariffs often unintentionally strengthen the position of geopolitical adversaries by reshaping global trade patterns. History has repeatedly shown that trade wars are harmful to the global economy: shrinking economies, disrupted supply chains, and severe damage to consumer welfare.

For example, Trump’s recent broad tariffs not only raised domestic prices in the U.S. but also unintentionally benefitted China. The tariffs hit countries like Vietnam, which had previously served as “alternatives” to China, potentially forcing production back to China, as China still benefits from economies of scale and a mature manufacturing system, remaining competitive despite high tariffs.

What’s even more troublesome is that tariffs can easily provoke retaliatory actions from trade partners, igniting trade wars. For instance, the European Union has hinted at imposing retaliatory tariffs on U.S. tech companies, raising the risk of broader economic conflict.

Markets Hate Uncertainty

The biggest fear in markets is uncertainty, and tariffs are one of the biggest sources of uncertainty. After Trump announced a new round of tariffs, the markets reacted with significant volatility, and stock market fluctuations surged.

Retail, technology, consumer goods, and manufacturing sectors are hit hardest, facing rising raw material costs and lowered consumer spending expectations.

Furthermore, tariff policies have eroded confidence in the U.S. dollar, leading to reduced capital inflows and a weaker dollar, triggering broader economic instability. This volatility not only damages consumer and business confidence but also suppresses investment, further dragging down economic growth.

Misconceptions about National Security

National security is indeed one of the few justifiable reasons for imposing tariffs, but in reality, tariff policies are widely misused, greatly undermining the credibility of the term “national security.”

Current tariff systems are not focused on protecting critical industries. Instead, they impose tariffs almost indiscriminately on all imported goods, which leads to: not only strategic sectors being harmed but also non-strategic sectors bearing the brunt, resulting in a general increase in costs.

Cryptocurrency: A Safe Haven in Times of Chaos

Tariffs and trade wars constantly remind us that a country, in the end, is a tribe of people, and these people often make emotional, self-interested decisions—even though these decisions may not be rational from a larger perspective.

In such an environment, cryptocurrency becomes increasingly important. It represents true individual asset sovereignty and is the purest form of “economic autonomy” in the midst of global turmoil.

Crypto can be seen as a super digital economic system designed for chaos.

Ray Dalio is right: trade conflicts are often not about trade itself, but about identity, national pride, domestic pressures, and emotional power struggles. Beneath these “surface noises,” crypto is quietly building a new economic structure with no borders, no tariffs, and no bureaucratic barriers.

Traditional governments struggle to track economic gains and losses accurately, even when it comes to digital services and intangible assets, but crypto has already pushed this concept to a whole new dimension: it transcends borders, policies, and the constraints of the physical world.

Of course, from a technical standpoint, we still need to explore how to truly integrate blockchain attributes with real-world business models (referencing some of my previous ideas), but this process is already underway.

To conclude: as the world becomes more uncertain and governments’ actions become increasingly unpredictable, how should “sovereign individuals” across the globe decide how to allocate their resources?

Disclaimer:

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2. Disclaimer: The views and opinions expressed in this article represent only the author’s personal views and do not constitute any investment advice.

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