How tariffs affect the Crypto Assets market

Throughout history, international trade has relied on tariffs, which play a crucial role in protecting local industries, shaping consumer choices, and generating revenue for governments. However, as our world becomes increasingly digital, discussions about tariffs are no longer limited to physical products.

Nowadays, the issue of cryptocurrency taxes, as well as discussions surrounding cryptocurrencies and taxes, trade tariffs, and digital currencies, have become increasingly important. From the consequences of the Sino-U.S. trade conflict to the rise of global protectionism, events over the past few years have shown that traditional economic policies are now closely intertwined with the digital financial ecosystem.

This article will help you understand how tariffs affect traditional markets and the emerging crypto space, explaining market behavior, regulatory responses, and the prospects of digital currencies.

What are tariffs and how do they affect traditional markets?

Tariffs are taxes imposed by the government on imported goods. The expected import tariff typically ranges from 5% to 25% of the product's value, but in some cases, manufacturers may face additional rates. The government uses tariffs in two ways: to generate revenue and to protect domestic industries by making imported products more expensive than local products.

Historical background

Economies have historically been affected by the long-term impact of tariffs. The Smoot-Hawley Tariff Act of 1930 in the United States imposed high import duties on over 20,000 different products.

This protectionist measure aimed at protecting American industries during the Great Depression triggered adverse reactions from other countries, leading to a significant reduction in global economic trade.

A country that raises import tariffs will trigger a series of economic effects throughout its economy. Higher prices force consumers to reduce their purchases of foreign products, businesses will redirect their strategies towards domestic production, and investors must adjust their market sentiment to accommodate the new price structure.

In addition, those analyzing the import tariff cryptocurrency market are closely watching tariff adjustments. Although this term originates from traditional trade, the principles behind it now provide a reference for the perspective of digital currencies.

Cryptocurrency Market - Immune to Tariff Policies or Vulnerable?

Many digital asset enthusiasts mistakenly believe that centralized policies cannot affect decentralized cryptocurrencies that operate autonomously. Currently, the situation has exceeded surface expectations.

Although blockchain technology has reduced reliance on centralization, the cryptocurrency market is still influenced by traditional economics. Market participants monitor all major economic trends and government decisions regarding tariffs, as these factors can trigger sudden changes in the market.

When new tariff news emerges, traditional markets usually exhibit volatility. This instability often spills over into the digital realm. Historical data shows that significant tariff announcements tend to coincide with notable changes in cryptocurrency values.

For example, fluctuations between Bitcoin prices and trade tariffs have been observed following the implementation or even just the anticipation of tariff adjustments.

When Trump imposed a 27% “discount reciprocal tariff” on imported goods from India, the crypto market panicked within minutes of the announcement, even though cryptocurrencies were not mentioned. Initially, BTC dropped from $88,000 to $85,000. After the U.S. imposed an additional 50% tariff on China, Bitcoin also fell below $76,000.

Tariffs not only affect cryptocurrency prices but also influence changes in investors' fear and greed index. The fear and greed index has dropped to 10, the lowest level since June 2022, as investor sentiment deteriorates. The last time the index reached such a significant level of fear was in June 2022, when the Terra ecosystem, hedge fund Three Arrows Capital, and crypto lending firm Celsius collapsed one after another. The index ranks market sentiment on a scale from 0 (extreme fear) to 100 (extreme greed), taking into account volatility, market momentum, trading volume, social media sentiment, and Bitcoin's dominance.

Many people in the market have pointed out that the crypto market's reaction to tariffs could be a clear signal of broader economic concerns.

This indicates that even decentralized asset classes can face some volatility during times of financial uncertainty. The impact of cryptocurrency volatility is becoming increasingly evident. When tariffs are introduced, investors often turn to cryptocurrencies as a means of protecting assets and reducing risk.

This trend indicates that although digital currencies operate independently of central banks, they still respond to the same macroeconomic factors that influence traditional financial assets. Therefore, the cryptocurrency market is as sensitive to changes in global economic policy as any other type of investment.

Case Study - US-China Trade War and Cryptocurrency Behavior

The Sino-U.S. trade war began in July 2018, initiated by U.S. President Donald Trump during his first term. It ultimately led to tariffs being imposed on approximately $550 billion worth of Chinese goods and $185 billion worth of U.S. goods.

Both parties signed the first phase of the trade agreement in January 2020, but during the two-year period of the agreement, the amount of U.S. export goods purchased by China was less than 60% of its commitment.

There have been many trade wars between China and the United States, but some of the biggest trade wars occurred between 2020 and 2025:

September 2018: The United States imposed a 15% tariff under Section 301 (subset of $300 billion, List 4A), and China retaliated against certain American products (subset of $75 billion).

In January 2020, China made some adjustments to its Most-Favored-Nation (MFN) tariff rates for the year, while the United States also lowered tariffs on imports from Japan as part of the US-Japan trade agreement.

Fast forward to January 2021, China adjusted its Most-Favored-Nation tariff rates again, while the United States continued to reduce tariffs on imports from Japan under the same trade agreement.

February 2025: The United States imposes a 10% tariff on all imported goods from China under the International Emergency Economic Powers Act (IEEPA)

April 2025: According to IEEPA, the United States imposes tariffs ranging from 1% to 74% on nearly all countries with which it has a trade surplus, including China (74%). The tariffs on China include an additional 50% tariff as retaliation against China's retaliatory statement.

At the end of February/beginning of March 2025, the cryptocurrency market experienced a decline after President Trump confirmed new tariffs on Canada and Mexico. These tariffs were initially announced on February 1 but were postponed to March 4, 2025, after negotiations.

The Bitcoin market experienced a price drop following the announcement, triggering numerous market liquidations. The value of digital assets saw billions of dollars in losses after this policy announcement, revealing their high sensitivity to macroeconomic announcements.

In explaining the new trade policy, Trump claimed that the United States has been treated unfairly in international business relations. The immediate market reaction indicates that, despite the initial vision of cryptocurrencies being independent of government influence, cryptocurrency investors are increasingly incorporating traditional economic policies into their trading decisions.

How tariff policies indirectly affect cryptocurrency regulation

The increasing international trade conflicts are making cryptocurrency regulatory policies and tariff policies more closely related. Tariffs are primarily used to protect local industries and shape trade dynamics, but they can also have a ripple effect on how governments view and manage digital assets.

Governments often incorporate tariffs into their economic strategies to regulate imports and respond to global impacts. These actions often lead to inflation and currency instability, forcing individuals and companies to adopt cryptocurrencies.

Regulatory authorities often view the growing interest in cryptocurrencies as a potential threat, leading to stricter regulations and more stringent tax enforcement, especially in countries under tariff pressure.

Some governments may even consider taxing cryptocurrency transactions or tightening rules on cryptocurrency exchanges. On the other hand, some view cryptocurrencies as a safe haven, providing citizens with a viable alternative to their weak fiat currencies. This dual perception—as both a risk and a hedge—shapes the evolving economic policies and approaches to cryptocurrencies.

The impact of long-term global trade policies on the development of digital currencies

Digital currencies will experience profound long-term impacts due to changes in global trade policies. As countries adjust their trade methods to respond to economic pressures and protectionist movements, digital currencies will undergo significant changes. Digital payment systems and cryptocurrency exchanges will increasingly face the growing impact of traditional business issues in the coming years.

A positive development is the formation of trade alliances that support the use of cryptocurrencies. Countries may create blockchain-based digital trade agreements to help simplify cross-border transactions by reducing the friction of traditional tariffs.

These agreements have the potential to eliminate bureaucratic obstacles and reduce costs, thereby alleviating the burden of traditional tariff measures in international trade. The discussion of trade tariffs and digital currencies has evolved from theoretical debates into viable economic models, which could fundamentally change global trade practices.

Current discussions on international trade policies and cryptocurrencies indicate that digital currencies may become the foundation of the global financial system. In the current period of reassessing trade frameworks around the world, digital currencies demonstrate their practicality as a flexible and adaptable option, contrasting sharply with traditional systems struggling under regulatory constraints.

The increasing acceptance of digital payments and the strengthening of cooperation agreements have enhanced the role of cryptocurrencies as a bridge between traditional financial markets and modern financial systems. Emerging regulations indicate that tariffs will become manageable, while laying the groundwork for a more connected and efficient global trade network.

Conclusion

Tariffs no longer merely regulate traditional trade—they now significantly impact the cryptocurrency ecosystem. Evidence from the China-U.S. trade war, including increased trading volumes and price fluctuations, indicates that digital currencies respond strongly to changes in tariff policies.

As governments around the world tighten economic policies to protect domestic interests, the cryptocurrency market faces increased regulation and risk. It is crucial for investors and policymakers to remain vigilant about these changes, as future global trade policies will further integrate traditional financial control with digital finance, shaping a more interconnected economic system. **$SNX **$XDC **$XAI **