Source: Vernacular Blockchain

On the big stage of the global economy, a field of things is often like a stone thrown into water, causing unexpected ripples. Tariffs, as an old tool to regulate international trade, have long become commonplace for the impact of traditional financial markets. But with the rise of the "new player" of crypto assets, what is the relationship between trade and the price of digital assets?

In early February 2025, US President Trump announced new tariffs on Canada and Mexico, and the crypto asset market immediately "dived". This wave of decline has sparked heated discussion: How did the trade affect these crypto assets that originally wanted to be "independent portal"?

This article will take you to find out how tariffs are "linked" to crypto asset prices and the tricks behind them.

01What is tariff?

To put it simply, tariffs are the "tolls" charged on imported goods and services. If a certain import is charged tariffs on, the importer will have to pay extra money to this person. The extra cost will often end up being on consumers, causing things to become expensive.

The main purpose of collecting tariffs is:

Make money: When it was not popular to collect income taxes before, tariffs were the main source of income.

Protect your own business: make imported goods expensive so that everyone is more willing to buy what they produce.

Use to "negotiate conditions": You will use tariffs to negotiate transactions with other people, strive for conditions that are favorable to you, or force other changes.

Balanced import and export: If a person buys too much more than sells, he may impose tariffs to reduce this "trade deficit."

Although tariffs seem to be quite simple, the economic impact it brings is very complicated. It can affect the value of money, the rise and fall of the stock market, how everyone spends money, and even how they manage money (currency).

02 How does tariffs "make troubles"?

If you want to know how tariffs affect crypto assets, you must first understand how it works throughout the entire economic system. As soon as the tariffs were announced, things began:

Announcement: When it comes to taxing imported goods or services, the tax rate is generally calculated based on the percentage of the value of the goods.

Cash: When these tax-collected goods enter the country, the importer has to go to the customs to pay the money.

Price increase: Importers will definitely not pay the money themselves. They will add the cost to the price of the product, which will be even more expensive when sold to consumers.

Our choice: When consumers see that the imported goods are expensive, they may buy substitutes, or simply buy less.

Chack reaction: When everyone's consumption habits change, it will affect the manufacturers, other industries related to these industries will also be affected, and the entire economy will eventually change.

For example, if the United States imposes a 25% tariff on imported steel, then American buyers buy foreign countriesSteel has to pay 25% more. Now the United States' own steel mills are happy because their steel is not that expensive and more competitive. But those American companies that use steel as raw materials may be in trouble because their costs are increasing.

These economic changes do not occur in isolation. Financial markets will respond to tariff announcements based on expectations of company profits, economic growth, inflation and other possible retaliation measures.

03How did tariffs affect the traditional financial markets in the past?

The response of traditional financial markets to tariffs has been recorded in history. Looking at previous examples can help us understand how the crypto asset market may react.

The stock market is like a roller coaster: Once important tariffs are announced, the stock market usually becomes very unstable. During the Sino-US trade frictions from 2018 to 2019, the US S&P 500 index fell sharply several times in a single-day manner as soon as there were new tariff news. Stock prices are usually the most volatile in industries directly affected by tariffs, such as manufacturing, agriculture and retail.

Currency also "changes": Tariffs often lead to changes in the value of different currencies. One If a lot of tariffs are collected, its currency may appreciate in the short term because there is less demand for foreign goods. But if others retaliate with tariffs, the currency that initially received tariffs may depreciate because its goods cannot be sold.

For example, during the trade war in 2018, the RMB depreciated a lot against the US dollar, which to a certain extent offset the impact of US tariffs on exported goods, making goods relatively cheap even if they are added to tariffs.

Bonds have become "safe haven": During trade disputes, bonds, which are considered safer, will be more popular, and everyone will quickly buy "safe haven". This often leads to lower yields of bonds that are considered economically stable.

Es may have to raise prices: Tariffs directly increase the cost of imported goods, so they will lead to price increases, that is, inflation. This may allow central banks to take measures such as raising interest rates to control inflation - and the move to raise interest rates will usually have an impact on all financial markets.

After understanding the historical reactions of traditional markets to tariffs, we can better guess what the crypto asset market may react.

04How may tariffs affect the crypto asset market?

The relationship between tariffs and crypto asset prices is quite complex and is constantly changing. While the initial goal of crypto assets is to get rid of control, there is growing evidence that crypto assets are not completely immune to macroeconomic impacts.

Recent market reactions

As mentioned earlier, the crypto asset market fell from the end of February to early March 2025, after President Trump confirmed that he would impose new tariffs on Canada and Mexico. Although this news came out on February 1st, the real implementation was postponedIt was March 4th.

As soon as the news came to an end, the price of Bitcoin fell significantly, and triggered a series of market liquidations. This shows that although crypto assets initially wanted to be independent of influence, investors are increasingly considering the traditional macro when making trading decisions.

Trump said at the time that the United States was "taken off" by its partners in trade, so it required tariffs. But the market's immediate reaction tells us that crypto asset investors are already very sensitive to these macroeconomics.

Possible channels of impact

Tariffs may affect the price of crypto assets in the following ways:

Risk sentiment becomes worse: Tariffs will bring economic uncertainty, making investors feel that the risk is too high and dare not hold assets like crypto assets that they think are riskier, so they will choose to sell them. Although some people hope that Bitcoin can maintain its value in economic turmoil like "digital gold", judging from market performance, many people still regard it as a high-risk asset and sell it whenever there is any turbulence.

The US dollar is strong, but the currency may be weak: Judging from historical data, the price trends of Bitcoin and many other crypto assets are somewhat "opposite" to the US dollar. If tariffs make the dollar stronger in the short term (sometimes it does), the price of crypto assets will often fall.

Lower global capital flows: Trade restrictions may lead to reduced global economic activity and capital flows. When the money in the entire financial system becomes less, demand for investments with more speculative nature such as crypto assets may also decline.

Mining costs may increase: For crypto assets like Bitcoin that need to "mine", if tariffs are imposed on computer hardware (especially ASICs for mining), the cost of mining will rise directly, and miners may not make money, or even shut down the computer and stop mining, which may reduce the security of the entire Bitcoin network and indirectly affect the price of Bitcoin.

May be more stringent: When trade relations are tense, stricter supervision is usually carried out in many aspects. Investors may worry that those who are fighting a trade war may also include crypto assets under stricter control.

Different crypto assets, different reactions

Different crypto assets may have different reactions to tariffs:

Bitcoin: As the crypto asset with the largest market value, more and more institutions are starting to invest in Bitcoin, so when the market is not good, Bitcoin is becoming more and more like a traditional risky asset. This means that if trade tensions escalate, the price of Bitcoin could fall.

Stablecoins: Those "stablecoins" pegged to fiat currencies such as the US dollar may be more popular during trade disputes, because traders may want to hold assets with stable prices first, but do not want to leave the crypto asset market completely, so that they can enter the market later.

Practical tokens: Crypto assets related to specific blockchain applications may be subject to more tariffs on their respective banks.The direct impact of the industry, not the impact of the overall market sentiment.

05 Summary

The relationship between tariffs and crypto asset prices is an interesting intersection between traditional economy and emerging financial technologies. While crypto assets were initially designed to be independent of currencies, market evidence has increasingly shown that they are still affected by macroeconomic forces, including trade.

In February 2025, the market's reaction to President Trump's announcement that he would impose tariffs on Canada and Mexico is an obvious example. Therefore, crypto asset investors should pay close attention to the global macroeconomic. Although crypto assets have many unique advantages over traditional assets, they are still part of the global financial system and are sensitive to changes in the global macroeconomic.