Author: FinTax

1. Trump's new tariff policy: content and motivation

1.1 Content

U.S. President Trump signed two executive orders at the White House on April 2, 2025, announcing that the United States will set up a 10% "minimum benchmark tariff" on trading partners and impose higher tariffs on certain items. The tax rate chart it displays shows that the United States sets reciprocal tariff rates on countries around the world range from 10% to 50%, among which, the United Kingdom, Australia, Singapore and other countries are 10%, the Philippines is 17%, the European Union is 20%, Japan is 24%, South Korea is 25%, 34%, Vietnam is 46%, and Cambodia is 49%... Trump declared that the new tariff measures aim to promote US manufacturing and "make the United States rich again." The "benchmark tariff" rate will come into effect on April 5, and the "reciprocal tariff" will come into effect on April 9.

The core of this new tariff policy is the so-called "reciprocal Tariff". However, “reciprocal tariffs” do not apply in certain circumstances, including but not limited to: (1) articles subject to USC 50 1702 (b); (2) steel and aluminum products, automobiles and automotive parts that have been subject to Section 232; (3) copper, pharmaceuticals, semiconductors and wood products, certain critical minerals, and energy and energy products listed in Annex 2 of the Executive Order; (4) goods subject to the tax rate set forth in column 2 of the United States Coordinated Tariff Form; (5) all goods that may be subject to future Section 232 tariffs; (6) goods that comply with USMCA rules of origin; (7) American ingredient value in the goods (US ingredient refers to the value that can be attributed to components produced entirely in the United States or based on substantial changes), provided that the US ingredient is not less than 20% of the value of the goods.

1.2 Analysis of motivation

The White House declared that the new tariff order aims to deal with the long-term trade deficit in the United States by significantly adjusting tariffs and creating a fair playing field for American businesses and workers. In fact, Trump has vigorously imposed tariffs at the beginning of his term, and economic factors are just one of the driving forces:

First, economic factors. The United States has been in a trade deficit position in international trade for a long time. According to the White House's speech, this "has led to the hollowing out of the US manufacturing base and curbing the US's expansion of advanced development.The ability to manufacture capabilities disrupts critical supply chains and makes the U.S. defense industrial base reliant on foreign opponents. "From the official perspective, reducing the deficit and revitalizing the US manufacturing industry are the biggest economic factors for the escalation of tariffs in this year's US.

Second, factor. Trump and the Republican voter base are mainly blue-collar and conservatives, and they are the main victims of the loss of manufacturing in the US. Trump's slogan of "making America great again" through tariff means is one of its important strategies to cater to voters, fulfill campaign promises, and stabilize the basic market of the vote. At the same time, raising tariffs and trade barriers is essentially to maintain the core position of the United States in the global economic system and achieve its goals through economic means.

Second, third, leadership factors. From a certain perspective, the new tariffs It is not unrelated to Trump's businessman background. Compared with long-term economic planning, Trump prefers to realize the short-term interests of the United States during his term and shape the image of "America First", so he is willing to use tariffs as a "trading chip" for international negotiations.

2. How tariffs affect the crypto mining industry? The release of this tariff immediately triggered a violent market reaction. On April 2, US stock futures plunged collectively, and the crypto market was also not spared during the collapse of US stocks. Recently, Bitcoin fell from US $88,500 to US $82,000, a drop of 3%. BNB, SOL, XRP The decline in mainstream altcoins is even more severe. In addition to the overall impact on traditional financial markets and crypto markets, the impact of the new tariff policy on crypto mining is worthy of special attention.

2.1 The impact of the new tariff policy on crypto mining

Because of its rich cheap energy, strong infrastructure and stronger financial strength, the United States has become the most important crypto mining market in the world. According to statistics in December 2024, the United States accounts for about 36% of the global hash value, leading the cliff, with Russia (16%), (14%), the United Arab Emirates (3.75%) and other countries have jointly shaped the basic pattern of the global cryptocurrency mining market. As of the beginning of 2025, the proportion of computing power in the United States may have exceeded 40%, or even close to 50%.

The high computing power in the United States represents a high demand for crypto mining machines, and the United States is not the main production place of crypto mining machines, but mainly obtains mining machines through imports. Therefore, in the crypto mining ecosystem,The direct impact of tariffs is mainly on the mid-to-upstream manufacturers, namely the supply of raw materials, the assembly and sales of mining machines. Among them, the supply of raw materials involves chips, materials and other components. As the main components of mining machines, the chips mainly come from Samsung in South Korea and TSMC in Taiwan, and the related materials are mainly provided by Southeast Asian manufacturers. Regarding the assembly of mining machines, due to factors such as labor costs, Southeast Asia has undertaken most of the assembly work with cheap and abundant labor. However, the above and regions are included in the areas where the tariffs are collected, and the tariffs in Cambodia, Laos, Vietnam, etc. are even close to 50%. This huge tariff will create a loss-win situation for American crypto miners and crypto miner manufacturers: on the one hand, the tariffs will directly raise the import price of crypto miners, compress the US market of miner manufacturers, and weaken their profitability in the most important markets. For the mining machine manufacturing industry, whose growth rate is already slowing, this is tantamount to another heavy and lasting blow. On the other hand, this part of the tariff costs will also be distributed to crypto miners in the United States, which will also significantly increase their operating pressure. Especially considering that since the price of Bitcoin continues to fall from its high of $100,000, all kinds of cryptocurrencies have continued to decline, and the profit margins of all kinds of crypto miners have been significantly reduced. Once the price of mining machines rises, some crypto miners may face a situation where they are unable to make ends meet and are forced to shut down mines. Furthermore, once too many miners as blockchain nodes are reduced, the processing efficiency and security of blockchain will be threatened, which will fundamentally have a negative impact on the entire crypto industry.

2.2 Exemption Situation and Uncertainty

Peer-align Tariff There are several exemptions, especially including exemptions for some semiconductor and US-made products, but these circumstances are difficult to apply to the crypto mining machine manufacturing industry. First, Trump coordinated the tariff table (HTS) system to make different products correspond to different customs codes to stipulate the application of tariffs for specific products. The annex that it announced is not subject to the new tariffs only lists a small number of HTS codes in the semiconductor field. Currently, the chip models required by mainstream mining machines are not included. Second, according to the so-called American composition rules, if the parts of the product made in the United States account for more than 20% of the total value, it can theoretically constitute "American composition" and is exempt from the application of reciprocal tariffs. However, the United States has never been the main source of crypto mining machines. Whether it is chips, other components or assembly, they are all done in areas where tariffs are imposed, so it is difficult for crypto mining machine manufacturers to get exemptions through this rule.

In addition, tariff uncertainty is also worth paying attention to. At present, many countries have expressed that they will respond to US tariffs with retaliatory tariffs and other countermeasures, such as Australia, Canada, etc. For example, the Tariff Commission of the Court announced that starting from April 10, 2025, theAll imported goods were subject to a 34% tariff and actual countermeasures were taken. At the same time, they also have a compromise attitude and faced high tariffs from the United States. Vietnam proposed to reduce tariffs on the United States to 0%, and Cambodia proposed to reduce them to 5%. The leaders of both sides agreed to continue to negotiate on bilateral agreements related to tariffs. After a series of games, the implementation of tariffs may change. According to the logic of reciprocal tariffs, if the tax rate on the United States is reduced (especially Southeast Asia), a certain tax exemption may be obtained, thereby reducing tariffs will hit the overall crypto mining industry, which may be some hope in the short term that will be visible in the bleak prospects.

3 The way to break the deadlock: How crypto mining responds to

3.1 The failure of traditional response strategies

In dealing with tariff barriers, the effect of traditional trade transfer strategies may be much worse than before. After the Sino-US trade war began in 2018, companies had re-exported trade or transferred production capacity through Southeast Asia such as Vietnam and Thailand to reduce the adverse effects of tariffs, and the same is true for mining machine manufacturing. However, the scope of this "reciprocal tariff" is different now and can be regarded as a global tax increase. As an important place for transferring production capacity, the Asia-Pacific region has almost been "annihilated", and it has become particularly difficult to detour other areas that are not affected by tariffs. As for the practice of mining machine manufacturers to directly lower the price of mining machine when customs declaration to reduce tariff expenditures, there are major compliance risks. Once verified, they may face high fines or even criminal risks.

As the world's largest mining market, the United States has many crypto miners and corresponding mining equipment needs. Since Trump's new tariff policy has added more production costs for American crypto miners, can not purchase mining machines and mining in the United States become a feasible survival strategy? After all, before the 2021 mining ban, more than two-thirds of the world's crypto mining activities had converged, and the migration of crypto miners from the United States has shown that crypto mining does not have absolute path dependence. In fact, there are pros and cons to choose to deploy crypto mines in other regions. Among them, the most direct benefit is to avoid Trump's tariff risks. As for disadvantages, first, enterprises need to bear the uncertain risks of mine relocation and reconstruction; second, because the United States has rich power resources, using high-priced electricity or adopting production models such as computing power leasing will cause miners to lose their economic cost advantages; third, most importantly, the United States has a friendly regulatory attitude, a good legal environment and a prosperous crypto market, which can greatly ensure the stability and sustainability of the crypto mining industry and reduce the risk of black swans caused by uncertainty.

3.2 Some countermeasures worth exploring

ExceptIn addition to putting hopes on Trump's "changing mind" and adjusting tariffs for specific regions, crypto miners and crypto miner manufacturers may also seek countermeasures from the following two aspects:

First, crypto miners can turn their attention to the second-hand mining machine trading market. Tariffs involve import and export issues. There is no need to pay tariffs when conducting second-hand mining machines transactions in the United States. Miners can quickly deploy mines to meet the current computing power growth needs by purchasing second-hand mining machines. However, the prices of second-hand mining machines fluctuate greatly and have a high non-standard level. At the same time, the performance of second-hand mining machines is relatively backward, which may not be able to meet mining needs.

Second, crypto mining machine manufacturers can study and utilize the "US composition" rules to produce mining machines that meet the tariff exemption conditions. As mentioned earlier, considering that considering that Trump's current term has just begun and the purpose of tariffs, the US tariff trade barriers may last for several years. At this time, short-term avoidance may be difficult to work, and long-term compliance measures need to be considered. Unlike traditional rules of origin, the 20% "US component" threshold set by this tariff is aimed at lowering the threshold for manufacturing to return to the United States and encouraging foreign companies to transfer high value-added links (such as R&D, core component production) to the United States. Under this rule, crypto mining machine manufacturers can seek domestic alternatives to high-tax components such as chips, or enhance the U.S. composition of mining machines by separating IP companies and manufacturing companies. For example, foreign crypto mining machine manufacturers can cooperate with American semiconductor manufacturers to develop mining machine chips, or purchase chip modules that are packaged and tested in the United States (such as TSMC's Arizona factory), thereby accounting for chip costs into the value of US origin, increasing the proportion of mining machines' U.S. components, and thus avoiding tariffs. For example, you can try to set up a technology holding company in the United States, hold core patents such as mining machine chip design and algorithms, and then authorize foreign crypto mining machine manufacturing companies to produce chips and mining machines. However, this plan has certain tax risks and needs to be further analyzed and judged when applying it in detail.