I. Introduction

After President Trump returned to the White House, his aggressive tariff policies sparked what’s being called “Tariff War 2.0,” creating volatility in both traditional markets and crypto. Bitcoin and the broader crypto market faced sharp corrections, with many projects under renewed pressure.

This report from Hotcoin Research explores key developments in U.S. tariff strategy, its macroeconomic impact, and how these shifts may reshape the crypto landscape — highlighting risks and new opportunities for investors.

II. Tariff Policies Since Trump’s Return to the White House

February: Swinging the Tariff Big Stick

Targeting North America:

On February 1, the United States introduced a 25% tariff on all goods imported from Canada and Mexico, with a specific 10% tariff on Canadian energy resources. This move was aimed at pressuring both nations to strengthen border security, tighten immigration controls, and combat drug smuggling. In response, Canada swiftly imposed a 25% tariff on several billion dollars’ worth of U.S. products, while Mexico also prepared to implement retaliatory measures.

Targeting China:
On the same day, Trump announced a 10% tariff on all Chinese imports to the U.S., effective February 4, aiming to pressure China to curb fentanyl and drug smuggling. He also signed an executive order ending the duty-free policy for low-value shipments (under $800) from China and Hong Kong, making them subject to the new tariff. These moves marked the start of the Trump administration’s tougher tariff policy.

March: The Evolving Tariff Negotiation Landscape

NAFTA Tariff Turmoil:

On March 4, the Trump administration imposed a 25% tariff on all goods from Mexico and Canada, triggering retaliatory tariffs from Canada and a potential response from Mexico. The next day, Trump temporarily exempted automotive tariffs for one month to ease pressure on automakers. By March 6, he postponed tariffs on Canadian and Mexican goods until April 2 to allow for further talks, and both countries delayed countermeasures. However, on March 7, Trump threatened new tariffs on Canadian timber and dairy, signaling ongoing volatility and undermining the stability of NAFTA.

Return of Steel and Aluminum Tariffs:

On March 12, the Trump administration reimposed a 25% tariff on steel and 10% on aluminum, citing national security concerns. In retaliation, the European Union announced tariffs ranging from 4.4% to 50% on U.S. steel and aluminum products, effective April 1.

April: Escalation of the Tariff War

Trump unveiled a new round of aggressive tariff measures, dubbed the “Liberation Day” tariffs, with two key components:

Universal Tariff:

Starting April 5, a 10% ad valorem tariff will apply to most imported goods from 185 countries. Canada and Mexico, under the USMCA, are temporarily exempt, as are small e-commerce parcels (under $800) to minimize consumer impact.

Equivalent Tariffs:

For nations with significant trade deficits with the U.S., an additional tariff will be imposed, effective April 9. China faces a 34% tariff, while the European Union, Japan, South Korea, Taiwan, India, and Thailand will see rates ranging from 20% to 36%. An extra 25% tariff will also apply to all imported automobiles and auto parts starting April 3. This new wave of tariffs impacts virtually every major trading nation, with unprecedented scope and rates, sparking comparisons to a “tariff nuclear bomb.”

Source: https://www.bbc.com/

Global Retaliation:

The sharp escalation in tariffs triggered swift global reactions. On April 3, the EU and Canada vowed retaliatory actions, while Japan sought exemptions. On April 4, China imposed a 34% tariff in response. Trump then threatened to increase the tariff rate on China’s goods from 20% to 104%. The following day, China retaliated with an additional 50% tariff, raising the total to 84%, escalating tensions into a full-blown trade conflict.

Sudden Policy Shift:

Less than 24 hours after imposing high tariffs on multiple trading partners, Trump reversed course on April 9. Citing consultations with over 75 countries, he announced a 90-day tariff suspension, reducing the universal tariff to 10%. However, this suspension excluded Mexico and Canada, and the tariff on Chinese goods was increased from 104% to 125%.

III. How Tariff Policies Impact the Crypto Market

Trump’s tariff policy has reshaped the global trade environment and impacted the Bitcoin and broader cryptocurrency markets through several macroeconomic channels. As a key policy tool, tariffs create chain reactions that affect economic growth, inflation, capital flows, exchange rates, and market sentiment — ultimately influencing crypto asset prices. Below are the key mechanisms at play:

Economic Slowdown and Inflation Fears:

Tariffs function as a tax on imported goods, directly raising costs for businesses and consumers. This drives inflation and slows economic growth. As inflation expectations rise and the economy weakens, investors typically turn to traditional safe-haven assets. Amid tariff uncertainty, gold has been the preferred asset over emerging alternatives like Bitcoin. In early April, gold prices surged to a historic high of $3,150 per ounce. While Bitcoin is often considered “digital gold” and a hedge against inflation, its speculative nature currently outweighs its safe-haven appeal, with demand for inflation protection focusing primarily on gold and other traditional assets.

Tightening of Dollar Liquidity and Cashing-Out Demand:

The trade war has disrupted global supply chains and trade, potentially tightening dollar liquidity. A reduction in imports and exports decreases the dollar supply, while uncertainty prompts businesses and investors to hoard cash, further boosting dollar demand. In this environment, some institutions and investors may liquidate assets, including crypto holdings, to raise cash. This intensifies downward pressure on cryptocurrency prices. Additionally, a flight to safe-haven assets can drive up the dollar’s exchange rate, further impacting Bitcoin, which is priced in dollars. Amid these tariff shocks, market expectations suggest the Federal Reserve may cut rates earlier to support economic growth, which has already driven U.S. Treasury yields lower (the 10-year yield dropped by 20 basis points following the tariff announcement). These changes in rate expectations influence asset allocations, with safe-haven funds flowing into bonds and dollar assets, reducing investment in higher-risk assets like Bitcoin.

Market Risk Appetite and Sentiment Shift:

Large-scale tariffs are a significant negative signal for investors, undermining global risk appetite. The trade tensions sparked by Trump’s tariff policies have heightened market uncertainty, prompting a “sell first and wait” mentality. This is reflected in the strong correlation between stock and Bitcoin declines. According to TradingView data, Bitcoin’s price has a 0.66 correlation coefficient with the S&P 500 index, suggesting that Bitcoin is currently viewed as a risk asset rather than a safe haven amid market shocks. The tariff-induced uncertainty has also cooled previously optimistic market sentiment. During Trump’s campaign and early administration, signals of support for cryptocurrencies helped Bitcoin surge to around $109,000 by the end of 2024. However, as trade prospects worsened and economic headwinds mounted, the shift in sentiment toward risk aversion has significantly dampened the momentum in crypto asset rallies.

Source: https://newhedge.io/bitcoin/us-equities-correlation

Historical Trends and Changes in Crypto Asset Positioning:

The crypto market’s response to trade conflicts has evolved over time. In 2018, when Trump initiated a trade war, Bitcoin was seen as a hedge against uncertainty, driving its price from $3,700 to $13,000. However, in the 2025 tariff shock, Bitcoin didn’t replicate that rally — instead, it declined alongside stocks. This shift reflects changes in Bitcoin’s investor base and market positioning: institutional investors now play a larger role, and Bitcoin’s behavior has become more closely aligned with tech stocks and other risk assets. This evolution underscores the growing integration of crypto into the global financial system.

IV. Analysis of Crypto Market Performance After the Tariff Policy Implementation

February: Declining Optimism

At the close of 2024 and into early 2025, Bitcoin surged past $100,000, fueled by Trump’s election win and his pro-crypto stance. However, as tariff news surfaced in February, Bitcoin’s price quickly reversed course, and the overall crypto market saw sharp declines. By month-end, Bitcoin had dropped 28% from its January peak, entering a technical bear market. The global crypto market cap shrank by over $1 trillion, marking a cooling period amid the first wave of tariff uncertainty.

March: Volatility and Consolidation

March saw Bitcoin fluctuate as Trump’s tariff policies on Mexico, Canada, and steel/aluminum fluctuated. Bitcoin hovered around $80,000 early in the month, as tariff exemptions brought temporary relief. However, Trump’s hardline rhetoric kept investors cautious, with Bitcoin oscillating between $75,000 and $90,000, reflecting mixed sentiment.

April: “Liberation Day” Tariffs Spark Volatility

When Trump signed the comprehensive tariff package in early April, Bitcoin’s price briefly spiked to $87,400 before sharply reversing, dropping to around $82,000 — with daily fluctuations exceeding 6%. By April 9, Bitcoin had fallen to $74,508, marking the lowest point of the year amid increased market volatility.

Source: https://www.hotcoin.com/en_US/trade/exchange

CoinMarketCap data reveals that on April 2 — the day the tariff announcement was made — global crypto-related investment products, including ETFs, saw a net outflow of around $8.6 billion, with Bitcoin ETFs alone experiencing a $8.7 billion outflow in just one day. This suggests that institutional funds quickly retreated to safer assets. Over the course of that volatile week, the total market cap of cryptocurrencies shrank by approximately $500 billion. Meanwhile, CME Bitcoin futures open interest declined, indicating that some institutional investors were scaling back their risk exposure. Together, these signals point to a temporary outflow of funds from the crypto market and a tightening of on-exchange liquidity as investors sought safer options amid the tariff-driven uncertainty.

V. Looking Ahead: Tariff Policy Trends and Crypto Market Outlook

At the start of 2025, the global economy was grappling with slowing growth and easing inflation. Following the 2024 rate hikes, U.S. inflation had cooled, but growth momentum remained weak. Meanwhile, Europe teetered on the edge of stagflation, and emerging markets, particularly China, faced challenges in their recovery. Against this backdrop, the onset of a full-scale trade war further clouded the prospects for a fragile economic recovery.

5.1 Future Trends in U.S. Tariff Policy

Trump’s Tariff Strategy: Leverage for Political Gains

Trump may use maximum pressure as a bargaining chip, easing some tariffs after securing concessions from trade partners to achieve political outcomes. For instance, tariffs on Canada and Mexico could be reduced following agreements on immigration and drug trafficking, while EU auto tariffs may be revisited through new trade talks. Tariffs on Chinese goods might also see partial rollbacks in exchange for increased procurement or market access. The Trump administration stresses that tariff revenues will support domestic industries and infrastructure. In the long term, tariffs on key sectors like new energy and semiconductors are likely to remain, but should the economy deteriorate in the latter half of 2025, the administration may adjust its strategy.

5.2 How U.S. Tariff Policy Influences Monetary Policy

Tariff Shock and the Fed’s Policy Dilemma

The tariff shock is likely to prompt the Federal Reserve to ease policy sooner than expected, with rate cuts anticipated in the second half of 2025. J.P. Morgan Private Bank analysts predict the Fed could lower rates to 3.5% by year-end, driven by growth risks outweighing inflation concerns. However, tariff-driven inflation limits the Fed’s ability to ease, creating a policy dilemma. If tariffs persist, they could trigger stagflation, forcing the Fed into a tough choice: cut rates and risk inflation, or hold rates steady and deepen the economic slowdown. Progress in trade talks and tariff reductions could improve growth expectations, ease inflation, and create room for Fed rate cuts, benefiting assets like Bitcoin.

5.3 Future U.S. Tariff Policies and Their Potential Impact on the Crypto Market

Crypto Market Outlook: Potential Scenarios Based on U.S. Tariff Policy

If trade tensions ease and global risk appetite recovers, cryptocurrencies could see a fresh rally. A successful Fed rate cut or return to quantitative easing could help Bitcoin and Ethereum regain strength after their recent correction. Trump’s crypto-friendly stance may also drive blockchain-friendly policies, boosting digital assets.

However, if the trade war deepens and triggers a global recession, cryptocurrencies will likely remain under pressure, mirroring declines in traditional risk assets. Yet, Bitcoin may regain its status as a store of value as fiat currencies weaken and central bank policies spur new interest in scarce assets.

VI. Conclusion

Tariff Policies and the Crypto Market’s ResilienceIn the short term, tariff policies have negatively impacted the crypto market, with heightened safe-haven sentiment dominating investor behavior. Over the medium term, the market’s direction will depend on the trade war’s progression and macroeconomic responses, likely leading to continued volatility and consolidation.

In the long term, these shifts could reshape the global economic landscape, potentially offering Bitcoin and crypto assets new strategic opportunities. Ultimately, this tariff crisis tests Bitcoin’s ability to become “digital gold,” with its role as a value anchor and hedge becoming clearer if global economies fracture under protectionism.

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