The trade policies of any country are a powerful weapon in its economic arsenal, and their use has long reverberated in currency markets. Imposing tariffs or sanctions creates a chain of effects that can destabilize the value of a currency.
Now, with the increasing chaos of global politics and the foothold of digital money, these old economic tools are beginning to disrupt the world of cryptocurrencies.
Old rules - how trade moves money.
The trade tactics of any country boil down to a simple game of supply and demand. Any policy that changes how goods and money cross borders will inevitably change how much people want or need that country's currency.
When tariffs raise the cost of imports, a country's purchases from abroad naturally decline. This reduces the need for foreign currencies and may signal a better trade balance for investors, often raising the value of the local currency.
But it's not that simple. The other country may retaliate with tariffs, harming exports and wiping out any gains. Additionally, the unpredictability of trade dispute developments may scare off foreign investors, driving them to flee and weakening the currency.
Sanctions are a more complex blow, and their consequences are complicated. If sanctions prevent a country from exporting its goods or freeze its assets abroad, the flow of foreign funds will dry up, and typically the local currency collapses. However, if sanctions prevent imports, paradoxically, this could strengthen the local currency due to decreased need to purchase foreign currency.
Cryptocurrencies – A new arena for trade fallout.
Cryptocurrencies, existing outside national borders, provide a strange new playing field where the effects of trade policy can play out in unexpected ways.
If your country is cut off from the global banking system due to sanctions, cryptocurrencies may seem like a financial outlet. Individuals, and even governments, may start using digital currencies for international transactions, increasing demand for them within the sanctioned country.
Citizens watching their savings drained by currency devaluation may turn to cryptocurrencies. In countries experiencing a trade war, people often exchange their local currencies for stablecoins or major currencies like Bitcoin to protect their wealth from inflation.
The economic devastation caused by trade disputes also has a way of extending. If tariffs lead to inflation or a slowdown in a large economy, investors everywhere feel anxious. This fear can extend to all types of assets, causing the value of cryptocurrencies to drop along with everything else.
Lessons from past agreements - What do trade deals mean for the future of cryptocurrencies?
Major U.S. trade deals have a long history of redirecting global investments and manipulating currency values. Looking at agreements like the North American Free Trade Agreement (NAFTA), its successor the U.S.-Mexico-Canada Agreement (USMCA), and the strained trade relationship with China, we can see indicators of what awaits digital currencies.
NAFTA/U.S.-Mexico-Canada – Connecting markets together.
When the North American Free Trade Agreement (NAFTA) was established in 1994, it unleashed a wave of trade and investment between the U.S., Canada, and Mexico. The U.S.-Mexico-Canada Agreement (USMCA), which replaced it in 2020, brought the agreement into the 21st century with new rules for digital trade and financial services. Most importantly, the USMCA included a chapter on currency policies, indicating that future trade agreements are likely to address monetary issues directly.
The U.S.-China clash – A living test of economic pressures.
The trade dispute between Washington and Beijing was a remarkable example of how to direct monetary policy. When the U.S. imposed tariffs on China, the dollar briefly rose while the yuan weakened. Money fled China, and investors rushed to the dollar as a safe bet.
What does this mean for digital currency?
The history of these agreements provides a roadmap for how digital assets like Bitcoin and stablecoins fit into the global economy.
Escaping unstable currencies - Just as trade deals now seek to prevent countries from cheating with their currencies, digital assets provide people a way out when their governments cannot maintain the stability of their money.
Stablecoins grease the wheels of trade - Stablecoins, pegged to a hard currency like the U.S. dollar, could make cross-border payments faster, cheaper, and more transparent. The adoption of the U.S.-Mexico-Canada Agreement on digital trade paves the way for a future where these currencies are part of the system.
Evading government controls - because digital assets do not respect borders, they provide a new way to circumvent capital controls. Individuals and businesses can use cryptocurrencies to move money around the world more easily.
Will the dollar become the next "safe haven"? The trade war between the U.S. and China has made the dollar appear to be the optimal safe asset. But the existence of digital currencies presents a new competitor for that title.
Is the era of the U.S. dollar over? Trade deals and the cryptocurrency question.
The ongoing tug-of-war in U.S. trade policy is undermining the dollar's dominance, paving the way for alternatives like cryptocurrencies to gain serious consideration.
For decades, the U.S. dollar has enjoyed a "hefty privilege" as the preferred global currency, granting America enormous economic and political leverage. By late 2024, it still accounted for nearly 58% of global foreign exchange reserves, compared to 20% for the euro.
However, this represents a drop from nearly 70% in the early 21st century. The decline of the dollar will not return to its old rivals. Central banks are diversifying their investments with a mix of other currencies, such as the Canadian and Australian dollars, or even the Chinese renminbi.
U.S. trade policy – A double-edged sword.
U.S. trade agreements can simultaneously support and harm the dollar. Agreements that open markets usually solidify the dollar’s status as a major power. However, the shift toward protectionism and tariffs could create chaos and undermine the dollar's reliability.
Worse still, using the dollar as a weapon through sanctions has pushed countries like China and Russia to actively work on building financial systems that do not rely on America.
Can cryptocurrencies fill the void?
These uncertainties surrounding the future of the dollar have sparked a discussion about what might replace it. Cryptocurrencies, especially Bitcoin, are part of this discussion. Proponents argue that its decentralized design insulates it from the policies of any one country.
However, there are still significant obstacles. They are highly volatile, not always easy to trade in large quantities, and the rules are chaotic. Nevertheless, the idea continues to gain traction, and the development of government-backed digital currencies (CBDCs) may bring about an even larger revolution.
Trade agreements - A new battleground for cryptocurrency rules?
Trade agreements have become the main platform for setting global rules for digital assets. Optimally implementing these rules could expand their use, deepen their markets, and possibly even calm sharp price volatility.
Currently, cryptocurrency rules are confusing and convoluted. But global groups are striving to reach consensus. The Financial Action Task Force (FATF) has published its own rules for virtual assets. The European Union's Markets in Crypto-Assets (MiCA) regulation represents a huge step toward establishing a unified legal framework for the entire union.
Modern trade agreements go beyond basic principles. The World Trade Organization has imposed a temporary ban on digital tariffs since 1998, but modern digital economy agreements address emerging technologies, such as artificial intelligence.
Harmonizing rules through these massive agreements could significantly change the cryptocurrency market in three major ways -
More people will use it - Clear rules build trust. A clear legal framework would make it easier for ordinary people and large companies to participate.
Easier to trade - a single set of rules would make transferring cryptocurrencies across borders much easier, meaning more trading and better liquidity.
Smoother prices - When trade deals reduce global tensions and enhance cooperation, they create a more stable world for investors, which may help tame cryptocurrency volatility.
Under the pressure of sanctions, countries and companies are betting on cryptocurrencies.
As trade disputes escalate, some countries and businesses are looking for new ways to settle international bills, pushing cryptocurrencies towards a central role in a redesigned decentralized global trading system.
The traditional banking system has become a key tool for implementing foreign policy. This 'financial weaponization' gives sanctioned countries a strong incentive to find alternatives that sanctions enforcers cannot control. The decentralized nature of cryptocurrencies makes them an extremely attractive option.
Many countries feeling the pressure of economic sanctions are becoming leaders in using cryptocurrencies for trade -
Russia - Amid a flood of Western sanctions, Russia is moving towards legalizing the use of cryptocurrencies for international payments. In early 2023, reports indicated that Russia and Iran are working on issuing a gold-backed stablecoin for their trade.
Iran - After being cut off from the world due to U.S. sanctions for decades, Iran agreed to make payments in cryptocurrencies for imports, reportedly paying for them using Bitcoin.
North Korea - The regime is known for using hacking and cryptocurrencies to raise funds and evade sanctions.
Venezuela - To combat the "financial blockade," Venezuela launched its state-backed cryptocurrency, the "Petro."
It's not just countries; companies are also turning to cryptocurrencies to protect themselves from trade wars. Stablecoins are particularly appealing for managing corporate funds, as they ensure lower fees and faster transactions.
Cryptocurrency miners are caught in geopolitical trouble.
The global supply chain for powerful computers used in cryptocurrency mining has become a front in the technology war between the U.S. and China. This has led to trade policies that threaten the entire industry.
The collateral damage of the chip war.
The world’s reliance on a handful of East Asian countries for computer chips is a huge vulnerability. The U.S. has banned exports of advanced chips to slow down China’s technological ambitions. In turn, China is pouring massive amounts of money into building its own chip industry.
Pressure on miners?
For cryptocurrency miners, these political maneuvers cause real economic suffering. Trade policies raise prices and limit the availability of the specialized hardware they need.
A 25% tariff on mining platforms could eat up between 1% and 2% of mining companies' profits. If these tariffs reach 50% or 60%, this number could double, making it nearly impossible for small companies to survive.
A threat to the network?
When the supply chain for hardware is disrupted, it may slow the growth of the cryptocurrency hash rate, which is the total computing power securing its network. If new hardware is expensive or hard to obtain, network security may be at risk.
The line between trade policy and cryptocurrency prices is not entirely clear, but it exists. When mining becomes less profitable, miners are forced to sell more of their new coins to cover their costs. This selling creates downward pressure on the cryptocurrency price.
Digital currency diplomacy - Governments versus cryptocurrencies.
Central banks around the world are racing to develop their own digital currencies. As of July 2025, 137 countries, representing 98% of the world economy, are considering issuing a central bank digital currency (CBDC). Nearly 50 countries are already conducting pilot programs, while the Bahamas, Jamaica, and Nigeria have launched their own.
Integrating central bank digital currencies into trade agreements could completely transform international trade by eliminating intermediaries, reducing fees, and making settlements nearly instantaneous.
The rise of central bank digital currencies (CBDCs) creates direct competition with existing cryptocurrencies. While cryptocurrencies allow for bypassing the banking system, their sharp price volatility poses a significant problem for major international trade. In contrast, CBDCs will have full backing and stability from the central bank.
Despite the competition, CBDCs and cryptocurrencies may end up integrating. These currencies could form a new foundation for massive international trade payments, while the fast nature of existing cryptocurrencies may continue to serve smaller niche markets.
A new economic cold war?
The trade war between the U.S. and China is no longer just about tariffs; it has turned into a deeper strategic competition that divides the global economy into two camps.
This conflict, which began in 2018, will reach a new level of intensity in 2025. The temporary calm is about to collapse, threatening a return to high tariffs. This necessitates a "strategic decoupling" as companies rush to move their supply chains out of China, benefiting countries like Vietnam and India.
This division may lead to the emergence of competing financial worlds. A U.S.-led bloc may prefer a system based on transparency, perhaps using digital currencies like Bitcoin or a digital dollar with strong privacy features. A China-led bloc is likely to coalesce around a more centralized model, such as its digital yuan.
Mining costs in the crosshairs of trade and green energy.
U.S. trade policy and the global shift towards clean energy complicate the cryptocurrency mining sector. Since most specialized mining equipment comes from China, the U.S. mining sector is vulnerable to all the fluctuations of the trade war. Tariffs on Chinese products amplify the cost of the machines needed to operate them.
It's not just the equipment; trade policies also affect energy prices. For example, tariffs on steel and aluminum raise costs for the U.S. oil and gas industry, which could in turn affect energy prices for miners.
At the same time, the pressure to use renewable energy adds another problem. Trade policies may also increase the costs of solar panels and wind turbines, much of which are also subject to tariffs.
A war for territory at home?
In the U.S., a chaotic regulatory picture for digital assets is crystallizing, amid a struggle for control between the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the U.S. Department of the Treasury. While these agencies squabble internally, they strive to present a united front to the rest of the world.
At the heart of the internal conflict is whether digital assets are securities or commodities. The U.S. Securities and Exchange Commission (SEC) claims most are securities, while the Commodity Futures Trading Commission (CFTC) sees them as commodities. At the same time, the Treasury Department focuses on preventing financial crimes and maintaining the stability of the financial system.
Perhaps trade deals don't matter much to cryptocurrencies?
There is a strong argument that U.S. trade deals have little real impact on decentralized assets like cryptocurrencies.
The shield of decentralization.
Bitcoin operates on a global network not tied to any country or government. Theoretically, this design should protect it from the policies of any one nation, such as tariffs or sanctions.
Cryptocurrencies as a means of political hedging.
Rather than being victims of trade wars, cryptocurrencies may be a refuge from them. Some data suggests that in times of heightened geopolitical risks, Bitcoin has delivered above-average returns.
All of this is indirect!
While it's difficult to prove a direct link between a trade deal and the price of Bitcoin, U.S. policy can still indirectly stir cryptocurrency markets by influencing the general mood of investors. Major trading announcements often cause sharp and immediate volatility in cryptocurrency prices, as they are swept up by broader market reactions.
