On April 3, 2025, Trump announced a 10% baseline tariff on a global scale and imposed so-called 'equivalent tariffs' on certain countries (such as 34% on China and 20% on the EU). The news sent shockwaves through global financial markets, causing the price of Bitcoin (BTC) to plunge from $88,500 to $82,000, before rebounding to $83,300. You might wonder: what does tariffs have to do with Bitcoin? Why such a price jump?
Don’t worry; this article will analyze Trump's tariff policy's true intentions, its impact on the dollar, and how it affects Bitcoin in the medium (3-6 months) and long term (1-2 years) from a macroeconomic perspective. We will use economic principles, formulas, and logical derivation to clarify this 'Northeast stew'-style policy. The conclusion is presented here: tariffs may present an opportunity for Bitcoin, but volatility is inevitable, so hold onto your coins and keep watching!
Part One: The 'Hidden Agenda' and True Intentions of Tariff Policies
1.1 The 'Smoke Screen' of Tariffs and the Core Objectives
Trump's tariff policy seems 'crazy', but it actually hides a big move. You mentioned that his claimed 'high equivalent tariffs' (such as reducing China's from 67% to 34% and the EU's from 39% to 20%) are just smokescreens; the real meat is that 10% baseline tariff. This is a typical 'Trump-style negotiation strategy': first throwing out a scary big move to attract global attention, then 'backing off' to cancel or reduce most equivalent tariffs, leaving a 10% baseline tariff that makes countries feel they negotiated a win.
This move is not new. Looking back at Trump's trade negotiations with Canada and Mexico, he also threatened to impose high tariffs and eventually unilaterally declared 'victory', canceling most restrictions. This time, he is using the same tactic, targeting the 10% global baseline tariff.
1.2 10% Tariff = Dollar Usage Fee?
You are correct; this 10% baseline tariff is essentially a 'dollar usage fee'. Trump has previously complained that the dollar, as a global reserve currency, is overvalued, harming the competitiveness of U.S. manufacturing. Why say this? Because global demand for the dollar (for trade settlements, reserve assets) pushes up the dollar's exchange rate, making U.S. exports more expensive, outsourcing manufacturing, and leading to an 'hollowing out' of the economy.
In economics, this is known as the Triffin Dilemma: When a country's currency is the global leader, it must output liquidity through trade deficits, which can put pressure on its domestic economy. Trump's solution is to covertly charge a 'usage fee' through tariffs, forcing the world to pay for the dollar's hegemony while reducing the dollar's actual purchasing power, achieving covert depreciation.
Part Two: How Do Tariffs Affect the Dollar?
2.1 Tariffs drive up inflation, reducing the purchasing power of the dollar
The core impact of tariffs is to raise the prices of imported goods. For example, if the U.S. imports a mobile phone from China for $100 and a 10% tariff is applied, it becomes $110. This cost will ultimately be partially passed on to U.S. consumers, leading to price increases and inflation.
We use the Fisher Equation to take a look:
i=r+π
(i): Nominal interest rate (the rate you see)
(r): Real interest rate (real return after inflation)
π: Inflation rate
Tariffs raise import prices, causing the inflation rate (\pi) to rise. For example, 17% of U.S. imports come from China; assuming a 10% tariff and a pass-through rate of 50% (half the cost passed on to consumers), the inflation contribution is:
Δπ=10%×17%×50%=0.85%
The U.S. inflation rate may rise by 0.85 percentage points as a result. Once inflation sets in, the purchasing power of the dollar in the U.S. declines, even if the exchange rate remains unchanged; this is 'covert depreciation.'
2.2 Dollar Exchange Rate: Strong in the Short Term, Weak in the Long Term?
In the short term, tariffs may trigger panic over trade wars, causing global funds to flock to the dollar for safety (after all, the dollar is still a 'safe haven'), pushing up the exchange rate. But in the long term? According to purchasing power parity theory (PPP), the exchange rate will reflect the price differences between the two countries. If U.S. inflation is higher than that of trading partners, the dollar should depreciate.
For example:
S=P(US)/P(Foreign)
S: Exchange rate (USD to foreign currency)
P_{US}: U.S. price level
P_{Foreign}: Foreign price level
Tariffs cause P_{US} to rise faster than P_{Foreign}, leading to a decline in (S) and dollar depreciation. However, this process takes time; it may only become apparent after 1-2 years.
Part Three: The Mechanism of Tariffs' Impact on Bitcoin
3.1 Bitcoin's Role as a 'Safe Haven' and 'Hedge'
Bitcoin is often compared to 'digital gold' and has two key attributes:
Safe-haven assets: When the global economy is in turmoil, investors seek it for shelter.
Inflation hedge: The decline in fiat currency purchasing power and Bitcoin's scarcity (21 million cap) preserve its value.
How do tariff policies affect it?
Global uncertainty: The risk of trade wars is rising, and risky assets like stocks may decline, increasing the demand for Bitcoin as a safe haven.
Inflation pressure: Tariffs push up prices in the U.S., making Bitcoin more sought after as a hedge.
Dollar depreciation: If the dollar's purchasing power falls by 10%, Bitcoin's dollar price will naturally rise.
3.2 Market Sentiment and Short-term Volatility
The Bitcoin market is highly emotional. After the announcement of tariffs, BTC fell from $88,500 to $82,000, possibly due to 'herd behavior': panic selling by some leads to others following suit, causing a price crash. But it then rebounded to $83,300, indicating that the market reassessed and realized this is not the end of the world.
Part Four: Medium-term Effects (3-6 months)
4.1 Global Economic Pressure, Bitcoin Volatility Intensifies
In the medium term, tariffs could trigger a trade war, impacting the global economy. The International Monetary Fund (IMF) estimates that global growth rates may drop from 3.2% in 2024 to 2.5% in 2025. Risk assets (stocks, cryptocurrencies) may come under pressure, but Bitcoin's safe-haven attributes may allow it to rise against the trend.
4.2 The Dollar's Trend Influences Bitcoin
The Federal Reserve's response is crucial:
Raising rates to combat inflation: The dollar strengthens, Bitcoin comes under pressure (as safe-haven demand decreases).
Loosening to save the economy: The dollar weakens, Bitcoin rises.
In the short term, safe-haven funds may support the dollar, but as inflation effects become evident, depreciation pressure will increase. Bitcoin's price may fluctuate violently between $80,000 and $90,000.
4.3 Supply and Demand Analysis
Looking at it through the supply and demand model:
Rising demand: Trade wars and inflation boost Bitcoin demand, shifting the demand curve to the right.
Limited supply: Bitcoin production is fixed (halving mechanism), making the supply curve vertical.
The result is rising prices, but if the global economy contracts and liquidity tightens, demand may pull back, leading to inevitable price fluctuations.
Part Five: Long-term Effects (1-2 years)
5.1 'De-dollarization' and the Rise of Bitcoin
In the long term, tariffs may accelerate 'de-dollarization'. Countries may reduce the use of the dollar for settlements and turn to other currencies or crypto assets. This weakens dollar hegemony, and Bitcoin may seize the opportunity, especially if the Trump administration truly treats BTC as a 'strategic reserve.'
5.2 Institutionalization and Adoption Rate
With ongoing global uncertainty, Bitcoin may be adopted by more institutions. For example, U.S. companies may follow MicroStrategy's lead and hoard coins, and the proliferation of payment systems will also boost demand. Long-term prices may break through $100,000 or even higher.
5.3 Risk Factors
However, long-term trends also have uncertainties:
Policy reversal: Tariff cancellation leads to dollar rebound and Bitcoin correction.
Regulatory tightening: Countries crack down on cryptocurrencies, affecting the adoption rate.
Part Six: Economic Derivation and Quantitative Analysis
6.1 Inflation Effect Calculation
Assuming the total U.S. imports amount to $3.3 trillion, with a 10% tariff and a 50% pass-through rate, the price increase will be:
ΔP=110%×50%×3.3 trillion/27.7 trillion (GDP)=6.5%
Inflation rises by about 6.5%, with a similar decline in dollar purchasing power.
6.2 Bitcoin Price Derivation
Assuming a 10% depreciation of the dollar, Bitcoin's supply-demand elasticity is low (supply is fixed), demand increases by 10% (hedging + inflation hedge), and the price theoretically rises:
ΔPBTC≈10%×88,500=8,850 USD
With market sentiment amplification, long-term prices may break through $100,000.
Conclusion: Hold onto Bitcoin, but don't panic
1. Medium-term: Market Expectations and Capital Flows
In the medium term, the implementation of tariff policies may intensify global economic uncertainty, especially under retaliation from U.S. trading partners and expectations of dollar depreciation. Investors may be more inclined to seek safe-haven assets, which could drive increased demand for Bitcoin due to its decentralized, anti-inflationary, and limited supply characteristics.
The relationship between Bitcoin demand and investor sentiment can be expressed through the following model:
DBTC=f(I,U,T,E)
Here, DBTC represents Bitcoin demand, I is investor income and wealth, U is economic uncertainty, T is expectations of monetary and fiscal policy, and E is changes in risk aversion sentiment. As the dollar depreciates and global economic uncertainty rises, investors may increase their demand for Bitcoin, driving its price up.
2. Long-term: Global Economic Adjustment and Bitcoin Market
In the long run, tariff policies may lead to a slowdown in global economic growth and exacerbate imbalances in international trade. In this economic environment, the status of the dollar as a global reserve currency may be challenged, capital flows may tend to diversify, and the demand for decentralized assets like Bitcoin may continue to grow. Moreover, due to Bitcoin's fixed supply (21 million), it has a unique advantage in responding to currency depreciation and inflation, potentially becoming a more widely accepted store of value in the long run.
So, hold onto your BTC, don't be scared off by short-term drops. Tariffs are just the opening act; the stage for Bitcoin is still long!
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