On April 9, 2025, the U.S. officially imposed an additional 104% tariff on all imported goods from China, marking a new peak in the U.S.-China trade conflict. This tariff war not only affects the economic lifelines of the two countries but also has far-reaching impacts on the global economy and the cryptocurrency market. Below, we will analyze the background, consequences, and the impact on the world, especially on the crypto space.
1. The Background of the Tariff War: From Friction to Full Confrontation
The root of this tariff war can be traced back to the long-term strategic differences between the U.S. and China. The U.S. believes that China has captured global market share through subsidies and currency manipulation, threatening America's economic dominance. Conversely, China views U.S. trade restrictions as bullying behavior aimed at stifling its rise, leading to longstanding tensions. Entering 2025, after Trump was re-elected as U.S. president, he quickly put into action his campaign promise of a 'tough stance towards China', becoming the direct trigger for this conflict.
This conflict's immediate trigger.
The cause of the situation is not complicated. In January, the Trump administration imposed two rounds of 10% tariffs on Chinese goods under the pretext of cracking down on illegal fentanyl inflows, totaling 20%. China quickly responded with equivalent tariffs on U.S. goods, leading to a back-and-forth escalation. By early April, Trump announced a 34% tariff on all Chinese goods starting April 9, accusing China of 'unfair trade'. China retaliated, imposing a 34% retaliatory tariff on U.S. goods last week and stating that it would never back down.
Trump was clearly enraged. On April 7, he posted on Truth Social warning that if China did not withdraw its retaliatory tariffs by April 8, the U.S. would impose an additional 50% tariff on April 9. Ultimately, China did not compromise, and the U.S. did not back down. As of today, with the previous 20% and 34% tariffs, the total tariff on Chinese goods has reached 104%. This not only reflects Trump fulfilling his pledge to voters but also his radical attempt to reshape global trade through extreme pressure. The Chinese Ministry of Foreign Affairs responded firmly, stating that they would 'accompany to the end', leading to a complete breakdown in relations and the full-scale outbreak of the tariff war.
2. Consequences of the Tariff War: Win-Win and Global Ripple Effects
What does a 104% tariff mean? Simply put, Chinese goods have almost lost their competitiveness in the U.S. market. For the U.S., this will directly raise import costs, especially for products such as clothing and electronics that rely on Chinese manufacturing, leading to potential shortages and price increases in the short term. Adjusting the supply chain takes time, making it difficult for companies to quickly find alternative suppliers, such as those in Vietnam or India, and cost increases are inevitable. Chip companies like Micron have already begun passing the tariff surcharges onto customers, with profit pressure becoming a common phenomenon. Worse still, American consumers will ultimately bear these additional costs, and the rising cost of living may trigger dissatisfaction.
For China, the impact is equally severe. The U.S. is China's largest single export market, and soaring tariffs will lead to a sharp decline in export orders, putting Chinese manufacturing at risk of factory closures and worker layoffs. In response, the Chinese government may increase fiscal stimulus, such as releasing infrastructure funds ahead of schedule or subsidizing export enterprises. At the same time, further restrictions on exports of key resources like rare earths cannot be ruled out as a countermeasure against the U.S. However, in any case, China’s economy is unlikely to avoid short-term pain.
Looking globally, the impact of this tariff war extends far beyond the U.S. and China. The fragmentation of the trade system is accelerating, and the costs of restructuring supply chains are putting pressure on global manufacturing. Other countries cannot stand aside: India is busy negotiating with the U.S. to avoid being affected, and European stock markets have already started to decline in recent days. Citi directly downgraded China’s GDP growth forecast for 2025 from 4.7% to 4.2%, reflecting market concerns about the escalation of the trade war. The financial market is also turbulent; last Friday, U.S. stocks plummeted to the worst record since 2020, and Bitcoin briefly fell below $80,000, with investors rushing to sell risk assets and turn to gold and Treasury bonds for safety.
3. The Impact on the Crypto Space: Short-Term Negatives and Long-Term Opportunities Coexisting
The impact of the tariff war on the cryptocurrency market is particularly complex, with both short-term negative shocks and long-term potential opportunities.
In the short term, the crypto space finds it hard to remain unaffected. The crypto market is highly correlated with traditional financial markets, and the economic uncertainty brought by the escalation of the trade war directly drags down risk assets. Last week, Bitcoin fell to $74,000, a cumulative drop of 16% this year, indicating a loss of investor confidence. The dollar strengthened due to safe-haven demand, putting pressure on assets priced in non-dollar currencies, and both retail and institutional investors may temporarily step back to observe. Without significant positive news, such as clear regulatory policies from the U.S., Bitcoin may continue to follow the stock market downward in the short term.
However, from a long-term perspective, the tariff war may bring a new narrative for cryptocurrencies. The intensification of the trade war may make the trend of 'deglobalization' increasingly apparent, and geopolitical tensions undermine trust in fiat currency systems. In this context, Bitcoin, as a decentralized 'safe-haven asset', may regain attention. Analysts from Standard Chartered pointed out that if the U.S.-China conflict further escalates, Bitcoin could become a 'hedging tool' against tariff risks. An extreme scenario is that if China sells U.S. Treasury bonds in retaliation, the global monetary system could become more unstable, and the borderless nature of cryptocurrencies may become a highlight. Of course, all this depends on the extent of the deterioration of the situation.
4. Summary and Outlook
The tariff war that began on April 9, 2025, is an extreme manifestation of Trump's 'America First' policy and another round of the strategic game between the U.S. and China. The background lies in the long-standing conflict of interests between the two sides, while the consequences will be a global shock under a win-win scenario. In the short term, the world economy will face supply chain chaos, rising costs, and market turmoil, and the crypto space will also be under downward pressure. However, in the long run, if the trade war truly pushes the global financial order to the brink of chaos, cryptocurrencies like Bitcoin may find a new footing.
At present, the key lies in China's upcoming countermeasures and whether Trump will wield the tariff stick against other countries. If both sides continue to escalate, the remaining days of this year may be filled with uncertainty. For ordinary people, whether buying goods or trading cryptocurrencies, they must be prepared for tough times. How the situation evolves remains to be seen!
