A Look Back at the First U.S.-China Trade War

The U.S.-China trade war began in 2018 as a long-running dispute between the two largest economies. It was triggered when then-President Donald Trump signed a memorandum on March 22, 2018, accusing China of stealing U.S. intellectual property and trade secrets. In response, he instructed the U.S. Trade Representative to impose tariffs on Chinese imports and implement other trade barriers to pressure China into changing what he called “unfair trade practices.”

The U.S. imposed tariffs on hundreds of billions of dollars’ worth of Chinese goods, with rates reaching as high as 25%. China retaliated with similar tariffs, including a 25% hike on $34 billion worth of U.S. exports, such as soybeans. This back-and-forth caused major volatility in both economies and global markets. Although the two nations signed a Phase One deal in 2020, most tariffs remained. Trump also targeted allies like the EU, Canada, and Mexico with steel and aluminum tariffs, sparking multilateral trade tensions.

Trade deficit comparison chart released by the Office of the United States Trade Representative (Image Source: U.S. trade deficit)

Trump’s approach showcased a style of “high-pressure negotiation with transactional priorities,” creating market instability that disproportionately impacted high-risk assets like cryptocurrencies and tech stocks.

The 2025 Tariff Escalation

Since his return to office in early 2025, Trump has rolled out several protectionist trade measures. In February, the U.S. imposed a blanket 10% tariff on all Chinese imports, citing efforts to combat fentanyl trafficking. In March, a 25% tariff was slapped on goods from Canada and Mexico.

The critical moment came on April 2, when Trump signed Executive Order No. 14257, setting a 10% base tariff on all global imports and introducing even higher “reciprocal tariffs” for about 60 countries. Tariffs on Chinese goods alone increased by 34%, bringing the total to 54%. In addition, the administration removed the tax exemption for low-value imports (under $800) from China and Hong Kong.

On April 9, Trump raised Chinese tariffs to a staggering 125%, including a 20% “Fentanyl Tariff.” China condemned the move, accusing the U.S. of violating international trade norms and announced retaliatory tariffs of the same magnitude.

Donald Trump announced tariffs on April 9th (Image source:https://truthsocial.com/realDonaldTrump/114309144289505174)

Tariff Suspension Triggers Crypto Rally

On April 10, Trump unexpectedly announced a 90-day suspension of the comprehensive tariff plan and reduced the base import tariff to 10% for multiple countries. This policy shift opened the door for renewed trade talks. However, the 125% tariff on Chinese goods remained—an intentional strategy to increase bargaining pressure.

The announcement sparked a powerful reaction in the crypto market. Prior to the news, Bitcoin was hovering around $77,000 during U.S. trading hours. Following the announcement, it surged past $81,000 within 24 hours, posting a 5.5% gain. Risk appetite soared across altcoins: XRP, Solana, Avalanche, Chainlink, and SUI—all part of the CoinDesk 20 Index—jumped over 10%. Ethereum climbed past $1,600 with an 8% daily gain.

Capital markets also rallied. U.S. stocks rebounded sharply, led by tech shares. The Nasdaq rose 7%, while the S&P 500 gained 8.8%, signaling investor optimism about a softening in trade policy.

On April 10, the price of Bitcoin soared after the suspension of tariffs (Image source:https://coinmarketcap.com/currencies/bitcoin/）

How Tariffs Influence Crypto Prices

Economic uncertainty from tariffs typically increases market volatility. Since cryptocurrencies are viewed as high-risk assets, escalating trade tensions often cause investors to shift capital toward safer options like gold or government bonds.

On one hand, higher tariffs raise import costs, which are passed on to consumers, fueling inflation. In response, central banks may raise interest rates, increasing borrowing costs and reducing available investment capital—affecting crypto markets. That said, in extreme cases, inflation can push individuals toward cryptocurrencies as a hedge against fiat devaluation.

Trade wars and high tariffs can also weaken national currencies, prompting citizens to adopt crypto as a store of value. For example, during periods of economic turmoil in Argentina, crypto adoption surged as a hedge against currency depreciation.

Lastly, mining operations often rely on imported equipment—especially ASIC miners and GPUs from China. Tariffs on such hardware increase mining costs, potentially reducing hash rates and impacting network security.

rypto Under Tariff Policy Pressure

In the short term, tariffs act as highly visible economic interventions that stir financial volatility. Investors tend to become risk-averse, making crypto—an inherently volatile asset class—especially vulnerable to sell-offs. Rising import costs and inflation expectations also fuel fears of further rate hikes by the Federal Reserve, adding to market anxiety.

However, from a mid-to-long-term perspective, sustained tariffs could erode fiat credibility and slow economic growth. In such a scenario, crypto’s narrative as an anti-inflationary “digital gold” may strengthen, boosting the appeal of Bitcoin and certain stablecoins as stores of value.

Overall, Trump’s tariff policy is ushering in a new cycle of structural repricing in global capital markets. Crypto assets are likely to face complex dynamics amid policy uncertainty and rising demand for safe havens. Investors should manage exposure to high-volatility assets and avoid crypto tokens that are highly sensitive to macroeconomic shocks. A defensive-yet-opportunistic strategy may serve best under such conditions.

Conclusion

In an era of shifting global trade dynamics and unpredictable policy shifts, Trump’s tariff revival is once again a key driver of market sentiment. As one of the most sensitive asset classes, crypto is becoming increasingly tied to macroeconomic policy moves. To navigate the complexities of tariff escalation and monetary policy interaction, investors must stay highly attuned to policy direction and adapt accordingly. Understanding the transmission mechanisms between crypto and the global economy is essential for capturing long-term value in a rapidly evolving market.