Written by: FinTax
1. Trump's New Tariff Policy: Content and Motivations
1.1 Policy Content
On April 2, 2025, US President Trump signed two executive orders at the White House, announcing that the United States will establish a 10% "minimum baseline tariff" on trade partners and impose higher tariffs on certain countries. The tax rate chart he displayed shows that the reciprocal tariff rates for countries worldwide range from 10% to 50%, with the United Kingdom, Australia, and Singapore at 10%, the Philippines at 17%, the European Union at 20%, Japan at 24%, South Korea at 25%, China at 34%, Vietnam at 46%, and Cambodia at 49%... Trump claimed that the new tariff measures aim to promote US manufacturing and "make America wealthy again". The "baseline tariff" rate will take effect on April 5, and the "reciprocal tariff" will take effect on April 9.
The core of this tariff policy is the so-called "Reciprocal Tariff". However, the "reciprocal tariff" does not apply in certain cases, including but not limited to: (1) items constrained by 50 USC 1702(b); (2) steel and aluminum products, automobiles and auto parts already subject to Section 232 tariffs; (3) copper, pharmaceuticals, semiconductor and wood products, certain critical minerals, and energy and energy products listed in Annex 2 of the executive order; (4) goods subject to the tariff rates specified in Column 2 of the US Harmonized Tariff Schedule (HTSUS); (5) all goods that may be subject to future Section 232 tariffs; (6) goods from Canada and Mexico that comply with USMCA rules of origin; (7) goods with US component value (US components refer to value attributable to components produced entirely in the US or based on substantial transformation), provided that the US component is not less than 20% of the goods' value.
1.2 Motivation Analysis
The White House claims that the new tariff order aims to address the long-standing US trade deficit by significantly adjusting tariff policies and creating a fair competitive environment for US businesses and workers. In fact, Trump has been heavily imposing tariffs since the beginning of his current term, with economic factors being just one of the motivations:
First, economic factors. The United States has long been in a trade deficit position in international trade. According to the White House's statement, this "has led to the hollowing out of the US manufacturing base, suppressed the ability to expand advanced domestic manufacturing capabilities, disrupted critical supply chains, and made the US defense industrial base dependent on foreign adversaries." From the official perspective, reducing the deficit and revitalizing US manufacturing are the biggest economic factors behind the upgrade of this administration's tariff policy.
Second, political factors. Trump's voter base in the Republican Party primarily consists of blue-collar workers and conservatives, who are also the main victims of US manufacturing job losses. The Trump administration's use of tariff measures to achieve its political slogan of "making America great again" is an important strategy to cater to voters, fulfill campaign promises, and consolidate its core voter base. At the same time, raising tariffs and trade barriers is essentially about maintaining the United States' core position in the global political and economic system, using economic means to achieve political goals.
Third, leadership factors. To some extent, the new tariff policy is not unrelated to Trump's business background. Compared to long-term economic planning, Trump prefers to achieve short-term US interests during his term, shape the political image of "America First", and is thus willing to use tariffs as a "bargaining chip" in international negotiations.
2. How Tariffs Affect the Crypto Mining Industry
The release of this tariff policy immediately triggered a violent market reaction. On April 2, US stock futures collectively plummeted, and the crypto market was not spared during the stock market crash. Recently, Bitcoin dropped from $88,500 to $82,000, a decline of 3%, while mainstream Altcoins like BNB, SOL, and XRP experienced even more severe declines. Apart from the overall impact on traditional financial and crypto markets, the tariff policy's impact on the crypto mining industry deserves special attention.
2.1 The Impact of the Tariff Policy on Crypto Mining
With its abundant cheap energy, robust infrastructure, and stronger financial capabilities, the United States has become the most important global crypto mining market. According to December 2024 statistics, the US accounts for about 36% of global hash rate, far ahead and jointly shaping the global crypto mining market landscape with Russia (16%), China (14%), and the UAE (3.75%). By early 2025, the US hash rate share may have exceeded 40%, possibly approaching 50%.
The US's high computing power represents a high demand for crypto mining machines, but the US is not the main production site for mining machines, instead primarily obtaining them through imports. Therefore, in the crypto mining ecosystem, the midstream and upstream manufacturers are mainly affected by the tariff policy, specifically the supply of raw materials, assembly, and sales of mining machines. This includes chips, materials, and other components. As the main components of mining machines, chips primarily come from South Korea's Samsung and Taiwan's TSMC, with related materials mainly provided by Chinese and Southeast Asian manufacturers. Regarding mining machine assembly, due to labor costs, China and Southeast Asian regions have undertaken most of the assembly work with their cheap and abundant labor. However, these countries and regions are all subject to reciprocal tariffs, with countries like Cambodia, Laos, and Vietnam facing tariffs close to 50%. These massive tariffs will create a lose-lose situation for US crypto miners and mining machine manufacturers: On one hand, tariffs will directly increase the import prices of mining machines, compress the US market for mining machine manufacturers, and weaken their profitability in their primary market. For the already slowing mining machine manufacturing industry, this is another heavy and prolonged blow. On the other hand, these tariff costs will also be shared by US crypto miners, significantly increasing their operational pressure. Especially considering that since Bitcoin's price has been continuously declining from its $100,000 high point, various cryptocurrencies have been falling, and the profit margins of various crypto miners have already significantly reduced. Once mining machine prices rise, some crypto miners may face situations of unsustainable operations and being forced to shut down mining farms. Furthermore, if too many blockchain nodes (miners) are reduced, the blockchain's processing efficiency and security will be threatened, fundamentally negatively impacting the entire crypto industry.
2.2 Exemption Scenarios and Uncertainties
The reciprocal tariff policy has several exemption scenarios, particularly including partial semiconductor and US-manufactured product exemptions, but these are difficult to apply to the crypto mining machine manufacturing industry. First, the Trump administration uses the Harmonized Tariff Schedule (HTS) system to assign different customs codes to various products and specify tariff applications. However, the annex announcing non-applicable tariffs only lists a small number of HTS codes in the semiconductor field, and the chip models currently used in mainstream mining machines are not among them. Second, according to the "US component" rule, if US-manufactured product components account for over 20% of the total machine value, they can theoretically constitute "US components" and be exempt from reciprocal tariffs. However, the US has never been the primary production site for crypto mining machines, whether for chips, other components, or assembly, which are all completed in regions subject to tariffs. Therefore, crypto mining machine manufacturers will also find it difficult to obtain exemptions through this rule.
In addition, the uncertainty of tariff policies is also worth noting. Currently, many countries have expressed that they will respond to U.S. tariff policies with retaliatory tariffs and other countermeasures, such as China, Australia, and Canada. For example, the Tariff Commission of the State Council of China announced that starting from April 10, 2025, a 34% tariff will be imposed on all imported goods originating from the United States, taking practical countermeasures. Meanwhile, some countries have adopted a compromising attitude. Facing high U.S. tariffs, Vietnam proposed reducing tariffs to 0% with the U.S., and Cambodia proposed reducing them to 5%. The leaders of both sides agreed to continue consulting on bilateral agreements related to tariffs. After a series of political negotiations, the implementation of tariff policies may change. Based on the logic of reciprocal tariffs, if relevant countries (especially in Southeast Asia) reduce their tax rates to the U.S., they may seek certain tax exemptions, thereby reducing the impact of tariff policies on the crypto mining industry, which might be a glimmer of hope in an otherwise bleak landscape.
3 Breaking the Impasse: How Crypto Mining Industry Can Respond
3.1 The Ineffectiveness of Traditional Strategies
In terms of dealing with tariff barriers, traditional trade diversion strategies may be far less effective. After the China-U.S. trade war began in 2018, Chinese companies had previously transferred trade or production capacity through Southeast Asian countries like Vietnam and Thailand to mitigate the adverse effects of tariffs, and the mining machine manufacturing industry was no exception. However, the scope of this "reciprocal tariff" policy is unprecedented, essentially a global taxation, and the Asia-Pacific region, an important production transfer destination, is almost completely affected. Circumventing through other regions unaffected by tariffs has become extremely difficult. As for mining machine manufacturers directly underreporting mining machine prices during customs clearance to reduce tariff expenses, this approach carries significant compliance risks, and if discovered, could face hefty fines or even criminal risks.
The United States, as the world's largest mining market, has numerous crypto miners and corresponding mining machine equipment demands. Since Trump's new tariff policy increases production costs for U.S. crypto miners, would not purchasing mining machines and mining in the U.S. be a viable survival strategy? After all, before China's mining ban in 2021, over two-thirds of global crypto mining activities were concentrated in China, and the migration of crypto miners from China to the U.S. has already demonstrated that the crypto mining industry does not have absolute path dependency. In fact, choosing to deploy crypto mining farms in other countries or regions has pros and cons. The most direct benefit is avoiding the risk of Trump's tariff policies. As for drawbacks, first, companies need to bear the uncertain risks of mining farm relocation and reconstruction; second, since the U.S. has abundant electricity resources, not mining in the U.S. and using high-priced electricity or adopting computing power leasing production models would cause miners to lose economic cost advantages; third, and most importantly, the U.S. has a friendly regulatory attitude, good rule of law environment, and a thriving crypto market, which can greatly guarantee the stability and sustainability of the crypto mining industry and reduce black swan risks from policy uncertainties.
3.2 Some Potentially Explorable Countermeasures
Besides hoping that Trump will "change his mind" and adjust tariff policies for specific regions, crypto miners and crypto mining machine manufacturers might seek solutions from the following two aspects:
First, crypto miners can turn their attention to the second-hand mining machine trading market. Tariffs involve import and export issues, and trading second-hand mining machines within the U.S. does not require tariff payments. Miners can quickly deploy mining farms and meet current computing power growth needs by purchasing second-hand machines. However, second-hand machine prices fluctuate significantly, have high non-standardization, and their performance is relatively outdated, which may not necessarily meet mining requirements.
Second, crypto mining machine manufacturers can research and utilize the "U.S. component" rules to produce mining machines that qualify for tariff exemptions. As mentioned earlier, considering Trump's just-begun term and the political purpose of tariffs, U.S. trade barriers may persist for years. At this point, short-term avoidance strategies might be ineffective, and long-term compliance measures need consideration. Unlike traditional rules of origin, the 20% "U.S. component" threshold this time aims to lower the barrier for manufacturing returning to the U.S., encouraging foreign companies to transfer high-value-added segments (such as R&D and core component production) to the U.S. Under this rule, without considering other factors and risks, crypto mining machine manufacturers can seek U.S. domestic alternatives for high-tariff components like chips, or separate IP companies from manufacturing companies to increase the U.S. component of mining machines. For example, foreign crypto mining machine manufacturers could collaborate with U.S. semiconductor companies to develop mining machine chips or purchase chip modules tested in the U.S. (such as TSMC's Arizona factory), thereby calculating chip costs into U.S. origin value and increasing the proportion of U.S. components in mining machines to avoid tariffs. Another approach could be establishing a technology holding company in the U.S. that holds core patents for mining machine chip design and algorithms, then licensing foreign crypto mining machine manufacturing companies to produce chips and mining machines. However, this plan carries certain tax risks and requires careful assessment when implemented.
