Key Points
In 2025, trade protectionism led by the United States made a strong comeback. Since Donald Trump's re-inauguration as president in January 2025, the United States has raised global trade war concerns by implementing a series of massive new tariffs targeting specific countries and industries. Within just the past week, the United States launched a new round of "reciprocal" tariffs, with other countries announcing countermeasures.
This report will analyze how these tariffs—the most aggressive since the 1930s—impact macroeconomic conditions and the crypto market. We will examine tariff levels, macroeconomic trends (including inflation, growth, interest rates, and Federal Reserve outlook), and their effects on crypto asset performance, volatility, and correlation based on data. Finally, we will explore key observation points and market prospects for crypto assets in an environment of stagflation and protectionism.
Tariff Resurgence in 2025
After years of relative trade peace, 2025 saw a rapid reversal. President Trump began fulfilling his campaign promises within the first days of returning to the White House, imposing tariffs on a wide range of imported goods through emergency authorization, covering specific countries and industries.
Trade tensions further escalated on April 2nd. The United States announced comprehensive "reciprocal" tariffs and named the day "Liberation Day", marking a new turning point in the global trade war. Trade relationships previously considered normalized with the United States have fundamentally transformed. Key events from the past week include:
●Base Tariffs: The United States announced a new 10% uniform tariff on all imported goods, reversing decades of trade liberalization. This base rate took effect on April 5th.
●Targeted Tariffs: On top of the base rate, higher country-specific tariffs were added. President Trump called these "reciprocal" tariffs, aimed at countries with high barriers to US products. Notably, Chinese goods will face an additional 34% tariff—bringing the cumulative tariff rate to 54% when combined with the existing 20%. Other targeted tariffs include: 20% on EU goods, 24% on Japanese goods, 46% on Vietnamese goods, and 25% on automotive imports. Canada and Mexico, already subject to 20% tariffs in February, were not included in the new list.
●Global Retaliation: US trading partners quickly responded. By mid-February, several early-taxed countries had announced countermeasures. Canada, unable to secure US tariff extensions, decided to impose a 25% tariff on all US imports. China also responded early and further escalated on April 4th, announcing a 34% tariff on all US imported goods.
With "reciprocal" tariffs taking effect and trade tensions intensifying, more countries are expected to introduce their own countermeasures. The EU has clearly stated it will respond soon, and several other major economies have prepared retaliation plans. While the full extent of global response remains unclear, all indications suggest a broad trade war involving multiple fronts is forming.
Chart 1: Tariffs on April 2nd, 2025 "Liberation Day" cover up to 60 countries, including many major US trading partners Note: The table reflects the "reciprocal" tariffs imposed by the US on its top 10 import sources on April 2nd.
These policies have pushed US import tax rates to their highest level since the Smoot-Hawley Tariff Act of 1930, which imposed comprehensive tariffs on thousands of goods during the Great Depression. Based on existing data, the US average tariff rate has risen to approximately 18.8%, with some estimates as high as 22%—a dramatic leap from 2024's 2.5%.
For reference, the US average tariff rate has typically remained between 1-2% over the past decades; even during the US-China trade friction of 2018-2019, it only rose to around 3%. Therefore, the 2025 measures constitute an unprecedented tariff shock in modern history—almost equivalent to returning to 1930s protectionism.
Chart 2: US Tariff Resurgence Pushes Import Tax Rates to Highest Level in Nearly a Century
Market Impact: Demand Cooling, Risk Aversion, and Volatility Surge
1. Demand Cooling and Rising Risk Aversion
Market sentiment has clearly shifted to caution, with investors displaying typical "risk-avoidance" behavior in response to tariff announcements. The crypto market's total market cap has dropped approximately 25.9% from its January peak, with nearly $1 trillion in value evaporated, highlighting its high sensitivity to macroeconomic instability.
Crypto assets and stock markets show highly consistent trends, both facing demand cooling, widespread selling, and entering correction zones. In contrast, traditional safe-haven assets like bonds and gold have performed brilliantly, with gold continuously setting new historical highs as investors' refuge during increased macroeconomic uncertainty.
Chart 3: Since initial tariff announcement, crypto market down 25.9%, S&P 500 down 17.1%, while gold up 10.3% and continuously setting new historical highs
The severe market reaction also highlights crypto assets' performance characteristics during intense "risk-avoidance" periods: Bitcoin (BTC) dropped 19.1%, with most mainstream Altcoins experiencing similar or even greater declines. Ethereum (ETH) fell over 40%, while high-beta sectors like MEME coins and AI-related tokens plummeted over 50%. This round of selling has erased most of the crypto market's early-year gains, with BTC's year-to-date (YTD) returns turning negative by early April, despite strong performance in 2024.
Chart 4: Under macro panic triggered by tariffs, Altcoins show significantly higher declines than Bitcoin, intensifying market pessimism
As the crypto market increasingly exhibits risk asset characteristics, continued trade wars may further suppress capital inflows and short-term digital asset demand. Funds may remain cautious or shift to perceived safer assets like gold. This sentiment is reflected in recent fund manager surveys, with only 3% of respondents indicating they would allocate Bitcoin in the current environment, while 58% prefer gold.
Chart 5: Only 3% of global fund managers view Bitcoin as their preferred asset class in a trade war scenario
2. Volatility Surge
Market sensitivity to tariff policies is evident, with each major announcement triggering severe price fluctuations. Over the past few months, BTC experienced multiple significant price oscillations—including one of its largest single-day drops since the COVID-19 pandemic crash in 2020. In late February 2025, when Trump suddenly announced plans to impose tariffs on Canada and the EU, BTC dropped around 15% in subsequent days, with its actual volatility significantly increasing. ETH showed similar trends, with its one-month volatility surging from around 50% to over 100%.
These market behaviors highlight that in the current high-uncertainty macroeconomic environment, the crypto market is extremely sensitive to sudden policy changes. In the near future, if policy direction remains unclear or trade tensions further escalate, the market will maintain high volatility. Historical experience also shows that volatility may only gradually subside after the market fully digests and prices in new tariff policies.
Chart 6: During this stage, BTC's one-month actual volatility rose to over 70%, while ETH exceeded 100%, reflecting the market's intense volatility after tariff announcement
Macroeconomic Impact: Inflation, Stagflation Concerns, Interest Rates, and Federal Reserve Outlook
1. Inflation and Stagflation Concerns
(The rest of the translation follows the same pattern, maintaining the original structure and translating all text while preserving any HTML tags)● Trade Dynamics Development: Any new tariff list, unexpected easing measures, or major bilateral changes (such as US-China negotiations or further escalation) will directly affect market sentiment and inflation expectations.
● Core Inflation Data: The upcoming CPI and PCE data are crucial. If they unexpectedly rise due to import costs, it will intensify stagflation concerns; if the data is weak, it may alleviate central bank pressure and enhance the attractiveness of risk assets (including crypto).
● Global Growth Indicators: Declining consumer confidence, slowing business activity (PMI), weak labor market (rising unemployment claims, slowing non-farm employment), corporate earnings warnings, and yield curve inversion (common recession signals) may further trigger risk aversion in the short term. However, macroeconomic weakness that accelerates monetary easing expectations could also provide support for the crypto market.
● Central Bank Policy Path: How the Federal Reserve and other major central banks balance inflation and recession will determine asset liquidity. If they refuse to cut rates amid slowing growth, risk assets will continue to be under pressure; if they turn accommodative, it may bring comprehensive stimulus. If real interest rates decline (whether due to policy or persistent inflation), long-duration assets like Bitcoin may benefit. Central bank policy divergence (such as the Fed turning dovish while the ECB remains hawkish) could also trigger cross-border capital flows, further intensifying crypto market volatility.
● Crypto-Specific Policy Events: ETF approvals, strategic BTC reserves, key legislative advances, etc., may become independent catalysts under the current macroeconomic context, potentially breaking crypto assets' "macro binding" and re-emphasizing their uniqueness. However, reverse risks should be noted, such as regulatory delays or unfavorable litigation progress that could generate negative feedback.
Conclusion
The most aggressive tariff policy since the 1930s is profoundly impacting the macroeconomic and crypto markets. In the short term, the crypto market may continue to exhibit high volatility, with investor sentiment swinging with trade war news.
If inflation remains high while growth slows, the Federal Reserve's response will be a critical turning point: if it turns accommodative, the crypto market may rebound due to liquidity recovery; if it maintains a hawkish stance, risk assets will continue to face pressure.
If the macroeconomic environment stabilizes, new narratives emerge, or crypto assets regain their long-term safe-haven status, the market may be poised for recovery. Until then, the market may remain in a volatile pattern and be highly sensitive to macroeconomic news. Investors need to closely monitor global dynamics, maintain diversified asset allocation, and seek opportunities in potential market dislocations brought by the trade war.
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