What Are Tariffs? The Logic Behind Trump Tariffs

Tariffs are taxes imposed by a country on imported goods, usually calculated as a percentage of the goods’ value. The Trump administration views tariffs as a primary tool to restructure the global trade order. In the latest round of policies, the White House imposed tariffs ranging from 10% to a historic 125% on goods from 60 countries, with Chinese goods facing the highest rates.

The original intent of imposing tariffs is to raise the cost of foreign goods, pushing consumers to buy domestic products and thereby protecting local industries. However, economists argue this could also lead to price inflation, rising manufacturing costs, and disruption of global supply chain stability.

Why Is Trump Launching a Tariff War?

There are three core reasons:

1. Trade Deficit: Trump insists that the U.S. has been “plundered by foreign countries” and needs “reciprocal tariffs” to reduce its trade deficit.

2. Manufacturing Reshoring: Tariffs are used to disrupt foreign supply chains and encourage investment to return to U.S. soil.

3. Political Mobilization: In an election year, being tough on China helps shape an image of economic nationalism and solidify his core voter base.

Leaked documents show that the tariff rates set by the White House are not based on WTO principles or trade reciprocity but aim to “eliminate the U.S. trade deficit with each country.” This means even countries with minimal exports to the U.S. are affected.

Global Market Reaction: Trade War Escalation Triggers Capital Panic

The Trump tariffs—up to 125%—have caused extreme volatility in global stock markets. The S&P 500 dropped below 5000 points, and a staggering $10 trillion was wiped off global market value. Tech giants like Apple and Microsoft collectively lost $1.65 trillion in market cap. Inflationary pressures have also risen, with the U.S. 10-year Treasury yield climbing above 4.3%, intensifying fears that the Federal Reserve may maintain high interest rates longer. Western countries, Japan, South Korea, and Canada voiced opposition and launched retaliatory tariffs. The UK Prime Minister openly admitted, “This will have a substantial impact on the British economy.”

How Is the Crypto Market Affected by Trump Tariffs?

Although crypto assets don’t go through traditional customs systems and theoretically aren’t directly affected by tariffs, the reality is that the crypto market is still driven by macro capital flows. After the tariff escalation, the crypto space was not spared. Key impacts include:

1. Bitcoin Price Drop and Spreading Fear:

Bitcoin fell below $75,000 (as of April 10, BTC has bounced back to $82,000), and total crypto market capitalization dropped from $3.9 trillion to $2.5 trillion. The Fear & Greed Index plunged into the “Extreme Fear” zone (17), indicating a general retreat from risk assets.

Image:https://www.gate.io/trade/BTC_USDT

2. Altcoins Crushed, BTC Dominance Rises:

BTC Dominance climbed to 62%, showing a flight to safer, mainstream assets. High-valuation tokens like Solana and AVAX fell by 20–30%.

Image:https://www.tradingview.com/symbols/BTC.D/

3. MicroStrategy Sell-off Fears Pressure Market Confidence:

Strategy firm MicroStrategy warned in SEC filings that it might sell its 520,000 BTC holdings if finances deteriorate. This potential “whale sell-off” added to selling pressure and created a chain reaction.

4. On-Chain Data Still Healthy, But Activity Slows:

Although large holding addresses have not panic sold, on-chain turnover has declined, indicating short-term market caution. Bitcoin is forming medium-term support around $70,000, but any rebound still requires macroeconomic tailwinds.

Summary: From Macro to On-Chain, Markets Are Under Pressure From All Sides

Why Trump tariffs? This is Trump’s political gamble to reshape the global economic order and boost his campaign. In practice, the ripple effects have reached global capital markets, and the crypto world hasn’t been immune.

While the “borderless” nature of crypto assets remains attractive, the combination of capital flight, institutional sell pressure, and macroeconomic headwinds means markets will remain under stress in the short term. In the long run, whether Bitcoin and similar assets can truly become “global safe-haven assets” will start to be revealed through this round of pressure testing.