trump_tariffs
US President Donald Trump Introduces Sweeping Tariffs
On April 2, US President Donald Trump introduced a series of tariffs, causing market turmoil and sparking debate among crypto analysts about their long-term implications.
At a special event at the White House, Trump signed an executive order and invoked emergency powers, imposing reciprocal tariffs on every country that levies tariffs on US goods, with a minimum starting rate of 10%.
The long-term impact of these extensive new taxes on global markets remains uncertain. The ambiguity is exacerbated by the unclear methodology used by the Trump administration to determine tariff rates.
Some believe the crypto market could experience a boom as investors seek alternatives to traditional investments. Others worry about tariffs’ effects on mining equipment, reducing profitability. Meanwhile, some fear broader economic consequences, including a potential recession.
Trump’s Tariffs “Provide Certainty” for Markets
Financial markets crashed immediately after the tariff announcement, and crypto markets were no exception.
Bitcoin (BTC) had nearly reached a session high of $88,500 but dropped 2.6% to around $83,000. Ether (ETH) fell from $1,934 to $1,797, and total crypto market capitalization declined 5.3% to $2.7 trillion.
Some market analysts remain unfazed. Trader Michaël van de Poppe wrote that the tariffs “won’t be as bad as the entire population expects them to be.”
“Uncertainty fades away. Gold will drop. ‘Buy the rumor, sell the news,’” he said. “Altcoins & Bitcoin go up. ‘Sell the rumor, buy the news.’”
BitMEX founder Arthur Hayes noted that while tariffs might reduce the trade deficit, fewer exports could limit demand for US Treasurys, necessitating Federal Reserve intervention to stabilize the market.
“The Fed and banking system must step up to ensure a well-functioning treasury [market], which means Brrrr,” he said.
“Brrrr” — referring to the Federal Reserve printing more money — is a theory Hayes has previously suggested could be bullish for Bitcoin’s price due to increased market liquidity.
What About Crypto Miners?
US crypto miners may have less reason to be optimistic about the tariffs, as they directly impact the cost of imported goods, particularly crypto mining rigs from Asia.
Mitchell Askew, head analyst at mining-as-a-service firm Blockware Solutions, stated: “Tariffs have MASSIVE implications for Bitcoin Miners. [Expect] offshore supply to get squeezed, increasing demand for onshore miners. If this coincides with a BTC rally, ASIC [mining rig] prices could surge 5 to 10 times like they did in 2021.”
Mason Jappa, CEO of Blockware, emphasized that tariffs will have “a major impact” on the Bitcoin mining industry. “Most current Bitcoin Mining Server imports come from Malaysia, Thailand, and Indonesia. Rigs already landed in the USA will become more valuable,” he wrote.
Some mining companies are already rushing to export mining rigs before the tariffs take effect. Lauren Lin, head of hardware at Bitcoin mining software firm Luxor Technology, told Bloomberg on April 3 that her firm was “scrambling.”
“Ideally, we can charter a flight and get machines over — just trying to be as creative as possible to get these machines out,” she said.
Tariffs’ Dubious Calculations, “Extraordinary Nonsense,” and a Looming Recession
The conveniently displayed tariff percentage charts at the White House signing event left many questioning how the Trump administration determined these numbers and why specific countries were selected.
Yale Review editor James Surowiecki wrote that the administration did not actually calculate tariff rates plus non-tariff barriers but instead “just took our trade deficit with that country and divided it by the country’s exports to us.”
“What extraordinary nonsense this is.”
Some have even speculated that the administration used ChatGPT to generate the tariff numbers. NFT collector DCinvestor claimed he was able to nearly replicate the list through generative AI prompts.
“I was able to duplicate it in ChatGPT. It also told me that this idea hadn’t been formalized anywhere before, and that it was something it came up with. FFS, the Trump administration is using ChatGPT to determine trade policy,” he said.
Another peculiar detail: the inclusion of some small, obscure territories on the White House’s list. As reported by Forbes, the US imposed a 10% tariff on the Heard and McDonald Islands in response to their 10% duties on US goods.
The Heard and McDonald Islands are uninhabited, barren, and among the most remote places on Earth, located 1,600 km from Antarctica. No one lives there; no trade occurs.
The questionable calculations and the contents of the tariff list have led many to doubt the administration’s economic rationale.
Nigel Green, CEO of global financial advisory giant deVere Group, told Cointelegraph that the president “peddles in economic delusion.”
“It’s a seismic day for global trade. Trump is dismantling the post-war system that made the US and the world more prosperous, and he’s doing it with reckless confidence,” he said.
Adam Cochrane, a partner at Cinneamhain Ventures, remarked that tariffs work effectively in industries where domestic production can offset the cost of imported goods.
“The US doesn’t have that, nor the factories for it, nor the labor to offset it, nor the raw materials for it. So you end up just paying more for the same goods.”
At the end of March, Goldman Sachs had already placed the likelihood of a US recession at 35%. After Trump signed the order, betting markets on Kalshi raised the probability to over 50%.
Trump, for his part, asserted that the tariffs will “make America great again” and give the US economy a competitive edge over former allies and trade partners. In his signing speech, he argued that the Great Depression of the 1930s would have been avoided if tariffs had been maintained.
The Smoot-Hawley Tariff Act, which increased tariffs during the Great Depression, is widely considered to have exacerbated the economic downturn and has become synonymous with failed economic policy.