GuShiio.com On the evening of March 3 (Beijing time), U.S. President Donald Trump confirmed the imposition of additional tariffs on Canada and Mexico, and began to take reciprocal tariff actions on April 2, making it clear that he hoped to negotiate with Canada and Mexico at the last minute to avoid comprehensive tariffs. Hope was dashed.
Author: Hedy Bi, OKG Research
On the evening of March 3 (Beijing time), U.S. President Donald Trump confirmed the imposition of additional tariffs on Canada and Mexico, and began to take reciprocal tariff actions on April 2, making it clear that he hoped to negotiate with Canada and Mexico at the last minute to avoid comprehensive tariffs. Hope was dashed.
Bitcoin, which still has to absorb the honey of the previous day’s “crypto strategic reserves” in the future, fell 8% in less than 48 hours. At the same time, U.S. stocks also suffered from tariff shocks and suffered a “black door”, with the Nasdaq index falling 2.6%. In just over a month since Trump took office, the market value of the crypto market has evaporated by 22%, and the Trump Media and Technology Group (DJT) has fallen by 34.75%. Musk, who has always supported Trump, was not spared due to the “simple and crude” practices of the DOGE department and excessive involvement in international politics. Tesla’s share price fell 32.87%.
Trump’s words are pulling on the nerves of the crypto market, and have a rather meaning of “success and failure.” In 2025, OKG Research will focus on the special topic “Launching Trumponomics”, and the author will continue to track the impact of the Trump 2.0 administration on the crypto market. In the previous article on this topic,”A new round of liquidity strikes, can the encryption market take advantage of the momentum to break through new highs?” We proposed that the market should focus on real liquidity (TGA can be focused on in the short term) rather than market news and public opinion, and showed that without real liquidity support, the “talk but no practice” foreign exchange rise will not last long. Not only that, according to the latest official data from U.S. investors, since February 28, TGA accounts have stopped injecting liquidity into the market, causing the TGA to inject a total of US$304.89 billion into the market.
As the first stick dropped, tariff policy has had a huge impact on the global risk market with “American attributes.” Remove the disruptive policy that Trump 1.0 and 2.0 both have a soft spot for? As the fifth article of the special topic of OKG Research 2025-“Trump Economy”, this article will use the trade war as a framework to analyze the deep content implications of Trump’s “left-handed tariffs, right-wing encryption.”
Tariff “bargaining chip”
Trump’s bilateral commitments to come to power are very obvious, but the first thing to drop the stick is tariffs.
On the surface, Trump imposed tariffs to reduce the trade deficit and boost jobs and the economy. But Trump’s 1.0 trade war and the global trade war triggered by pre-1930 tariffs both show that this is not “good business.” The U.S. Congressional Budget Office (CBO) stated that the 2018-2019 trade war caused the United States to lose 0.3% of GDP, or approximately US$40 billion. Data from the Peterson Institute for International Economics shows that in 2018 alone, aluminum tariffs lost approximately 75,000 reserves to the U.S. manufacturing industry. In addition, U.S. companies restored domestic inventories and instead moved production to countries such as Vietnam and Mexico (Carney). Trade wars implemented by other presidents also failed to achieve good results: in 1930, when the United States implemented the Smoot-Hawley Tariff Act, global trade volume recovered by about 66%. The value of U.S. exports fell by 67%, triggering price interruptions and causing massive unemployment.
Tariffs are only the beginning. The Trump administration curbs and creates economic uncertainty in exchange for bargaining chips. The core of the tariff game is not just the flow of goods, but also involves technology mortgage capital, flow and currency competition. The essence of a trade war is not limited to tariff barriers, but has a profound impact on the global financial system. From the foreign exchange market to the stock market, from global bond yields to asset risks, the capital market is not immune.
Buffett rarely warned that punitive tariffs could promote inflation and harm consumer interests. Expectations for the real economy will further aggravate the Fed’s problem-how to control inflation without triggering serious economic structures. Consumer confidence may drag down the economy, while inflationary pressures limit the Fed’s room to cut interest rates, ultimately further tightening liquidity and plunging the Fed into a recession.
For the crypto market, participants in global risk asset market sentiment, the market performance of crypto assets is on par with the volatility of U.S. technology stocks. Whether 70% of Bitcoin’s computing power relies on Nvidia’s GPU-driven mining machines, or whether crypto-related companies such as Coinbase and MicroStrategy are included in the Nasdaq 100 Index, the impact of U.S. financial policies and regulatory guarantees on the crypto market has further deepened.
Relatively speaking, the proportion of crypto markets is a derivative variable of U.S. financial policy, rather than a hedging tool (see OKG Research’s article,”Repositioning Crypto Markets: The Transformation Pain of Global Liquidity Troubled,” July 2024). In the future, assuming macro expectations remain unchanged, the market reaction to this tariff-influencing factor: If other countries choose to give in, the current performance of the crypto market will only remain unchanged in the short term, and the medium-risk and long-term arguments will be positive, including the inclusion of assets marked with U.S. attributes, and the United States will also use tariffs as a tool to achieve its real goals in negotiations; If other countries respond strongly, including but not limited to retaliating with the same tariffs, apologize for risky assets.
Cryptographic assets may become a very standardized countermeasure in extraordinary times
It can neither achieve the ostensible goals nor benefit Trump’s supporters “MEGA”(giant interest groups). Trump 2.0, which has a destructive tariff policy and a 40% decline in companies but still has to make a “hard-core” statement.”How to use” left-handed tariffs, front-line encryption assets “to make the United States great again?”
For more than a month, the turmoil in the U.S. financial market is accelerating the loss of “national confidence.” As Paul Krugman, an American economist and Nobel Prize winner in Economics in 2008, once wrote in his recent blog post,”Since taking power five weeks ago, Elon Musk and Donald Trump have wanton destruction on multiple fronts-including the rapid destruction of American influence in the world. The United States has suddenly redefined itself as a rogue state that reneges on promises, threatens headquarters, attempts to engage in mafia-style extortion, and democratic elections.
History tells us that when the national credit system begins to disintegrate, capital will not stand still, but will find new circulation methods.
Looking back in the last century, Japan’s economic rise led to a trade imbalance between the United States and Japan, resulting in trade difficulties. Through the “Plaza Accord”, the United States believed that the yen would appreciate, which severely damaged Japan’s export-oriented economy and caused turmoil in the financial system. The asset bubble burst, the Japanese government strengthened regulation, and the market quickly looked for alternative channels, giving rise to a black market economy-gold smuggling, offshore dollar trading surged, and the foreign exchange market flourished. According to Nikkei statistics, there were as many as 17,000 black markets in major cities in Japan. This “underground financial system” has become a spontaneous hedge against the collapse of the traditional financial system. Later, it supported its economy through war demand orders and currency liberalization, creating the grand scene that “one Tokyo can buy the entire United States.” However, the subsequent excessive interest rate cuts led to the bursting of the bubble, and Japan’s economy turned from prosperity to decline. He saw him build a Zhu Lou, banquet guests, and also saw him build a building.
Looking back at history, both “black market” and “financial liberalization” play a key role in the trade war. At this time, the Trump administration announced the establishment of a national reserve of crypto assets. On the surface, it is a financial innovation, but in fact it is more likely to be a “very standardized response in extraordinary times.”
There are two reasons: Faced with the US dollar credit panic, the Federal Reserve’s monetary policy has gone to extremes, and the United States urgently needs new chips to maintain global capital trust. Cryptographic assets may be this “quasi-financial weapon”: once strategic reserves are grasped, the government will have more room to operate in global flows; the market’s “de-dollarization” trend is emerging. As the trade war escalates, countries are bound to accelerate the allocation of non-US dollar assets to hedge risks to the US dollar system. At the beginning of 2025, the rising price of gold is a proof of this. Against the background of accelerating “de-dollarization”, if crypto assets can maintain true centralization but are manipulated by a single country, they may gain a new geopolitical premium in the global financial game.
Trump version 2.0 has an increasingly prominent attitude towards the United States ‘dominance in the global economic system. The Trump administration is trying to break the order of the international political and financial system since World War II. Compared with directly strengthening US dollar credit and establishing crypto asset reserves to provide the government with more “indirect intervention” in the market, with the continuous obstruction of crypto assets and technologies, a new cross-border payment system can be formed in the future, and even in the future. A state-led crypto financial network.
In “Trump Commentary”, Trump’s family originated from Germany, and he himself is described as a “fighter”, believing that enthusiasm is far more important than intelligence and talent. For him, the joy of being “impatient” to close a deal and defeat his opponent is his greatest motivation. However, in a trade war,”impatient” to re-negotiate a new deal and “defeat the opponent” will undoubtedly be the best conclusion for the Trump administration.
