March in the spring is not peaceful! The US and China are throwing tariffs at each other, and the cryptocurrency market is also being "dragged down"?

In the warm spring of March, as everything begins to revive, the leaders of Blue Planet are engaged in an economic war and tariff confrontation.

Recently, the Trump administration once again wielded the tariff stick, raising tariffs on Chinese goods imported to the U.S. from 10% to 20%, and threatening to impose a 25% tariff on Canada and Mexico.

This move instantly ignited panic in global markets, with the three major U.S. stock indices plummeting over 2% in a single day, and Bitcoin dropping more than 10% within 24 hours, resulting in a market value loss of $300 billion.

China quickly countered with a "tariff + non-tariff" response: imposing a 15% tariff on U.S. chicken and wheat, a 10% tariff on soybeans and pork, and placing 15 U.S. companies on an export control list.

Trump's tariffs on China increased from 10% to 20%, and he frequently brandished the "tariff stick," with superficial reasons including reducing trade deficits and protecting domestic industries, but the deeper logic is more akin to political leverage and negotiation tactics.

1. Short-term political gains: Tariff policies can quickly cater to his core voters (such as manufacturing workers), shaping an image of "strongly defending American interests," especially effective during election cycles.

2. Pressuring negotiation opponents: By creating economic uncertainty, he forces trade partners to make concessions. For example, before the tariffs on Mexico and Canada took effect on March 4, the market anticipated an agreement, but it ultimately fell through, leading to a plunge in U.S. stocks and the crypto market.

3. Disguising structural economic issues: Problems such as the hollowing out of U.S. manufacturing and high debt levels are difficult to resolve in the short term, and tariffs divert public attention. However, historical data shows that the trade war in 2018 led to a 0.3% loss in U.S. GDP, accelerating the outflow of industries to Vietnam and Mexico.

However, the role of tariffs in the U.S. economic recovery is limited. The Peterson Institute points out that the costs of tariffs are ultimately borne by U.S. businesses and consumers, raising inflation and suppressing consumption, exacerbating the Federal Reserve's policy dilemmas. Recently, new home sales in the U.S. fell to a three-month low, confirming this risk of weak consumption.

Why do U.S. stocks and the crypto market "suffer together"?

Every time Trump mentions tariffs, U.S. stocks and the crypto market often decline in tandem, driven by global risk sentiment and capital flight logic.

1. Similar risk asset attributes: U.S. tech stocks and cryptocurrencies are both viewed as high-volatility risk assets. For instance, the sharp decline of tech giants like Nvidia and Tesla (with single-day drops exceeding 8%) often coincides with Bitcoin's simultaneous drop.

2. Expectations of liquidity tightening: Tariffs raise inflation, limiting the Federal Reserve's ability to cut interest rates, leading to market concerns about liquidity contraction. The crypto market, in particular, relies heavily on a loose environment, and changes in liquidity expectations directly impact prices.

3. Spreading risk aversion: Funds shift from risk assets to safe-haven assets like government bonds and gold. On the day the tariffs took effect on March 4, Bitcoin plummeted 10%, Ethereum fell 16%, while the U.S. dollar index experienced three consecutive declines, indicating a divergence in the market's definition of "safe assets."

Tariff protection and crypto support: Trump's "left and right hand combat"?

Trump wields the tariff stick with his left hand while promoting a crypto strategic reserve with his right, seemingly contradictory but actually implying strategic synergy:

1. Reshaping dollar hegemony: Tariffs strike at trade opponents, while crypto reserves aim to seize emerging financial heights. If the U.S. controls core crypto assets like Bitcoin, it could gain new leverage in global liquidity, hedging against the risk of declining dollar credibility.

2. Dividing market camps: Tariffs primarily target traditional industries (like automotive manufacturing), while crypto policies attract tech capital and young voters, consolidating Trump's diverse support base.

3. Experimental policy probing: The crypto summit plans to propose policies like "zero capital gains tax"; if successful, it could attract global capital into the U.S. crypto market, while failure could be blamed on the industry itself, resulting in lower political costs.

Market predictions after the crypto summit: short-term euphoria and long-term fog

1. Short-term benefits released:

• Zero capital gains tax: If implemented, it will stimulate speculative funds to flood in, and Bitcoin may quickly surge towards the $150,000 mark.

• Institutional entry expectations: News of sovereign funds and banks increasing their holdings in crypto assets (such as Standard Chartered predicting Bitcoin could reach $500,000) may be amplified by the summit, driving FOMO sentiment.

1. Mid-term risk accumulation:

• Doubts about policy implementation: The Trump administration is adept at "governing by slogan," and specific regulations may be delayed or diluted, making market expectations prone to disappointment.

• Tariff shadows linger: If tariffs on China escalate, risk assets will come under pressure again, making it difficult for the crypto market to stand alone.

1. Long-term game key:

• The symbiotic relationship between the dollar and crypto: If the U.S. successfully incorporates crypto assets into its strategic reserves, it may form a "digital dollar hegemony," but it needs to resolve the inherent contradictions between centralization and decentralization.

• Global regulatory encirclement: The EU, China, and others may accelerate the development of sovereign digital currencies, weakening the U.S.'s first-mover advantage.

Conclusion

Trump's tariff and crypto policies are essentially a high-risk political gamble. In the short term, the market will experience severe fluctuations amid policy swings; in the long term, if the U.S. fails to balance "protection of traditional industries" with "expansion of financial innovation," it may accelerate the global capital flight from the dollar system. The fate of crypto assets will ultimately depend on whether they can escape the chessboard of geopolitical conflicts and become a true "decentralized safe haven."