The shadow of trade wars reappears, how will the crypto market respond?

Nearly a century ago, the Smoot-Hawley Tariff Act of 1930 had a profound impact on the global economy. The tariff war, which was framed as "protecting domestic industries," ultimately evolved into a disastrous contraction of global trade, exacerbating the depth and breadth of the Great Depression. To this day, the shadow of trade protectionism still lingers.

In April 2025, the United States announced an increase in tariffs on Chinese goods to 125%, plunging the global market into a tense atmosphere once again. The Chinese Ministry of Commerce quickly responded, stating that if the US continues its "tariff number games," China will "ignore" it and reserves the right to take further countermeasures. Meanwhile, the US government proposed a "90-day tariff suspension" plan for 75 countries, reducing the general tariff rate to 10%, but excluding China, Mexico, and Canada. This highly targeted trade strategy not only increases the risk of economic decoupling between China and the US but also poses new challenges to the crypto market—a new battleground for global capital flow.

Historical Warnings

The Smoot-Hawley Tariff Act, as one of the most destructive trade policies of the 20th century, offers historical lessons that contemporary policymakers should reflect on. In 1930, the U.S. Congress passed this act, raising average import tariffs to a historic high of 59%, with the intention of protecting domestic industries affected by the Great Depression, but it triggered a disastrous chain reaction.

Major global trading partners quickly adopted retaliatory tariff measures, leading to a contraction of the international trade system by nearly two-thirds between 1929 and 1934. U.S. exports plunged by 70%, and global unemployment worsened further. This policy not only failed to save the U.S. economy but also prolonged and deepened the Great Depression, exposing the fatal flaws of trade protectionism: in a globalized economy, unilaterally erecting high trade barriers inevitably leads to a "boomerang effect." The more far-reaching impact is that the act destroyed the foundation of international multilateral trade cooperation, fueled economic nationalist sentiments, and sowed the seeds for the collapse of the international economic order before World War II.

Trade Strategy in the New Era

In the tariff war of 2025 compared to 1930, the United States adopted a "selective tariff war" strategy, attempting to reshape the global supply chain—on one hand, applying extreme pressure on China, while on the other hand, temporarily easing tensions with most countries. This strategy of "divide and conquer" seems clever but actually hides risks. China, as the world's second-largest economy, is no longer the passive trade weak country of the 1930s. In response to the U.S. announcement of increased tariffs, China chose to handle it coldly with an attitude of "ignoring it," while accelerating the push for "de-dollarization". This strategic steadiness indicates that the new round of trade war may not evolve into a comprehensive melee like in the 1930s, but rather a more protracted war of attrition.

Crypto market response

The U.S. government's tariff policy has triggered severe fluctuations in the global financial markets, and the crypto market has not been spared. Bitcoin dropped from $83,500 to $74,500, Ethereum fell from $1,800 to $1,380, and the total market cap of other cryptocurrencies has been halved by over 40%. Market liquidity has significantly contracted, with Bitcoin's monthly capital inflow plummeting from a peak of $100 billion to $6 billion, while Ethereum turned into a net outflow of $6 billion. Despite a large-scale "surrender-style sell-off", as prices dipped, the scale of losses gradually narrowed, indicating that short-term selling pressure may be nearing exhaustion.

From a technical perspective, $93,000 has become a key resistance level for Bitcoin to regain upward momentum, while the $65,000-$71,000 range is a core support area that bulls must defend. The current market has entered a critical phase, and if the support level is broken, it will lead to most investors falling into unrealized losses, potentially triggering a more severe market adjustment. Overall, the crypto market is extremely sensitive to changes in global liquidity, and the uncertainty brought about by this tariff policy has caused widespread impact. Whether the market can stabilize will depend on subsequent policy directions and the flow of funds.

Conclusion

The crypto market is both a passive recipient and an active variable in this game. When international tensions rise and the global monetary system is in turmoil, investors may seek a scarce, global, and government or entity-independent means of storing digital value. Perhaps, as the credibility of the old order is eroded by trade wars, the seeds of a new system quietly take root. In this era of uncertainty, the development direction of the crypto market is worth our continuous attention.