What is the Impact of Tariffs on Crypto? A Comprehensive Guide

The impact of tariffs on cryptocurrency became clear when Bitcoin jumped 6% following news of a Trump tariff crypto policy pause. This market movement highlights how cryptocurrency prices increasingly respond to shifts in trade policy.

This reaction is part of a larger pattern. The cryptocurrency market is affected by various factors, including geopolitical tensions and tariff uncertainty. These economic changes, whether the result of new international trade barriers or shifting tariff policies, can potentially create unanticipated effects on Bitcoin, Ethereum, and other cryptocurrencies.

Key takeaways

• Tariffs can push investors toward crypto as a hedge against economic instability.
• Increased mining costs from hardware tariffs may affect Bitcoin's decentralization.
• Currency devaluation due to trade wars often boosts crypto adoption in affected countries.

What are tariffs, and how do they work?

Governments impose tariffs on imported goods designed to protect domestic industries or generate revenue. They work by increasing the cost of foreign products, making locally produced items more competitive. While tariffs primarily affect traditional trade, their impact on crypto emerges through secondary economic effects like inflation, currency fluctuations, and shifts in investor behavior.

How do tariffs impact the crypto market?

In crypto, tariffs can influence crypto price, mining operations, cross-border transactions, and even the appeal of digital assets.

1. Increased market volatility

Tariff uncertainty is a major driver of short-term crypto volatility. When governments propose trade restrictions without clear details, traders react impulsively, sometimes causing sharp price swings. For instance, on Liberation Day 2025, President Donald Trump's announcement of new tariffs on Asian tech imports led to a sudden 12% drop in Bitcoin within hours. The market later stabilized, but the event highlighted how quickly sentiment can shift in response to geopolitical moves.

To prevent further damage from tariff uncertainty, traders may do the following:

• Monitor geopolitical news for tariff announcements
• Diversify into stablecoins during high volatility periods

2. Capital flight to safe-haven assets

In times of rising trade tensions, investors traditionally seek safe-haven assets like gold or the U.S. dollar. While Bitcoin was once considered a potential hedge, recent market behavior suggests otherwise. In today’s economic climate, crypto is often among the first assets sold off during downturns, alongside equities.

This shift became evident during several recent global shocks, including tariff announcements and inflation scares, where Bitcoin’s price movements closely mirrored those of the broader stock market. Rather than acting as a counterbalance, crypto has shown increasing correlation with risk-on assets, thus undermining its role as a standalone hedge.

3. Weaker fiat currencies and crypto adoption

Tariffs can disrupt trade balances, leading to currency devaluation in affected countries. When local currencies lose value, citizens often turn to stablecoins to protect their wealth, especially in emerging markets with high inflation.

This effect is amplified in nations with capital controls, where cryptocurrencies provide one of the few avenues for wealth preservation. Countries experiencing severe currency crises, like Venezuela and Argentina, have seen particularly strong adoption of stablecoins pegged to the U.S. dollar as alternatives to their depreciating national currencies.

Did you know? Nigeria's crypto adoption increased 17% in 2023 as inflation eroded the naira's value.

4. Mining and hardware costs

Cryptocurrency mining relies on specialized hardware, much of which is imported. Tariffs on electronics can raise mining costs, squeezing smaller operators and potentially centralizing mining power among large players.

The impact varies by region. Miners in countries with imposed tariffs face higher equipment costs, while those in tariff-free zones gain a competitive advantage. This dynamic could gradually shift mining operations to more favorable jurisdictions, potentially affecting network decentralization.

Did you know? Chinese firms control around 70% to 80% of the global ASIC hardware market. If tariffs rise and are combined with additional export restrictions, the U.S. share of the global Bitcoin hashrate can drop below 30%.

Impact of tariffs across different cryptocurrencies

Ethereum (ETH)

Tariffs drive demand for Ethereum's dual utility as an inflationary asset and a DeFi/smart contract platform. According to Cointelegraph, the Ethereum price is at risk of a decline toward $1,200 as it retests a key support level amid diminishing network activity and a return to inflation of ETH supply. Despite these risks, some traders remain optimistic about Ether's upside potential.

Ripple (XRP)

XRP's price movements have been notably influenced by recent tariff-related developments. Following President Trump's announcement of a 90-day pause on most global tariffs, XRP experienced a significant surge, jumping over 13% to reach $2.04. This rally was part of a broader positive response in the cryptocurrency market, with other major digital assets also posting gains.

Stablecoins

Stablecoins like USDC and USDT have become useful tools for businesses and individuals seeking dollar exposure and financial stability. Based on Circle's report, USDC circulation grew by over 78% year-over-year, with significant adoption in emerging markets where access to traditional banking is limited.

Historical impact of tariffs on crypto

2018-2019: US-China Trade War

The U.S.-China trade war saw Bitcoin drop 30% alongside stocks, then surge 200% as Chinese investors used crypto to bypass capital controls. This established Bitcoin's dual nature, initially correlated with risk assets during panic selling but ultimately serving as a hedge.

2025: Trump's “Liberation Day” Tariffs and the Pause

President Donald Trump announced sweeping new tariffs on Liberation Day through Executive Order 14257, including a 10% universal import tariff and elevated rates for countries like China (125%) and the EU (34%). While intended to bolster U.S. industry, the move sparked fears of renewed trade wars and added pressure to already fragile global markets.

Just days later, the administration paused most tariff hikes for 90 days, and it already showed a positive effect on the cryptocurrency market. Altcoins such as Ethereum, Solana, and XRP rebounded as traders priced in short-term relief, underscoring how digital assets increasingly mirror macroeconomic risk sentiment.

The impact of tariffs on crypto manifests through multiple channels, from driving capital into stablecoins as safe havens to affecting crypto mining operations through hardware costs. While initial market reactions to tariff announcements are often volatile, cryptocurrencies, particularly Bitcoin, have demonstrated their resilience despite economic instability. For ongoing analysis of how macroeconomic policies like tariffs affect cryptocurrency markets, follow Acquire.Fi's blog.