Author: Bradley Peak, CoinTelegraph; Translated by: Bai Shui, Golden Finance
1. What are reciprocal tariffs?
Reciprocal tariffs sound like a trade term from a textbook, but their meaning is actually quite simple: if one country imposes tariffs on your goods, you should take the same measures in retaliation. It can be seen as a tit-for-tat strategy in global trade—governments can express, "If you charge our exporters 20%, we will charge yours the same amount."
The roots of this Concept can be traced back to the 1930s when the USA passed the Reciprocal Trade Agreements Act. The aim at that time was to break down trade barriers through mutual agreements rather than trade wars. Fast forward to today, the term has made a comeback—this time, it has become sharper.
For instance, in early 2025, under President Donald Trump, the USA government imposed a series of escalating tariffs on Chinese imports to address what it deemed unfair trade practices and a massive trade deficit. These tariffs initially started at a baseline of 10% and increased consecutively, with tariffs on various Chinese products reaching an astonishing 145%.
China also responded in kind, implementing its own series of reciprocal tariffs. Initially, Beijing imposed tariffs of 34% on all American imports, later increased to 84%, and ultimately reaching 125%, targeting a range of American products including Shenzhen Agricultural Products Group and Machinery.
So, how is this related to Cryptos? You will understand— but first, let's take a deeper look at how these tariffs actually work.
2. How do reciprocal tariffs work?
Although the USA has recently adopted a formula based on trade imbalances to determine its tariff rates, other countries like China often implement their own set of tariffs in response, which may not follow the same calculation method.
How does the USA calculate tariffs?
In 2025, the USA implemented a tariff strategy based on tax rates calculated from trade deficits with specific countries. The formula used is:
Tariff rate (%) = (USA's trade deficit with that country / USA's imports from that country) × 100 / 2
For example:
USA imports from China: 438.9 billion USD
USA's exports to China: 147 billion USD
Trade deficit: 291.9 billion USD
Deficit rate: (291.9 billion USD ÷ 438.9 billion USD) × 100 ≈ 66.5%
Tariff rate: 66.5% ÷ 2 ≈ 33.25%
This practice results in the USA imposing a 34% tariff on Chinese imported products in April 2025. Furthermore, these new tariffs will not replace the old tariffs, but will be added on top of them. Therefore, if a certain product already has a 20% tariff, it will now be subject to an additional 34% reciprocal tariff, meaning importers suddenly have to pay 54% in tariffs. This leap in price will quickly lead to a significant increase in the prices of foreign goods.
How will China respond
When the USA imposes tariffs, China often retaliates against industries that are politically and economically important to the USA, particularly those that may impact key voter bases.
Target industries:
Agriculture: China frequently targets American agricultural products such as Soybean, Pork, and Beef. For example, in 2018, China imposed a 25% tariff on American Soybean, significantly affecting farmers in states like Iowa that primarily grow Soybean.
Aerospace: In 2025, China suspended imports of Boeing aircraft and stopped purchasing aircraft parts from American companies, impacting the American aerospace industry.
Phased implementation.
China usually implements tariffs in phases to allow for strategic adjustments and negotiations:
At the beginning of 2025, as the USA raised tariffs, China initially imposed a 34% tariff on all American goods. Later, in response to the escalating USA tariffs, this percentage increased to 84%, eventually reaching 125%.
As a retaliatory measure, China also imposed an additional 10%-15% tariff on various agricultural products from the USA, including Corn, Soybean, and Chicago SRW Wheat.
The USA uses specific formulas to calculate tariffs, whereas China’s approach is more about strategic retaliation aimed at exerting economic and political pressure rather than directly matching tariff rates.
Did you know? Policymakers sometimes choose slightly higher numbers to convey a stronger political message—especially when they want to appear tough on trade issues or take a hard stance against specific countries. A unified "34%" sounds more decisive and deliberate than "33.25%".
3. Economic impact of reciprocal tariffs.
Reciprocal tariffs have a very realistic impact on the global economy. When the USA and China started attacking each other with import taxes, other countries also felt the aftershocks.
Global trade is slowing down.
In early 2025, the World Trade Organization delivered a grim message: global trade is expected to grow by around 3%, but is currently nearly stagnant, close to just 0.2%. The WTO directly pointed to the aggressive tariff strategy of the USA and its domino effect on other economies. As countries adopt their own measures in response, the Transportation of goods has come to a halt. Export decreases, import decreases, and there is a lot of uncertainty.
Developing countries are being squeezed.
Smaller economies like Cambodia and Laos, which rely on exporting cheap goods to large markets such as the USA, are hit particularly hard. When tariffs rise, American buyers retreat. This means a reduction in factory Orders in places that can hardly bear the impact, leading to unemployment and shrinking incomes.
Domestic prices are rising.
At the same time, American Consumers are starting to feel the pressure. Tariffs on Chinese goods have made prices of all items, from electronics to basic Housewares, more expensive. Even American companies that rely on imported parts are incurring higher costs and passing these expenses onto downstream businesses. Inflation is already high, which only adds fuel to the fire.
Did you know? The International Monetary Fund predicts that the trade war could reduce the global GDP growth rate from 3.3% in 2024 to 2.8% in 2025.
Four, the impact of reciprocal tariffs on Cryptos.
When governments of various countries start imposing tariffs on each other, it sends a signal of instability - and financial markets dislike uncertainty. When Global trade flows are disrupted, Stocks, Bonds, and Cryptos will react.
Market Volatility
In early April 2025, when the USA announced a 50% tariff on imported products from China, the cryptocurrency market reacted rapidly. Bitcoin's price dropped to $74,500, and Ethereum fell by over 20%. This sharp decline highlighted the sensitivity of cryptocurrencies to macroeconomic changes and investor sentiment.
However, after President Trump suspended most tariffs for 90 days, the situation began to stabilize. As of April 22, Bitcoin had rebounded to over $92,000, reflecting the cryptocurrency market's responsiveness to policy changes.
Mining
Due to the tariffs on imported mining equipment, Bitcoin miners in the USA are facing increased operating costs.
This is particularly challenging for smaller businesses. Larger companies may be able to absorb the additional costs or renegotiate vendor agreements - but what about small or medium-sized mining companies? They are the ones being squeezed. As profit margins shrink, some businesses may be forced to close or relocate to tariff-free jurisdictions.
Did you know? Due to tariffs on mining hardware made in China, Bitcoin miners in the USA faced equipment costs rising by 22%-36% at the beginning of 2025, leading some miners to consider relocating their businesses overseas.
Investment Trends
Economic uncertainty often drives investors to seek safe havens - and Cryptos increasingly meet this requirement. As traditional markets become turbulent due to factors like escalating global tariffs, many investors turn to Bitcoin and other digital assets to hedge against inflation, currency devaluation, or geopolitical risks.
Institutional interest has also clearly increased. As governments engage in trade wars and raise cross-border operating costs, Cryptos begin to seem like a more stable long-term investment. For example, in the first quarter of 2025, some hedge funds and sovereign wealth tools started to allocate digital assets in response to these global macro pressures.
Reports indicate that the USA has established a strategic cryptocurrency reserve (holding both BTC and ETH), clearly showing that Cryptos are no longer viewed as a marginal asset in the eyes of traditional finance or policymakers.
V. Strategic Considerations for Cryptocurrency Stakeholders
For anyone in the cryptocurrency space - whether building infrastructure, mining Cryptos, or managing investor portfolios - these policy shifts are very real and highly relevant.
Diversification
If you are a miner or a startup dependent on Hardware, relying on a specific vendor or country for equipment? This is a liability. Tariffs may soar overnight, significantly cutting into your profits and forcing you to adopt expensive solutions.
Diversifying the supply chain—whether through sourcing from Neutral countries or investing in domestic alternatives—can mitigate the impact.
Understand the regulatory environment.
Cryptocurrency companies can no longer ignore policies. Tariffs, trade barriers, and sanctions—these are forces that affect the market. If involved in mining, cross-border payments, or even just Hardware Transportation, closely monitoring local and international trade developments is necessary.
At this time, having support from legal and trade experts is no longer a luxury but a survival tool.
Reconsider the narrative.
This is a unique opportunity to reposition Cryptos. As traditional economic systems are battered by trade wars and retaliatory tariffs, the idea of decentralized, borderless financial alternatives begins to resonate on a whole new level.
Cryptos have long positioned themselves as tools for hedging against inflation and achieving financial freedom. Against the backdrop of rising Global protectionism and economic polarization, this message carries more weight than ever.
Smart projects and investors will tend to align with this narrative, growing through adversity rather than merely weathering the storm.
