Macro research report on the crypto market: Trump’s reciprocal tariffs hit global assets. Can Bitcoin become a new safe-haven asset?

1. Analysis of Trump's reciprocal tariff policy

1.1 Background and motivation of tariff policy

Trump has always advocated the "America First" economic policy, emphasized narrowing the trade deficit and attempted to protect U.S. manufacturing by raising import tariffs. The global trade situation has continued to be tense since he re-entered the White House. The reciprocal tariff policy introduced this time is part of its economic nationalist strategy to punish countries that have set high or non-tariff barriers to U.S. exports.

1.2 Main content and its impact

The recent "Reciprocal Tariff Policy" policy introduced by the Trump administration is considered an important turning point in the global trade landscape. The core goal of this policy is to adjust U.S. trade rules to match the tariff rates of imported products with the tax rates imposed by exporters on U.S. goods. Although the starting point of this move is to reduce the U.S. trade deficit and encourage manufacturing to return to the U.S., its far-reaching impact will affect the global economy and even change the trade policies and market structures of multiple countries.

The policy’s implementation context can be traced back to Trump’s long-standing dissatisfaction with globalization. He believes that the beneficiaries of globalization are mainly other countries, while the United States has become the target of "exploitation". During the campaign, Trump promised to use a series of measures to protect US manufacturing and employment, readjust the international trade landscape, and give priority to US interests. During his first presidency, Trump launched a trade war with China, raising tariffs, restricting exports of high-tech products, and attempting to weaken the global supply chain's dependence on China. Although these policies have had a certain impact on China's economy in the short term, in the long run, the United States itself has also suffered considerable economic losses. Rising corporate costs and rising consumer goods prices eventually led to intensified inflation, forcing the Federal Reserve to adopt more radical monetary policies.

Today, Trump's reciprocal tariff policy will expand globally, meaning that the United States will not only impose additional tariffs on specific countries, but also impose a benchmark tariff of at least 10% on all trading partners. The implementation of this policy will undoubtedly have a profound impact on international supply chains. Many countries have always enjoyed lower export tariffs to the United States, such as the EU, Japan and Canada, which allows their companies to enter the U.S. market more competitively. However, under Trump's new tariff system, commodity prices in these countries will inevitably rise, which may ultimately weaken their competitiveness in the US market. What's more serious is that due to the huge US market, this increase in tariffs may lead to global companies being forced to adjust their production strategies, and some companies will even choose to transfer some production to other countries to avoid tariff costs.

What is more worth noting is that domestic American companies are also unable to survive the impact of this policy. Although the Trump administration’s goal is to encourage manufacturing to return, the reality is that many U.S. companies are highly dependent on global supply chains. For example, the U.S. automobile industry relies on imported parts, the technology industry relies on chips made in Asia, and even the agricultural sector relies on foreign fertilizers and machinery equipment. Therefore, the increase in tariffs will lead to an increase in production costs for enterprises, which will eventually be passed on to consumers, pushing up inflation levels and further aggravate economic uncertainty. In addition, the increase in tariffs may trigger adjustments to the domestic industrial structure of the United States, and some companies that rely on low-cost imported raw materials may be forced to cut production capacity or lay off employees, affecting the stability of the employment market.

From a global perspective, the biggest affected persons of this policy are undoubtedly China, the EU, Japan and emerging market economies. China is one of the largest trading partners of the United States, and the Trump administration's tariff policy may further deteriorate U.S.-China relations and intensify economic confrontation between the two sides. China has taken a series of measures to deal with the U.S. trade barriers, including strengthening economic and trade cooperation with other countries, promoting the internationalization of the RMB, and accelerating independent scientific and technological innovation. If Trump's policies are tightened further, China may increase exports to emerging markets, while encouraging local companies to reduce their dependence on the U.S. market. In addition, China may take countermeasures, such as imposing higher retaliatory tariffs on U.S. imports, or restricting the export of certain key materials, such as rare earth metals, which will have a huge impact on the U.S. high-tech industry.

The EU also faces major challenges. In the past, European countries have enjoyed relatively stable trade relations in the global trade system, and Trump's tariff policy will force the EU to take tougher responses. The European economy is already facing pressure of slowing growth, coupled with the energy crisis caused by the Ukrainian war, if Trump imposes tariffs on EU products, it may further weaken the competitiveness of European manufacturing. More importantly, the EU may take countermeasures, such as strengthening regulation of US technology companies, or restricting the import of certain US products. In the long run, the EU may rely more on China and other Asian countries as alternative markets, thereby accelerating the "de-Americanization" process of global trade.

Japan and South Korea are in a relatively complicated situation. As long-term ally of the United States, they are often influenced by the United States in their trade policies. However, the Trump administration's reciprocal tariff policies put them in a dilemma. If Japan and South Korea do not take countermeasures, they will lose their advantage in competition with other countries; but if countermeasures are taken, the United States may put more pressure on them in other areas (such as security cooperation, scientific and technological cooperation). Therefore, Japanese and Korean companies may adopt more flexible strategies, such as increasing investment in the U.S. to avoid high tariffs, while accelerating cooperation with Southeast Asian markets to reduce reliance on the U.S. market.

Emerging market countries, such as India, Brazil and Southeast Asian countries, will also face huge challenges. The Trump administration's policies have put export companies in these countries under higher cost pressures, especially countries such as Vietnam and Indonesia that have relied on export growth in recent years, which may lose the price advantage of the US market. At the same time, these countries may accelerate cooperation with China and further promote regional economic integration. For example, ASEAN countries may strengthen cooperation under the framework of RCEP (Regional Comprehensive Economic Partnership Agreement) to reduce their dependence on exports to the United States. In addition, the Trump administration's policies may accelerate the decentralization of global supply chains, allowing more companies to seek to set up production bases in multiple countries rather than relying on a single country's supply chain.

Overall, Trump's reciprocal tariff policy is not only an economic policy, but also a signal of the reshaping of the global trade system. The impact of this policy is not limited to short-term market fluctuations, but is more likely to lead to long-term changes in the global trade landscape. Many countries may reassess trade relations with the United States and even promote the de-dollarization process to reduce their dependence on the U.S. market and the dollar system. At the same time, the United States itself is also facing internal economic pressure. Rising inflation, increasing corporate costs, and supply chain adjustments may lead to slowing down and even falling into recession.

Against this backdrop, crypto assets such as Bitcoin may usher in new development opportunities. As uncertainty in the global market increases, investors may look for new safe-haven assets, and Bitcoin is expected to become the focus of global investors due to its decentralized, immutable and transnational circulation. However, the high volatility of the Bitcoin market, the uncertainty of policy regulation, and its still-formed safe-haven attributes mean that investors need to carefully evaluate their potential risks.

Trump's reciprocal tariff policy is an important signal of changes in the global economic order, and regardless of the ultimate impact, global markets will undergo profound reshaping in this change. In the future, how countries adjust their own trade policies and how the crypto market finds new development opportunities in this change is worthy of continuous attention.

2. Response to global financial markets

Once Trump's reciprocal tariff policy was announced, the global financial market immediately responded violently. The U.S. stock market was first hit, and investors were worried that the increase in tariffs would aggravate corporate costs and drag down corporate profits, which would lead to pressure on the stock market. The S&P 500 and Dow Jones Industrial Index experienced a significant pullback after the policy was announced, especially in the manufacturing, technology and consumer goods industries that were more affected by trade. Many multinationals rely on global supply chains, and the additional tariff costs will weaken their profitability and may force them to adjust their business strategies, further increasing market uncertainty.

At the same time, the US Treasury market also fluctuated. The rise in market concerns about the recession has led to a flood of safe-haven funds into U.S. Treasury bonds, driving a decline in long-term Treasury yields, while short-term interest rates remain high as the Federal Reserve may adopt austerity policy to cope with inflationary pressures. This inverted interest rate curve further deepens market expectations for a future recession.

In the foreign exchange market, the US dollar index once strengthened. Investors tend to see the dollar as a safe-haven asset, especially as global trade tensions escalate. However, once tariff policies lead to higher import costs and intensified inflation in the United States, the Federal Reserve may have to adopt a more cautious monetary policy to limit the further appreciation of the US dollar. At the same time, emerging market currencies are generally under pressure, especially those countries that rely heavily on exports to the United States, whose currencies depreciate to varying degrees against the US dollar, and capital outflows have exacerbated market turmoil.

The reaction of the commodity market cannot be ignored. Crude oil prices have increased in the short term, and the market is worried that global trade frictions may curb economic growth and thus affect oil demand. On the other hand, gold prices have risen due to rising inflation expectations. Investors seek safe-haven assets, and gold, as a traditional value storage tool, has once again become the favored object of funds.

The fluctuations in the crypto asset markets such as Bitcoin are also quite significant. Some investors regard Bitcoin as digital gold. When traditional markets fluctuate, safe-haven demand drives funds into Bitcoin, causing its price to rise in the short term. However, Bitcoin’s price volatility is high and is greatly affected by market sentiment. It remains to be seen whether the market will regard it as a long-term safe-haven asset. Overall, Trump's reciprocal tariff policy has exacerbated uncertainty in the global market and prompted funds to flow rapidly between stock markets, bond markets, foreign exchange, commodities and crypto markets. Investors need to pay more attention to changes in the macroeconomic situation to cope with possible market fluctuations.

3. Dynamics of Bitcoin and Crypto Markets

Trump's reciprocal tariff policy has undoubtedly caused widespread financial market turmoil around the world. Traditional asset markets have been significantly affected, while crypto markets have shown a unique dynamic in these changes. Bitcoin and other cryptocurrencies are often seen as high-risk assets, but are gradually seen by some investors as a safe-haven option, especially in the context of increasing economic uncertainty.

First, the reactions of Bitcoin and crypto markets are not directly affected by tariff policies like traditional assets. Compared with traditional assets such as stocks and bonds, Bitcoin has much greater volatility, so it responds more violently to market events in the short term. After Trump's tariff policy was introduced, although the stock market suffered a shock, Bitcoin's performance did not simply fall, but showed a relatively independent trend. This phenomenon shows that Bitcoin may gradually change from a risky asset to a safe-haven asset in the eyes of investors, especially as the analogy with gold is deepening.

The dynamics of the crypto market are not just the performance of a single asset in Bitcoin, but the fluctuations of the entire ecosystem. Although the crypto market is younger and faces dual pressures from government policies and market sentiment, its unique attributes allow it to contrast with traditional markets in some ways. For example, Bitcoin, as a decentralized asset, is not directly controlled by any single government or economy, can cross national boundaries and avoid the policy risks faced by many traditional assets. Therefore, some investors may turn to Bitcoin in the face of global economic turmoil, a reciprocal tariff policy, as a more diversified and risk-deregulated asset.

Meanwhile, as uncertainty in global monetary policy increases, especially the value of the US dollar and other fiat currencies may be affected by Trump’s tariff policies and changes in the Federal Reserve’s monetary policy, more and more investors may begin to see Bitcoin as a potential currency hedge. While Bitcoin still faces price volatility and regulatory uncertainty, its position in the global monetary system has gradually been recognized, especially as the risk of a global recession continues to increase, Bitcoin may become a new "digital gold" to withstand the depreciation pressure of traditional currencies.

In addition, other assets in the crypto market also reflect to varying degrees the global economic uncertainty brought about by Trump's tariff policies. Other mainstream cryptocurrencies such as Ethereum and Ripple (XRP) have experienced certain price fluctuations in the short term. The price volatility of these crypto assets is also affected by changes in the global financial environment. Although their market volatility is more severe than Bitcoin, it also demonstrates the gradual independence of the crypto market in the global economic system.

However, it should be noted that although the market performance of Bitcoin and other cryptocurrencies has begun to attract attention, they still face many challenges and uncertainties. First, the regulatory policies of the cryptocurrency market are still unstable, especially when the regulatory environment of major countries such as the United States is still unclear, and whether crypto assets can gain legal status on a global scale in the future remains variable. Secondly, the market size of cryptocurrencies such as Bitcoin is relatively small, with insufficient liquidity, and are easily affected by transactions from a few large players. Therefore, although the crypto market shows more and more risk aversion attributes, it still faces long-term problems such as market depth, liquidity, and instability of regulations.

In general, although Trump's tariff policy was originally intended to safeguard the economic interests of the United States by renegotiating international trade agreements, this policy also intensified uncertainty in the global economy. Against this backdrop, Bitcoin and other crypto assets, as an emerging investment vehicle, may play an increasingly important role in global investors’ search for safe-haven assets. As the global economic and financial environment changes, the dynamics of the crypto market will be more complex, and investors will have to pay close attention to the development of this asset class and make smarter decisions in terms of regulation, market volatility, and long-term value.

4. Analysis of Bitcoin’s safe-haven attributes

As a decentralized digital currency, Bitcoin’s hedging attributes have received increasing attention in recent years, especially when the global financial and political environment is instable. Although Bitcoin was initially seen as a highly volatile speculative asset, with the changes in the global economy and the increasing uncertainty of the traditional financial system, more and more investors are beginning to see Bitcoin as a hedge tool, similar to traditional hedge assets such as gold. After Trump's peer-to-peer tariff policy was introduced, Bitcoin's safe-haven attributes were further tested and strengthened.

First, Bitcoin has the nature of decentralization, which makes it not directly controlled by any single government or economy. In a globalized financial system, monetary policies and economic decisions in many countries may be affected by various external factors, causing fluctuations in the value of these currencies. However, Bitcoin, through the distributed ledger of blockchain technology, ensures that it does not rely on endorsements from any central bank or government, thus reducing the policy risks faced by fiat currencies and traditional financial systems. When uncertainty in the global economy intensifies, investors can avoid the potential risks brought by single-country policies by holding Bitcoin. This makes Bitcoin a global, cross-border hedging tool.

Secondly, the total supply of Bitcoin is limited, with the maximum supply being 21 million. Compared to fiat currencies in traditional monetary systems, governments and central banks can respond to economic crises or fiscal deficits by increasing the money supply, which often leads to the risk of currency depreciation and inflation. However, the fixed supply of Bitcoin means it will not be affected by government expansionary monetary policy as legal tender. This feature makes Bitcoin a natural hedging role in inflation and currency depreciation risks. Therefore, in the context of the Trump administration's implementation of reciprocal tariff policies, global trade wars and increased risks of recession, investors may use Bitcoin as a store of value to avoid losses caused by the depreciation of fiat currencies.

Furthermore, Bitcoin’s trustworthiness attributes make it an “independent” asset class in the global economy. Traditional financial markets tend to experience drastic fluctuations in the event of global financial crisis or trade frictions intensified, and stocks, bonds and other asset classes may be directly affected by policy intervention or fluctuations in market sentiment. Bitcoin's price fluctuations are affected by market supply and demand, investor sentiment, and global acceptance, and are relatively less controlled by a single economy or political factor. For example, global stock markets and gold markets have generally been negatively affected after Trump announced reciprocal tariffs, but Bitcoin has not fully followed this trend. Although it has also experienced certain fluctuations, this fluctuation is more reflected in the market's recognition of the long-term value of Bitcoin and the gradual acceptance of the cryptocurrency market.

In addition, Bitcoin's global liquidity is also part of its hedging attributes. Bitcoin’s trading market is open 24/7, and anyone can buy and sell through a cryptocurrency trading platform anywhere, which makes Bitcoin highly liquid. When traditional markets fluctuate violently, investors can enter or exit the Bitcoin market at any time to avoid missing risk aversion opportunities due to market closure or insufficient liquidity. After Trump's tariff policy was implemented, some investors turned to Bitcoin in search of safe-haven, pushing up their market demand and showing relative price firmness. This liquidity and the market's 24/7 openness are one of the important advantages of Bitcoin as a safe-haven asset.

However, the attributes of Bitcoin as a safe-haven asset are not without controversy. First of all, Bitcoin’s volatility is much higher than traditional safe-haven assets such as gold, and in the short term, the price of Bitcoin may fluctuate violently due to market sentiment and investor expectations. In the context of global economic turmoil, the price of Bitcoin may be affected by capital flows and market sentiment of large investors, and will be manifested as a price plummeting or soaring in the short term. Therefore, while Bitcoin has the potential for hedging, its volatility may limit its widespread use as a traditional hedging asset.

Secondly, Bitcoin still faces uncertainty from regulatory policies. Although Bitcoin’s decentralized and anonymous nature makes it a potential hedge tool, governments and regulators around the world are not consistent in their attitudes toward cryptocurrencies. Some countries such as China and India have already adopted strict cryptocurrency bans or restrictions, which has put the circulation and transactions of Bitcoin facing greater uncertainty. If major economies around the world impose stricter regulatory measures on cryptocurrencies, it could pose a challenge to Bitcoin’s hedging attributes and weaken its position in global asset allocation.

Nevertheless, Bitcoin’s potential as a safe-haven asset remains strong in the long run. Its decentralization, fixed supply and cross-border liquidity make it uniquely advantageous in dealing with global economic uncertainty, political conflicts and currency devaluation. With the continuous maturity of the crypto market and the improvement of investors' awareness of Bitcoin, its safe-haven attributes may be further recognized by the market, especially in the environment where traditional financial assets face greater risks, Bitcoin is expected to become the "digital gold" in the future.

5. Future Outlook and Investment Strategy

As the Trump administration introduces peer tariffs and sparks widespread discussions about economic recession, trade conflicts and market uncertainty around the world, the future outlook for Bitcoin and cryptocurrency markets is facing many challenges and opportunities. For investors, in this environment full of uncertainty and risks, how to adjust their investment strategies and take advantage of dynamic changes in the crypto market will be the key to determining the success or failure of investment.

5.1 Future Outlook: Potential and Challenges of the Crypto Market

In the long run, cryptocurrencies, especially Bitcoin, as a decentralized digital asset, have global, independent and low correlation with traditional financial systems, making them an important part of the future financial system. Bitcoin is not only a "pioneer" of digital assets, but also a strategic asset class in the global financial market. Especially when facing global economic challenges such as Trump's peer tariffs, its attributes as safe-haven assets are becoming increasingly apparent.

However, despite the great appeal of Bitcoin’s fundamentals and technical aspects, investors still need to realize that the crypto market is still in a relatively early stage and there are still high uncertainty and risks. Bitcoin prices are highly volatile, especially driven by macroeconomic policies, geopolitical risks and market sentiment, which may cause large price fluctuations in the short term. There are still variables in the impact of regulatory policies of governments around the world on the crypto market, especially when global cryptocurrency policies have not yet been unified. Regulatory attitudes in different countries and regions may lead to the liquidity and market depth of crypto assets being affected to varying degrees.

Therefore, although Bitcoin and other crypto assets have good risk aversion potential, beware of possible emergencies in the crypto market, and investors should make flexible investment adjustments based on market changes. Especially when facing fluctuations in the macroeconomic environment, investors may need to adopt diversified investment strategies to avoid excessive concentration on a certain type of assets in order to reduce the systemic risks caused by fluctuations in a single asset.

**5.2 Investment Strategy: How to Cope with Volatility in the Crypto

Market**

For investors looking to make money through crypto markets, adopting a flexible investment strategy is crucial in the face of Trump’s reciprocal tariff policy and the complex situation in the global economy. In an uncertain macroeconomic environment, investors can make strategic deployments based on the following aspects:

Diversified portfolio: Due to the high volatility of Bitcoin and crypto assets, investors should avoid concentrating all their funds on a single asset. Diversifying investment portfolios, combining different types of crypto assets such as Bitcoin, Ethereum, and stablecoins, can reduce market risks to a certain extent. At the same time, investors can also appropriately allocate traditional financial assets such as gold, bonds, etc. as hedges to achieve risk balance.

Long-term perspective: Although Bitcoin and other cryptocurrencies may be affected by macroeconomic policies, market sentiment and policy changes in the short term, in the long run, as a scarce digital asset, the long-term value of Bitcoin may be increasingly recognized by the market. Against the backdrop of increasing uncertainty in the global economic system, Bitcoin’s decentralization, fixed supply and independence may make it a store of value and a safe-haven option. Therefore, long-term investors holding Bitcoin should remain calm, ignore short-term volatility, and continue to pay attention to Bitcoin's technological innovation and market acceptance.

Short-term trading strategies: For short-term traders, finding investment opportunities in the market volatility brought by Trump’s policy may be a good choice. In the short term, the price of cryptocurrencies will be affected by Trump’s administration’s tariff policies, market sentiment and global economic data. Investors can take advantage of market volatility and choose to buy at lows and sell at highs to obtain short-term returns. However, short-term trading requires strong market judgment and technical analysis capabilities, so it is not suitable for all investors.

Hedging strategy: Investors can consider using the derivatives market to hedge. For example, use tools such as Bitcoin futures and options to manage risk when the market is down. These derivatives tools can provide effective risk hedging when Bitcoin price fluctuates violently, helping investors reduce losses. At the same time, the use of stablecoins (such as USDT, USDC, etc.) can also be used as a hedge tool to help investors maintain their funds stable amid the violent fluctuations in the crypto market.

Pay attention to market supervision and policy changes: Policy risks are a major uncertainty in the cryptocurrency market. The Trump administration’s reciprocal tariff policy may trigger regulatory and policy adjustments to cryptocurrencies in other countries and regions. Therefore, investors need to pay close attention to regulatory dynamics around the world regarding cryptocurrencies, especially policy changes in major economies such as the United States, China and Europe. These policy changes may have a significant impact on liquidity, compliance and investor confidence in the crypto market, affecting price fluctuations in crypto assets.

5.3 Conclusion

To sum up, Trump's reciprocal tariff policy has had a profound impact on the global economy, and the crypto market has also shown unique dynamics different from traditional assets in this macro context. As a decentralized and limited supply digital asset, Bitcoin's hedging attributes are becoming increasingly prominent in an environment of increasing global economic uncertainty. Although the crypto market still faces certain volatility and regulatory challenges, Bitcoin and other crypto assets have huge growth potential in the long run. Investors should adopt reasonable investment strategies based on their own risk tolerance, investment goals and market changes to obtain the maximum profit in a market environment full of uncertainty.