What are Reciprocal Tariffs and How Do They Affect the Crypto Industry?

Author: Bradley Peak, CoinTelegraph; Compiler: Baishui, Golden Finance

1. What are reciprocal tariffs?

Reciprocal tariffs sound like textbook trade terms, but their meaning is actually simple: if a country imposes tariffs on your goods, you have to take the same measures to fight back. Think of it as a tit-for-tat strategy in global trade - a way for governments to say, "If you charge our exporters 20%, we will charge the same to your exporters."

The roots of this concept can be traced back to the 1930s, when the United States passed the Reciprocal Trade Agreements Act. The goal at the time was to break down trade barriers through mutual agreements rather than trade wars. But fast forward to today, the term has made a comeback - this time, it has become more pointed.

For example, in early 2025, in order to address what it considered unfair trade practices and a huge trade deficit, the US government under President Donald Trump imposed a series of escalating tariffs on Chinese imports. These tariffs were initially based on a 10% base rate, and have since been increased to a staggering 145% on a variety of Chinese goods.

China has responded in kind, implementing its own set of reciprocal tariffs. Initially, Beijing imposed a 34% tariff on all US imports, which was later increased to 84% and eventually 125%, targeting a variety of US products including agricultural products and machinery.

So, what does this have to do with crypto? You'll understand - but first, let's take a deep dive into how these tariffs actually work.

How do reciprocal tariffs work?

While the United States has recently adopted a formula based on trade imbalances to determine its tariff rates, other countries, such as China, often respond with their own set of tariffs that may not follow the same calculation method.

How the United States Calculates Tariffs

In 2025, the United States implemented a tariff strategy that calculates tariff rates based on trade deficits with specific countries. The formula used is:

Tariff rate (%) = (US trade deficit with the country / US imports from the country) × 100/2

For example:

• US imports from China: US$438.9 billion

• US exports to China: US$147 billion

• Trade deficit: US$291.9 billion

• Deficit ratio: ($291.9 billion ÷ $438.9 billion) × 100 ≈ 66.5%

• Tariff rate: 66.5% ÷ 2 ≈ 33.25%

This practice resulted in the United States imposing a 34% tariff on Chinese imports in April 2025. Furthermore, these new tariffs do not replace old tariffs, but are imposed on top of them. So if a product already has a 20% tariff and now has a reciprocal tariff of 34%, the importer is suddenly paying a 54% tariff. This jump in price can quickly lead to a significant increase in the price of foreign goods.

How China Responds

When the United States imposes tariffs, China often retaliates against industries that are politically and economically important to the United States, especially those that could influence key voter bases.

Targeted Industries:

• Agriculture:China frequently targets U.S. agricultural products such as soybeans, pork, and beef. For example, in 2018, China imposed a 25% tariff on U.S. soybeans, which had a significant impact on farmers in states such as Iowa where soybean cultivation is a major industry.

• Aerospace:In 2025, China suspended imports of Boeing aircraft and stopped purchasing aircraft parts from U.S. companies, affecting the U.S. aerospace industry.

Phased Implementation

China typically implements tariffs in phases to allow for strategic adjustments and negotiations:

• In early 2025, as the U.S. increased tariffs, China initially imposed a 34% tariff on all U.S. goods. Later, in response to the escalating US tariffs, this ratio increased to 84% and eventually reached 125%.

• In retaliation, China also imposed tariffs of 10%-15% on a variety of US agricultural products such as corn, soybeans, and wheat.

The US uses a specific formula to calculate tariffs, while China's approach is more of a strategic retaliation, designed to exert economic and political pressure rather than directly matching tariff rates.

Did you know? Policymakers sometimes choose slightly higher numbers to send a stronger political message - especially when they want to appear tough on trade issues or take a tough stance against a specific country. A unified "34%" sounds more decisive and cautious than "33.25%."

3. The economic impact of reciprocal tariffs

Reciprocal tariffs affect the global economy in very real ways. When the United States and China began to attack each other with import taxes, other countries also felt the aftershocks.

Global trade slows

At the beginning of 2025, the World Trade Organization had grim news: Global trade, which was expected to grow by around 3%, is now barely growing, at just closer to 0.2%. The WTO pointed directly to the aggressive U.S. tariff strategy and the domino effect it has had on other economies. As countries responded with their own measures, goods stopped moving. Exports fell, imports fell, and there was a lot of uncertainty.

Developing countries squeezed

Smaller economies like Cambodia and Laos that rely on exporting cheap goods to big markets like the United States have been hit especially hard. When tariffs go up, American buyers pull back. That means fewer factory orders, job losses, and shrinking incomes in places that can least afford the shock.

Domestic prices are rising

Meanwhile, American consumers are starting to feel the pinch. Tariffs on Chinese goods have made everything from electronics to basic household items more expensive. Even American companies that rely on imported components are paying more and passing those costs on to downstream businesses. Inflation is already high, and this will only add fuel to the fire.

Did you know? The International Monetary Fund predicts that the trade war could reduce global GDP growth from 3.3% in 2024 to 2.8% in 2025.

Fourth, the impact of reciprocal tariffs on cryptocurrencies

When governments begin to impose tariffs on each other, it signals an unstable situation - and financial markets hate uncertainty. When global trade flows are disrupted, stocks, bonds, and cryptocurrencies will react.

Market volatility

In early April 2025, when the United States announced a 50% tariff on Chinese imports, the cryptocurrency market reacted quickly. Bitcoin prices fell to $74,500 and Ethereum fell more than 20%. The 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 has rebounded to over $92,000, reflecting the responsiveness of the cryptocurrency market to policy changes.

Mining

U.S. Bitcoin miners face increased operating costs due to tariffs on imported mining equipment. Miners are currently facing higher capital expenditures due to tariffs as high as 36% on necessary hardware from countries such as China and Taiwan.

This is especially difficult for smaller operations. Larger companies may be able to absorb the additional costs or renegotiate supplier agreements - but what about small or medium-sized mining companies? They are the ones who are squeezed. As profit margins shrink, some businesses may be forced to close or relocate to tariff-free jurisdictions.

Did you know? U.S. Bitcoin miners face a 22%-36% increase in equipment costs by early 2025 due to tariffs on Chinese-made mining hardware, leading some miners to consider moving operations overseas.

Investment Trends

Economic uncertainty often prompts investors to seek safe havens - and cryptocurrencies increasingly fit the bill. When traditional markets become volatile due to factors such as escalating global tariffs, many investors turn to Bitcoin and other digital assets to hedge against inflation, currency devaluation or geopolitical risks.

There is also a clear uptick in institutional interest. As governments engage in trade wars and drive up the cost of doing business across borders, cryptocurrencies are starting to look like a more stable long-term investment. For example, in the first quarter of 2025, some hedge funds and sovereign wealth vehicles began allocating to digital assets in response to these global macro pressures.

The reported creation of a strategic cryptocurrency reserve by the United States (holding both BTC and ETH) is a clear sign that cryptocurrencies are no longer a fringe asset in the eyes of traditional finance or policymakers.

V. Strategic Considerations for Crypto Stakeholders

For anyone in the crypto space—whether you’re building infrastructure, mining cryptocurrencies, or managing investor portfolios—these policy shifts are very real and very relevant.

Diversification

If you’re a miner or a hardware-reliant startup, relying on a certain supplier or country to provide your equipment? It’s a liability. Tariffs can spike overnight, slashing your profits and forcing you to adopt expensive workarounds.

Diversifying your supply chain—whether by sourcing from neutral countries or investing in domestic alternatives—can soften the blow.

Understand the Regulatory Landscape

Crypto companies can no longer afford to turn a blind eye to policy. Tariffs, trade barriers, sanctions – these are forces that shape markets. If you’re involved in mining, cross-border payments or even just shipping hardware, you need to keep a close eye on developments in local and international trade.

This is when having the support of legal and trade experts is no longer a luxury, but a survival tool.

Rethink the Narrative

This is a unique opportunity to reposition crypto. At a time when traditional economic systems are buffeted by trade wars and retaliatory tariffs, the idea of ​​a decentralized, borderless financial alternative is beginning to resonate on a whole new level.

Crypto has long positioned itself as a hedge against inflation and a tool for achieving financial freedom. Against a backdrop of growing global protectionism and economic polarization, these messages carry more weight than ever.

Smart projects and investors will lean into this narrative and thrive in the storm, rather than simply weathering it.