Trade War Tremors: How US tariffs are upending crypto markets

In the span of just three months, a resurgent wave of American protectionism has redrawn the map of global finance—and sent tremors through the digital corridors of the crypto world.

With President Donald Trump back in the Oval Office and eager to fulfil campaign promises, the United States has levied the most aggressive tariff regime since the Great Depression.

On April 2, 2025—dubbed “Liberation Day” by the administration—a sweeping round of “reciprocal tariffs” marked a turning point in a rapidly escalating global trade war. In the days that followed, markets recoiled, retaliation flew from Beijing to Brussels, and $10 trillion in global market value had vanished as at April 10.

The ripples have been severe. According to a Binance Research report titled Tariff Escalation and Crypto Markets: Impact Analysis, total crypto market capitalization has fallen by 25.9% since January—mirroring steep declines in equities and underscoring the fragile tether between digital assets and macroeconomic forces.

“Crypto is behaving more like a traditional risk asset than ever before,” says the report. “In this high-uncertainty environment, capital is retreating from speculative sectors and flowing toward safe havens like gold.”

Indeed, as Bitcoin (BTC) fell 19.1 per cent and Ethereum (ETH) plunged over 40 per cent, gold has surged to record highs, up 10.3 per cent since February. The sharp divergence illustrates how investors are re-evaluating crypto’s role in a protectionist, stagflationary world.

"The resurgence of trade protectionism is introducing significant volatility across global markets — and crypto is no exception. In the short term, this kind of macro uncertainty tends to trigger a risk-off response, with investors pulling back as they wait to see how things unfold around growth, policy, and trade,” notes Binance’s CEO, Richard Teng.

“Looking further ahead, though, this environment could also accelerate interest in crypto as a non-sovereign store of value. Many long-term holders continue to view Bitcoin and other digital assets as resilient during periods of economic stress and shifting policy dynamics."

Trump’s new tariffs represent an economic rupture unseen in nearly a century. The average U.S. tariff rate has surged from 2.5 per cent in 2024 to between 18.8 per cent and 22 per cent in 2025, depending on the estimate. For context, that’s comparable to levels seen under the 1930 Smoot-Hawley Tariff Act, which infamously deepened the Great Depression.

The April 2 proclamation included a 10 per cent blanket tariff on all imports, layered with even steeper country-specific duties: 54 per cent on Chinese goods which Trump has since raised to 125 per cent, 20 per cent on EU exports, 24 per cent on Japanese imports, and a staggering 46% on Vietnamese products.

While Canada and Mexico had already faced 20 per cent tariffs earlier in February, other nations swiftly retaliated. China struck back with its own 34 per cent tariff on all U.S. imports, and Canada imposed a 25 per cent blanket duty.

These developments have jolted crypto markets into a state of high alert. As trade tensions rose, the report shows, Bitcoin's price swings intensified—culminating in one of its sharpest one-day drops since the COVID-19 crash of 2020. Volatility, particularly for Ethereum, spiked to above 100%, from a pre-crisis level of around 50 per cent.

The broader crypto retreat has upended the narrative of digital assets as inflation hedges or safe havens. In February, just 3 per cent of fund managers surveyed by Bank of America favoured Bitcoin in the event of a trade war, compared to 58 per cent who backed gold.

While Bitcoin has historically shown resilience after macro shocks, its current alignment with equities indicates it may no longer be decoupled from traditional markets. Binance’s research shows BTC’s 30-day correlation with the S&P 500 rose from –0.32 in February to 0.47 by late March. Meanwhile, its correlation with gold turned sharply negative, hitting –0.22 in April.

In practical terms, this suggests investors no longer view crypto as a diversifier in turbulent times—but rather, as an extension of risk markets vulnerable to macro shocks.

Beyond price volatility, the bigger worry now looming over digital assets is stagflation: a dreaded blend of slow growth and high inflation. The new tariffs, effectively taxes on imports, are expected to drive up prices across industries—just as the Federal Reserve had been making progress in cooling inflation.

According to the Binance report, market-based inflation expectations have shot past 3%, with consumer surveys nearing 5%. At the same time, growth forecasts are slumping. Fitch Ratings estimates the global economy could lose up to $1.4 trillion in output if the full tariff regime persists, with U.S. real GDP per capita projected to fall by nearly 1%.

“The tariffs announced in recent weeks are larger than expected,” Fed Chair Jerome Powell said on April 4, “and their economic effects—particularly on inflation and growth—will need to be closely monitored.”

Markets have begun pricing in up to four interest rate cuts this year, reversing earlier expectations of tightening. But the Fed faces a treacherous balancing act. Cutting rates too quickly could fan inflation; waiting too long could deepen the downturn.

Despite the turmoil, the crypto market may yet find its footing. History has shown that Bitcoin’s correlation with traditional assets often fades after periods of stress. But in the short term, uncertainty reigns.

“We are witnessing a macro reordering,” says the report. “Trade policy, not blockchain fundamentals, is now the dominant driver of crypto performance. That’s a new paradigm for this market.”

There are glimmers of hope. Analysts believe this correction could purge the market of speculative excesses accumulated during the 2024 bull run, clearing the way for more sustainable growth.

Binance has partnered with Worldpay to enable users to easily purchase crypto via Apple Pay and Google Pay. With this integration, Binance users can now make fiat-to-crypto purchases through these popular mobile payment methods, offering more accessibility and convenience for users to enter the crypto space.

“Worldpay is recognized as one of the world’s leading eCommerce Payments companies and is a natural collaborator for Binance to provide Apple Pay and Google Pay to users — delivering greater choice and accessibility for crypto purchases with some of the most popular mobile payment options,” said Thomas Gregory, VP of Fiat at Binance.

Analysts also argue that the current crisis could reignite interest in decentralized finance (DeFi) as users look for alternatives to fragile fiat ecosystems rattled by geopolitical risk.