Trade War Resurges: Echoes of History and the Future of the Crypto Market

Nearly a century ago, the Smoot-Hawley Tariff Act of 1930 had a profound negative impact on the global economy. This policy, which was justified in the name of protecting domestic industries, ultimately evolved into a global trade disaster, exacerbating the severity of the Great Depression. To this day, the shadow of trade protectionism lingers.

In April 2025, the United States announced it would raise tariffs on Chinese goods to 125%, sending global markets into panic once again. The Chinese Ministry of Commerce quickly responded, stating that if the U.S. continued to play "tariff number games," China would ignore it and reserve the right to take further countermeasures. Meanwhile, the U.S. government proposed a "90-day tariff suspension" for 75 countries, reducing the general tax rate to 10%, but specifically excluding China, Mexico, and Canada. This targeted trade strategy not only increased the risk of economic decoupling between China and the U.S. but also posed new challenges for the crypto market—this new battlefield of global capital flow.

Historical Warnings

The lessons brought by the Smoot-Hawley Tariff Act of the 1930s are worth our deep reflection. At that time, countries fell into a vicious cycle of retaliatory tariffs, ultimately leading to the collapse of the international trade system. This policy, considered one of the most destructive trade policies of the 20th century, serves as a warning to contemporary decision-makers: trade protectionism has never been a good solution to economic problems.

In 1930, the U.S. Congress passed this act, raising the average import tariff to a historic high of 59%. Although the intention was to protect domestic industries affected by the Great Depression, it triggered a disastrous chain reaction. Major global trading partners quickly retaliated, leading to a nearly two-thirds decline in international trade between 1929 and 1934, a 70% drop in U.S. exports, and further worsening of global unemployment rates. This policy not only failed to save the U.S. economy but also deepened the impact of the Great Depression, exposing the fatal flaw of trade protectionism: in a globalized economy, unilaterally raising trade barriers will inevitably provoke a backlash. The more far-reaching impact is that the act undermined the foundation of international multilateral trade cooperation, fueled economic nationalism, and laid the groundwork for the collapse of the international economic order before World War II.

Current Tariff Strategy

The tariff war of 2025 is different from that of 1930. The United States is attempting to reshape global supply chains through a "selective tariff war"—applying great pressure on China while temporarily easing relations with other countries. This "divide and conquer" strategy may seem clever, but it actually carries risks. As the world's second-largest economy, China is no longer the passive trade weak country it was in the 1930s. In the face of U.S. tariff increases, China has chosen a "no response" cold treatment attitude, while accelerating its "de-dollarization" layout. This strategic composure has made the market realize that the new round of trade war may not develop into a comprehensive melee like that of the 1930s, but rather a more prolonged war of attrition.

Crypto market reaction

The U.S. government's tariff policy has triggered violent fluctuations in the global financial markets, and the crypto market has also suffered a comprehensive impact. The price of Bitcoin dropped from $83,500 to $74,500, while Ethereum fell even more sharply, from $1,800 to $1,380, and the total market value of small cryptocurrencies plummeted by over 40%. Market liquidity has clearly contracted, with monthly inflows into Bitcoin plummeting from a peak of $100 billion to $6 billion, while Ethereum saw a net outflow of $6 billion. Despite a large-scale "capitulation sell-off," the scale of losses has gradually diminished as prices fell, indicating that short-term selling pressure may soon be exhausted.

From a technical analysis perspective, $93,000 has become a key resistance level for Bitcoin to regain upward momentum, while the range of $65,000-$71,000 is the core support area that bulls must defend. The current market has entered a critical phase, and if it breaks the support level, it could lead to most investors falling into floating losses, triggering a more severe market correction. Overall, the crypto market is extremely sensitive to changes in global liquidity, and the uncertainty brought by the recent tariff policy has caused widespread impact. Whether the market can stabilize will depend on the subsequent policy direction and the flow of funds.

In this game, the crypto market is both a passive recipient and an active variable. It is worth pondering: when the international situation is tense and the global currency system is turbulent, where can investors find a scarce, global, and digitized store of value that is not controlled by any single government or entity? Perhaps, just as the credibility of the old order is being eroded by trade wars, the seeds of a new system have quietly begun to sprout.