Trump and the first trade war

The U.S.-China trade war refers to the ongoing trade conflict between China and the United States since 2018. It began when U.S. President Donald Trump signed a memorandum on March 22, 2018, accusing China of “stealing U.S. intellectual property and trade secrets.” He directed the U.S. Trade Representative to impose tariffs and other trade barriers on Chinese imports to pressure China to change its “unfair trade practices.”

Starting in 2018, the U.S. imposed phased tariffs on hundreds of billions of dollars worth of Chinese goods, with rates as high as 25%. In response, China launched reciprocal tariffs, imposing an additional 25% on $34 billion worth of U.S. goods exported to China, triggering significant economic and market volatility in both countries. Additionally, the U.S. levied tariffs on steel and aluminum products from allied countries such as the EU, Canada, and Mexico, sparking multilateral trade disputes.

Overall, Trump’s tariff policy reflected a distinctive approach of “high-pressure negotiation with deal-making priority,” often leveraging trade uncertainty to gain geopolitical economic advantages. This volatility created short-term shocks and long-term structural pressure on global financial markets—especially on high-risk assets like cryptocurrencies and tech stocks—prompting concessions in trade agreements, supply chain reshoring, and geopolitical dynamics.

Trump signs ‘China-US Economic and Trade Agreement’ with Chinese representatives (Image source:https://zh.wikipedia.org/wiki)

Escalation of the U.S.-China Trade War in 2025

Since returning to office in early 2025, the Trump administration has enacted a series of trade protection measures. In early February, the U.S. announced a 10% tariff on all Chinese imports, citing it as a countermeasure against fentanyl trafficking. In early March, it imposed a 25% tariff on goods from Canada and Mexico.

A pivotal moment occurred on April 2, when Trump signed Executive Order No. 14257, imposing a minimum 10% baseline tariff on all global imports, with higher “reciprocal tariffs” on goods from about 60 countries. For Chinese goods, tariffs were increased by 34% on top of existing rates, totaling 54%. Additionally, the U.S. revoked the duty-free status for low-value goods (under $800) from China and Hong Kong.

On April 9, the Trump administration raised tariffs on Chinese goods to 125%, including a 20% “fentanyl tariff.” This move was seen as a response to what the U.S. called China’s “disrespect for global markets.” The Chinese government strongly opposed the action, retaliated with a 125% tariff on U.S. goods, and condemned the U.S. actions as violations of international trade rules, describing them as unilateralism and economic bullying.

Trump’s Policy Shift on Crypto

Since returning to the White House in early 2025, President Trump has significantly eased regulations on the cryptocurrency industry, including:

Dissolution of regulatory agencies: The Department of Justice has dissolved the national encryption currency enforcement team, and the Securities and Exchange Commission (SEC) has also withdrawn the lawsuits against Coinbase and Binance, announcing that it will no longer regulate meme coins.

Appointment of Pro-Crypto Officials: Former SEC commissioner Paul Atkins has been appointed as the new SEC chairman, and venture capitalist David Sachs has been appointed as the “White House AI and Cryptocurrency Affairs Manager,” responsible for formulating a new cryptocurrency policy framework.

The official cryptocurrency launched: The Trump family has launched $TRUMP and $MELANIA meme coins, and established the World Liberty Financial decentralized financial platform, where Trump’s title in the company is “Chief Encryption Advocate”.

$ TRUMP is a memecoin related to the President of the United States, Trump (Image Source:https://www.gate.io/en/trade/TRUMP_USDT)

Temporary Tariff Suspension Boosts Crypto Prices

On April 10, President Trump announced a 90-day suspension of the new tariff plan and reduced the baseline tariff rate on imports from multiple countries to 10%, while maintaining the 125% tariff on Chinese goods. This move aimed to increase pressure on China for substantial concessions in future trade negotiations.

The announcement triggered an immediate reaction in the crypto market. In the previous week, Bitcoin had hovered around $77,000 during U.S. trading hours. After the “tariff pause” news broke, its price soared past $81,000, gaining 5.5% within 24 hours. Ethereum rose above $1,600, with an 8% daily increase. Market risk appetite surged, and altcoins also saw broad-based gains.

From April 9th to 15th, the price of Bitcoin soared after the suspension of tariffs (Image Source:https://coinmarketcap.com/currencies/bitcoin/)

Strategic Choices in the U.S.-China Rivalry

As a key driver of China’s external demand, the U.S. absorbed around $525 billion worth of Chinese goods in 2024. Trump’s high-tariff policies are significantly narrowing this export channel, exposing China to an unprecedented risk of external demand contraction. If U.S. exports continue to be restricted, China’s economic growth may slow further, weakening its resilience in the broader U.S.-China strategic competition.

Although policymakers have made “expanding domestic demand and boosting consumption” a central focus of this year’s growth agenda, the effectiveness of current measures remains limited. Reviving domestic market demand has become an urgent policy priority. To effectively counter the systemic shocks from U.S. tariff hikes, China may need to accelerate the rollout of stronger fiscal support and structural reform measures to stabilize domestic demand, market confidence, and overall economic fundamentals.

Conclusion

From traditional export pressures to crypto market volatility, geopolitical rivalry now extends beyond physical goods into the broader domain of financial technology. As the U.S.-China trade war enters a new phase of fierce confrontation, Trump’s tariff policies are reshaping global market expectations. Cryptocurrencies, as highly policy-sensitive assets, are becoming an indirect barometer of U.S.-China policy divergence. Going forward, investors should closely watch policy signals and trade negotiations to dynamically adjust their strategies and navigate this new global trade cycle marked by both volatility and opportunity.