Are Trump’s Tariffs Good for Bitcoin?
United States President Trump has been rocking international waters with the announcement of continually increasing tariffs. These tariffs have raised the prices of foreign goods and financially harmed many American families. But will they help Bitcoin?
The relationship between Bitcoin and tariffs is weak at best, but we will evaluate it to see if there is any truth to the claim that Trump’s tariffs are good for Bitcoin.
What Are Trump’s Tariffs?
As March rolled into April, President Donald Trump had already ordered so many different tariffs it can be difficult to track them all. Below is information directly from the White House summarizing the Trump Tariffs. (This information is subject to frequent updates however, so feel free to cross-reference the website yourself).
· 25% additional tariff on all imports from Canada and Mexico (the exception is energy resources from Canada, which are only subject to a 15% tariff)
· 10% additional tariff on all goods imported from China
· Reciprocal tariffs imposed on all countries that trade with the US (aka, if Nigeria charges the US a 5% tariff, the US will do the same to Nigerian imports)
· 25% tariff on all cars not made on US soil.
Further announcement is expected to come on April 2nd and this is a constantly developing story.
Are Tariffs Good for the Economy?
Before we address the cryptocurrency aspect, lets discuss whether or not tariffs are good for the economy in general. According to experts, tariffs are bad for the economy.
You might be confused, mostly because Trump says the opposite, but there have been several studies done on the topic of tariffs and while it might seem like more tariffs mean more income, the opposite is actually true.
Tariffs tend to dissuade trade, and though those imposing the tariffs often think they have items that other locations NEED, the opposite is actually true. There are very few things that are considered a “need” in life, and most countries, rather than paying huge tariffs, choose to do without the item being tariffed. Not only that, but tariffs can destroy long-term trade relations and sink GDP, with the country being targeted by the tariff and looking elsewhere for the item being tariffed.
For example, let’s say that the US is one of the few producers of strawberries in the world (they’re not, but just stay with me) and say they tariff strawberries, adding a 20% tariff to all strawberry exports. Suddenly, that $5 box of strawberries is $6, and some families who were previously buying strawberries will choose to do without. Those who do continue to buy strawberries won’t spend on other items because they are paying the tariff.
The country buying the strawberries may begin to look elsewhere. They may even discover that their own country is capable of growing strawberries, and they may begin to set up their own farms. A few months after the tariff is enacted, they decide they don’t need American strawberries anymore and discontinue trade altogether. Suddenly, the US, the world strawberry producer, has thousands of strawberries they can’t export because no one is buying them. The crop rots and the farmers take tremendous losses. The government either had to buy them out (rescue them) or watch their own citizens suffer.
This is just one example of how tariffs damage both local and worldwide economies. And considering the amount of inflation already present in the United States, tariffs on incoming goods are going to cause huge problems for the average American family. Not only that, but they actually lead to job loss (remember the strawberry farmer going bankrupt?) and a lowering GDP. While they increase income in the short term, they do more damage long term than they are worth.
Are Tariffs Good for Bitcoin?
Now that we have discussed the downsides of tariffs on the economy, it’s time to talk about their effect on Bitcoin.
Although Bitcoin hit an all-new high when Trump won the election in November 2024, it has since entered a recession, and investors are wondering if the tariffs will fix it. In our opinion, No.
As we mentioned above, experts generally associate tariffs with a recession, and with things being so unpredictable on the economic front, many companies have had to set aside cryptocurrency adoption measures in order to make ends meet. Not only that, but many families are already struggling, and with prices expected to increase, they have become more conservative with their investments, many middle-class Americans cashing theirs out rather than investing more.
If that weren’t enough, experts have begun to assume that the price of BTC will follow the trends of the stock market, and with the current bear market going on there, they only expect for things to become dimmer for Bitcoin going forward.
Should You Sell Your Bitcoin Now?
We don’t have a crystal ball, so we can’t tell you whether or not it is a good idea to sell your Bitcoin now. What we can say is that while there are positive regulations coming for cryptocurrency on one side of the spectrum, hard times may be coming on the other.
What we mean by this: If you can afford to hodl (hold on and wait) your Bitcoin, then we truly believe you should as eventually it will rise again in price. But if you expect to enter difficult financial times, and you may need to use the money you currently have invested, you need to be aware that experts are not looking too positively at the price of BTC in the coming year.
It is also worth noting that Trump has been pushing for a US Bitcoin reserve, but it has been shot down in many aspects. While there is still a possibility it may come to pass, we are assuming at this point that it will not be approved.
Overall, the future of the American economy looks grim thanks to Trump’s Tariffs and we don’t expect they will be positive for Bitcoin either.
