The Trump Tariff Iron Curtain Descends: Where Lies the Path for Crypto Mining?
1 The Trump Tariff Policy: Content and Motivation
– Policy Content
On April 2, 2025, U.S. President Trump signed two executive orders at the White House, announcing the establishment of a 10% “minimum benchmark tariff” on trade partners, with higher tariffs imposed on certain countries. The displayed tariff rate map shows that the U.S. has set reciprocal tariff rates ranging from 10% to 50% for various countries worldwide. Among them, the UK, Australia, Singapore, and others are at 10%, the Philippines at 17%, the EU at 20%, Japan at 24%, South Korea at 25%, China at 34%, Vietnam at 46%, and Cambodia at 49%… Trump claimed that the new tariff measures aim to boost U.S. manufacturing and “Make America Rich Again.” The “benchmark tariff” rate will take effect on April 5, and the “reciprocal tariff” on April 9.
The core of this new tariff policy is the so-called “reciprocal tariff”. However, the “reciprocal tariff” is not applicable in certain situations, including but not limited to: (1) items subject to 50 USC 1702 (b); (2) steel and aluminum products, automobiles, and automobile parts already subject to Section 232 tariffs; (3) copper, pharmaceuticals, semiconductors, and wood products, certain key minerals, as well as energy and energy products listed in Annex 2 of the executive order; (4) goods subject to the rates specified in Column 2 of the U.S. Harmonized Tariff Schedule (HTSUS); (5) all goods that may be subject to future Section 232 tariffs; (6) goods from Canada and Mexico that comply with the USMCA rules of origin; (7) the value of U.S. components in goods (U.S. components refer to the value attributable to components entirely produced in the U.S. or based on substantial transformation), provided that the U.S. component is not less than 20% of the value of the goods.
– Motivation Analysis
The White House claimed that the new tariff orders aim to address the U.S.’s long-term trade deficit by significantly adjusting tariff policies and creating a fair competitive environment for U.S. businesses and workers. In fact, Trump has been vigorously imposing tariffs since the beginning of his current term, and economic factors are just one of the motivations:
First, economic factors. The U.S. has long been in a trade deficit in international trade. According to the White House statement, this has “led to the hollowing out of America’s manufacturing base, inhibited the U.S.’s ability to expand advanced domestic manufacturing capabilities, disrupted key supply chains, and made the U.S. defense industrial base dependent on foreign adversaries.” From the official stance, reducing the deficit and revitalizing U.S. manufacturing are the biggest economic factors behind the current administration’s tariff policy upgrade.
Second, political factors. Trump and the Republican Party’s voter base are primarily blue-collar and conservative, who are also the main victims of U.S. manufacturing loss. The Trump administration uses tariffs to achieve its political slogan of “Making America Great Again,” which is one of its key strategies to cater to voters, fulfill campaign promises, and secure its electoral base. At the same time, increasing tariffs and trade barriers essentially serve to maintain the U.S.’s core position in the global political and economic system, achieving political goals through economic means.
Third, leadership factors. From a certain perspective, the new tariff policy is not unrelated to Trump’s business background. Compared to long-term economic planning, Trump prefers to achieve short-term benefits for the U.S. during his tenure, shaping a “America First” political image, and thus is willing to use tariffs as “bargaining chips” in international negotiations.
2 How Tariffs Impact Crypto Mining
The release of this tariff policy immediately triggered a sharp market reaction. On April 2, U.S. stock futures collectively plummeted, and during the crash of the U.S. stock market, the crypto market was not spared either. Recently, Bitcoin has fallen from $88,500 to $82,000, a decline of 3%, while mainstream altcoins such as BNB, SOL, and XRP have suffered even more severe losses. In addition to the overall impact on traditional financial markets and the crypto market, the new tariff policy’s impact on crypto mining deserves special attention.
– The Impact of the Tariff Policy on Crypto Mining
Thanks to its abundant cheap energy, strong infrastructure, and greater financial strength, the U.S. has become the world’s most important crypto mining market. According to statistics from December 2024 (as shown in the figure, Hashrate Index, 2024), the U.S. accounts for approximately 36% of the global hash rate, leading by a landslide, along with Russia (16%), China (14%), the UAE (3.75%), and others, shaping the basic landscape of the global crypto mining market. By the beginning of 2025, the U.S. hash rate share may have already exceeded 40%, and could even be approaching 50%.
The high hash rate in the U.S. represents a high demand for crypto mining machines, yet the U.S. is not the main production area for mining machines and primarily relies on imports to obtain them. Therefore, in the crypto mining industry chain, the main manufacturers in the mid-to-upstream segments, namely raw material supply, mining machine assembly, and sales, are directly affected by the tariff policy. Raw material supply involves chips, materials, and other components. As the main components of mining machines, chips primarily come from South Korea’s Samsung and Taiwan’s TSMC, while related materials are mainly provided by Chinese and Southeast Asian manufacturers. Regarding the assembly of mining machines, due to labor costs and other factors, China and Southeast Asian regions, with their cheap and abundant labor, undertake the majority of the assembly work. However, all of the above countries and regions have been included in the list of areas subject to reciprocal tariffs, with tariffs on Cambodia, Laos, Vietnam, and others approaching 50%. These exorbitant tariffs will create a lose-lose situation for U.S. crypto miners and mining machine manufacturers: on the one hand, tariffs will directly drive up the import prices of mining machines, compress the U.S. market for mining machine manufacturers, and weaken their profitability in the most important market. For the already slowing mining machine manufacturing industry, this is nothing short of another heavy and prolonged blow. On the other hand, this portion of the tariff costs will also be passed on to U.S. crypto miners, significantly increasing their operational pressure. Especially considering that since Bitcoin’s price peaked at $100,000 and continued to decline, various cryptocurrencies have also been on a downward trend, and the profit margins for crypto miners have already been significantly reduced. Should mining machine prices rise, some crypto miners may face the prospect of being unable to cover their costs and may be forced to shut down their mining operations. Furthermore, if too many miners, who serve as blockchain nodes, are reduced, the processing efficiency and security of the blockchain will also be threatened, fundamentally having a negative impact on the entire crypto industry.
– Exemption Scenarios and Uncertainties
There are several exemption scenarios under the reciprocal tariff policy, particularly including exemptions for certain semiconductors and U.S.-made products, but these scenarios are difficult to apply to the crypto mining machine manufacturing industry. First, the Trump administration, through the Harmonized Tariff Schedule (HTS) system, assigns different tariff rates to different products based on their customs codes. The annex announcing products not subject to the new tariffs only lists a small portion of HTS codes in the semiconductor field, and the chip models currently used in mainstream mining machines do not fall under these codes. Second, according to the so-called U.S. content rules, if U.S.-made components account for more than 20% of the total value of a product, they can theoretically constitute “U.S. content” and be exempt from reciprocal tariffs. However, the U.S. has never been a major producer of crypto mining machines, and whether it is chips, other components, or assembly, these are all completed in regions subject to additional tariffs, making it difficult for crypto mining machine manufacturers to gain exemptions under this rule.
In addition, the uncertainty surrounding tariff policies is also worth noting. Currently, many countries have indicated that they will respond to U.S. tariff policies with retaliatory tariffs and other countermeasures, such as China, Australia, Canada, and others. For instance, the Tariff Committee of the State Council of China announced that starting April 10, 2025, a 34% tariff will be imposed on all imports originating from the United States, taking actual retaliatory measures. At the same time, some countries have taken a compromising stance. Faced with the high tariffs imposed by the U.S., Vietnam has proposed reducing tariffs on U.S. goods to 0%, and Cambodia to 5%, with both leaders agreeing to continue negotiations on bilateral tariff agreements. After a series of political negotiations, the implementation of the tariff policies may change. According to the logic of reciprocal tariffs, if relevant countries (especially in Southeast Asia) reduce their tariff rates on the U.S., they may secure certain tax exemptions, thereby mitigating the overall impact of the tariff policies on the crypto mining industry. This could be a glimmer of hope in an otherwise bleak outlook.
3 Breaking the Deadlock: How Crypto Mining Can Respond
– The Ineffectiveness of Traditional Response Strategies
In terms of coping with tariff barriers, the effectiveness of traditional trade diversion strategies may not be as effective as before. After the start of the U.S.-China trade war in 2018, Chinese companies diverted trade or transferred production capacity through Southeast Asian countries such as Vietnam and Thailand to mitigate the adverse effects of tariffs, and the mining machine manufacturing industry was no different. However, the scope of this “reciprocal tariff” policy is unprecedented, amounting to a global tax increase, with the Asia-Pacific region, a key area for production capacity transfer, being almost entirely affected, making it particularly difficult to bypass regions unaffected by tariffs. As for the practice of mining machine manufacturers underdeclaring the price of mining machines at customs to reduce tariff payments, it carries significant compliance risks, and if discovered, could result in hefty fines or even criminal penalties.
As the world’s largest mining market, the U.S. boasts numerous crypto miners and corresponding demands for mining machine equipment. Given that Trump’s new tariff policy has increased production costs for U.S. crypto miners, could the strategy of not purchasing mining machines or mining in the U.S. become a viable survival approach? After all, prior to China’s 2021 mining ban, over two-thirds of global crypto mining activities were concentrated in China, and the migration of crypto miners from China to the U.S. has already demonstrated that the crypto mining industry does not have absolute path dependence. In reality, deploying crypto mining operations in other countries or regions has its pros and cons. The most direct advantage is avoiding the risks associated with Trump’s tariff policies. On the downside, first, companies would need to bear the additional uncertain risks of relocating and rebuilding mining farms; second, since the U.S. has abundant electricity resources, not mining in the U.S. and instead using expensive electricity or adopting production models such as computational power leasing would deprive miners of their cost advantages; third, and most importantly, the U.S. offers a friendly regulatory environment, a robust legal system, and a thriving crypto market, which can greatly ensure the stability and sustainability of the crypto mining industry, reducing the black swan risks brought about by policy uncertainties.
– Some Worthwhile Response Measures to Explore
In addition to hoping that Trump will “have a change of heart” and adjust the tariff policies targeting specific regions, crypto miners and mining machine manufacturers may also seek solutions in the following two aspects:
First, crypto miners can turn to the second-hand mining machine trading market. Since tariffs pertain to import and export issues, domestic second-hand mining machine transactions in the U.S. do not require the payment of tariffs. Miners can quickly deploy mining farms and meet current computational power growth needs by purchasing second-hand mining machines. However, the prices of second-hand mining machines may also rise with the increase in new mining machine prices, and their performance may be outdated, which may not meet mining requirements.
Second, crypto mining machine manufacturers can research and utilize the “U.S. content” rule to produce mining machines that meet tariff exemption conditions. As previously mentioned, considering that Trump’s current term has just begun and the political nature of the tariffs, the U.S. tariff trade barriers may persist for several years. At this point, short-term avoidance measures may not be effective, and long-term compliance measures need to be considered. Unlike traditional rules of origin, this tariff sets a 20% “U.S. content” threshold, aimed at lowering the barriers for manufacturing to return to the U.S. and encouraging foreign companies to transfer high-value-added segments (such as R&D and core component production) to the U.S. Under this rule, disregarding other factors and risks, crypto mining machine manufacturers can seek U.S.-based alternatives for high-tariff components such as chips, or separate IP companies from manufacturing companies to increase the U.S. content of mining machines. For example, foreign crypto mining machine manufacturers can collaborate with U.S. semiconductor companies to develop mining machine chips, or procure chip modules fabricated and tested in the U.S. (such as those from TSMC’s Arizona factory), thereby counting the chip costs as U.S. origin value, increasing the proportion of U.S. content in mining machines, and thus avoiding tariffs. Additionally, attempts can be made to establish technical holding companies in the U.S. to hold core patents for mining machine chip design and algorithms, and then license foreign crypto mining machine manufacturing companies to produce chips and mining machines. However, this approach carries certain tax risks and requires further assessment when implemented.