The Shadow of Trade Protectionism Reemerges: Lessons from History on the Current Situation

Nearly a hundred years ago, a tariff bill in 1930 had a profound impact on the global economy. This bill, under the guise of protecting domestic industries, ultimately evolved into a global trade disaster that exacerbated the severity of the Great Depression. Even today, the shadow of trade protectionism still lingers.

In April 2025, the United States announced that it would raise tariffs on goods from a certain country to 125%, and the global market once again felt the familiar chill. In response, the country's Ministry of Commerce stated that if the U.S. continued to play "tariff number games," they would "ignore" it and reserve the right to take further countermeasures. Meanwhile, the U.S. government proposed a "90-day tariff suspension" to 75 countries, reducing the general tariff rate to 10%, but excluding certain specific countries. This targeted trade strategy not only increases the risk of decoupling for certain countries' economies but also poses new challenges for the cryptocurrency market—this new battlefield for global capital flow.

Historical Warnings

The reason the tariff legislation of the 1930s became a tragedy was that countries fell into a vicious cycle of retaliatory tariffs, ultimately leading to the collapse of the international trade system. This is considered one of the most destructive trade policies of the 20th century and offers contemporary decision-makers a profound historical lesson: trade protectionism has never been a good remedy for economic difficulties.

In 1930, the U.S. Congress passed this bill, 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 took retaliatory measures, leading to a nearly two-thirds decline in international trade between 1929 and 1934, with U.S. exports plummeting by 70% and global unemployment worsening further. This policy not only failed to save the U.S. economy but also deepened the Great Depression, exposing the fatal flaws of trade protectionism: in a globalized economy, unilateral high trade barriers inevitably lead to a "boomerang effect." The more far-reaching impact is that this bill undermined the foundation of international multilateral trade cooperation, fueled economic nationalism sentiments, and set the stage for the collapse of the international economic order before World War II.

Current Trade Friction

Compared to nearly a century ago, the tariff disputes in 2025 exhibit different characteristics. The United States is attempting to reshape the global supply chain through a "selective tariff war"—pressuring one country to the extreme while temporarily easing tensions with most others. This strategy of "divide and conquer" may seem clever, but it is fraught with risks. As the world’s second-largest economy, the country is no longer the passive trading weakling of the 1930s. In response to the U.S. decision to impose tariffs, the country has chosen to adopt a posture of "ignoring" it and is simultaneously accelerating its "de-dollarization" initiatives. This strategic resolve has made the market realize that the new round of trade friction may not evolve into a comprehensive melee like in the 1930s, but rather a more protracted war of attrition.

Reaction of the Cryptocurrency Market

The U.S. government's tariff policy has triggered severe fluctuations in global financial markets, and the cryptocurrency market has not been spared. Bitcoin fell from $83,500 to $74,500, Ethereum dropped from $1,800 to $1,380, and the total market value of other cryptocurrencies was cut by more than 40%. Market liquidity has significantly contracted, with monthly inflows into Bitcoin plummeting from a peak of $100 billion to $6 billion, while Ethereum turned into a net outflow of $6 billion. Although there has been a large-scale "surrender-style sell-off", as prices decline, the scale of losses is gradually shrinking, indicating that short-term selling pressure may be nearing exhaustion.

From a technical perspective, the $93,000 level has become a key resistance for Bitcoin to regain upward momentum, while the $65,000-$71,000 range is the core support zone that bulls must defend. The market has now entered a critical phase, and a break below the support level could lead to most investors facing unrealized losses, potentially triggering a more severe market adjustment. Overall, the crypto market is extremely sensitive to changes in global liquidity, and the uncertainty brought by the recent tariff policy has caused widespread impacts. Whether the market can stabilize will depend on subsequent policy direction and capital inflow.

Conclusion

The cryptocurrency market is both a passive recipient and an active variable in this game. When international tensions rise and the global monetary system is in turmoil, investors may seek a scarce, global, and government or entity-uncontrolled means of storing digital value. Perhaps, when the credibility of the old order is eroded by trade frictions, the seeds of a new system quietly begin to sprout.