Trump's Tariff Escalation to Iran: How 25% Secondary Tariffs Impact the Crypto Market

January 23rd, Trump announced a new sanctions measure aboard Air Force One: the U.S. government will impose an additional 25% tariff on all countries engaging in trade with Iran. This measure will take effect soon. This is not simply an escalation of trade wars but a new economic sanction tool called “secondary tariffs.” The crypto market reacts sensitively to this, and market risk sentiment has already begun to heat up.

What are secondary tariffs and why are they worth paying attention to

The “secondary tariffs” mentioned by Trump are not technical terms but essentially a form of monetary sanctions targeting third-party countries that trade with nations the U.S. disapproves of. In this case, targeting Iran means any country doing business with Iran will be subject to a 25% tariff.

The power of this policy lies in its broad scope. Unlike traditional unilateral sanctions, secondary tariffs force third-party countries to choose between “trading with Iran” or “facing U.S. tariffs.” For the globalized trade system, this is akin to deploying a geopolitical bomb in the economy.

The market is already reacting in advance

Although this new policy was announced only on January 23rd, the crypto market’s sensitivity to tariff threats has already been evident. According to the latest news, on January 19th, Bitcoin temporarily broke through the $95,000 resistance level amid ETF fund inflows and weakening inflation data, reaching nearly $98,000 at its peak. However, when Trump announced tariffs on eight European countries, BTC quickly retreated to around $92,000.

The scale of this market volatility is significant:

• Approximately $850 million in long positions were liquidated across the entire market within hours
• Bitcoin and Ethereum accounted for nearly half of this liquidation
• The USD weakened due to US-Europe tensions, facing devaluation risks

This indicates that the market has already incorporated tariff policies as a major risk factor into its pricing.

The escalation path of tariff policies

The 25% tariff on Iran is not an isolated event but a continuation of Trump’s trade policy. According to the latest news, Trump previously announced a 10% tariff on eight European countries (Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland), with plans to raise it to 25% in June.

This means:

• The tariff threat is not only targeting Iran but is spreading globally
• The announced policies are expected to escalate in the coming months
• The EU has already prepared retaliatory measures worth approximately €93 billion
• The trade war could escalate and last for several months

Potential impact on the crypto market

From the market response, the impact pathway of tariff policies on crypto assets is clear:

Risk sentiment transmission

Geopolitical tensions directly impact risk assets. Although Bitcoin is often called “digital gold,” in macro risk events, it behaves more like stocks, declining in tandem with Nasdaq futures.

Volatility amplification

Due to negative gamma exposure in Bitcoin options priced between $86,000 and $95,000, market makers are forced to buy when prices rise and sell when prices fall, amplifying price swings. The sharp decline triggered by the tariff news is a manifestation of this mechanism.

USD devaluation expectations

The escalation of tariffs may prompt foreign investors to hedge against USD devaluation risks. In theory, this is positive for Bitcoin (as a non-USD asset), but in the short term, risk sentiment pressures often outweigh this factor.

Key points to watch moving forward

Policy implementation timing

Trump stated that the measure will “take effect soon,” but the specific timeline remains unclear. If implemented quickly, it could trigger a new round of market volatility.

Supreme Court rulings

According to the latest news, the U.S. Supreme Court is about to rule on the legality of Trump’s tariff policies. This ruling could cause short-term market fluctuations.

Global trade system reactions

Major economies like the EU and Canada are already preparing retaliatory measures. If a global trade war escalates, the crypto market, as a risk asset class, could face greater pressure.

Summary

Trump’s newly announced 25% secondary tariffs targeting Iran mark an escalation in trade policy. This policy is characterized by its broad scope and far-reaching impact, not only targeting Iran but spreading globally. The crypto market has already begun to react to such policies, and recent Bitcoin price fluctuations reflect this risk pricing.

For crypto investors, it is crucial to recognize that in an environment of escalating geopolitical tensions, Bitcoin’s “safe-haven” attribute is often overshadowed in the short term by risk sentiment. Close attention should be paid to policy implementation timing, Supreme Court rulings, and global trade system responses, as these factors will directly influence short-term crypto market trends.