China’s response to President Trump’s aggressive trade policies is quietly disrupting global money flows, with ripples reaching all the way to crypto markets.
Since taking office early last year, President Trump has imposed steep import tariffs or taxes on nearly all goods entering the United States, including goods from China, the world’s second-largest economy and global factory. As of January 2026, the average US tariff on Chinese imports is approximately 29.3%.
In response, China has adapted to Trump’s tactics, with tight control over the yuan’s exchange rate playing a key role in its resilience.
According to a recent note from JPMorgan, this stance on exchange rate management has helped Beijing maintain export competitiveness and limit deflation, while reinforcing dollar-led liquidity cycles during periods of trade stress.
In other words, China’s exchange rate management tends to overload dollar-driven money flows during the escalation of trade tensions, like storms that make the flood worse.
This affects bitcoin, which is a macro-sensitive asset. It lags when tariff-led risk-off makes dollar liquidity scarce and rises when tensions ease. This is exactly how bitcoin traded in March-April last year after trade tensions escalated.
China’s influence on crypto prices flows indirectly through currency management and global liquidity cycles, data suggests, unlike the US, where it flows directly via capital movements in exchange-traded funds and other alternative investment vehicles.
That interpretation is consistent with arguments from Arthur Hayes, who has framed trade agreements between the US and China as largely performative and emphasized that the real economic adjustment takes place through quieter channels.
In his view, tariffs and negotiations set the political backdrop, while exchange rate policy, capital account tools and treasury-led liquidity management determine market outcomes.
JPMorgan’s outlook reinforces this logic. China may not allow the yuan to appreciate meaningfully, but the interplay of tariffs, managed currencies and dollar liquidity still shapes the macro environment in which bitcoin trades.
China’s Resilience
According to JPMorgan Private Bank’s latest Asia Outlook, China’s export engine remains robust, with real exports on track to grow by around 8% in 2025 and global market share rising to around 15%, despite a tight net of US tariffs, and US-bound exports from China falling below 10% of the total.
This resilience reflects diversification towards ASEAN and other regions, as well as a conscious decision to manage the yuan tightly rather than allow it to appreciate.
The Chinese yuan has strengthened about 4% over the past year from its 2023 lows, but on a calendar-year basis in 2025 it is only marginally stronger against the dollar, underscoring how tightly managed and range-bound the currency remains.
Any recent strengthening of the yuan, the bank argues, is likely to be seasonal, with the medium-term outlook pointing to a stable, range-bound trajectory as policymakers prioritize export competitiveness and grapple with entrenched deflationary pressures.
The bank warned that the bar for meaningful yuan appreciation remains high, describing the currency as operating under a low-volatility regulatory framework where movements are largely dictated by the dollar.
For crypto markets, that framework shifts focus away from sustained yuan appreciation and toward liquidity transmission.
