China's response to President Trump's aggressive trade policy is quietly disrupting global cash flows, with ripples reaching all the way to crypto markets.
Since taking office early last year, President Trump has slapped steep import tariffs, or taxes, on nearly all goods entering the U.S., including those from China, the world's second-largest economy and the global factory. As of January 2026, the average U.S. tariff on Chinese imports is approximately 29.3%.
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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 by JPMorgan, this stance on exchange rate management has helped Beijing preserve export competitiveness and contain deflation, while amplifying dollar-led liquidity cycles during periods of trade stress.
In other words, China's exchange rate management tends to supercharge dollar-driven cash flows during the escalation of trade tensions, like storms that make the flood worse.
This affects bitcoin, which is a macro-sensitive asset. It tanks when the tariff-led risk-off makes the dollar liquidity scarce and rebounds when the tensions ease. That's exactly how bitcoin traded in March-April last year after trade tensions escalated.
China’s influence on crypto prices runs indirectly through currency management and global liquidity cycles, data suggests, unlike the U.S., where it flows directly via capital movements in exchange-traded funds and other alternative investment vehicles.
That interpretation aligns with arguments from Arthur Hayes, who has framed U.S.-China trade deals as largely performative and emphasized that the real economic adjustment occurs through quieter channels.
In his view, tariffs and negotiations set the political backdrop, while FX policy, capital-account tools, and Treasury-led liquidity management determine market outcomes.
JPMorgan’s outlook reinforces that logic. China may not allow the yuan to strengthen meaningfully, but the interaction among tariffs, managed FX, 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 resilient, with real exports on track to grow about 8% in 2025 and global market share rising to roughly 15%, despite a dense web of U.S. tariffs, and U.S.-bound exports from China dropping to below 10% of the total.
That resilience reflects diversification toward ASEAN and other regions, as well as a deliberate decision to tightly manage the yuan rather than allow it to appreciate.
The Chinese yuan has strengthened about 4% over the past year off 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 yuan strength, the bank argues, is likely seasonal, with the medium-term outlook pointing to a stable, range-bound trajectory as policymakers prioritize export competitiveness and grapple with entrenched deflationary pressure.
The bank cautioned that the bar for meaningful yuan appreciation remains high, describing the currency as operating under a low-volatility management framework in which movements are largely dictated by the dollar.
For crypto markets, that framework shifts the focus away from sustained yuan appreciation and toward liquidity transmission.
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