China’s response to President Trump’s aggressive trade policy is quietly disrupting global cash flows, with repercussions reaching all the way to crypto markets.
Since taking office early last year, President Trump has imposed heavy tariffs or taxes on imports of nearly all goods entering the United States, including those 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 exchange rate playing a key role in its resilience.
According to a recent JPMorgan note, 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 tension.
In other words, China’s exchange rate management tends to overload dollar-driven cash flows during escalating trade tensions, such as storms worsening flooding.
This affects bitcoin, which is a macro-sensitive asset. It plummets when risk aversion triggered by tariffs makes dollar liquidity tight, and recovers when tensions ease. This is exactly how bitcoin traded in March-April last year after trade tensions escalated.
China’s influence on cryptocurrency prices is transmitted indirectly through currency management and global liquidity cycles, the data suggests, unlike in the US, where it flows directly through capital movements in exchange-traded funds and other alternative investment vehicles.
That interpretation aligns with the arguments of Arthur Hayes, who has called U.S.-China trade deals largely performative and has emphasized that true economic adjustment occurs through quieter channels.
In his view, tariffs and negotiations set the political backdrop, while currency 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 significantly, but the interplay between tariffs, the managed exchange rate, and dollar liquidity still shapes the macro environment in which bitcoin is traded.
China’s resilience
According to JPMorgan Private Bank’s latest Asian outlook, China’s export engine remains resilient: real exports are on track to grow around 8% in 2025 and global market share will rise to around 15%, despite a dense web of US tariffs, with China’s US-bound exports falling to less than 10% of the total.
That resilience reflects diversification into 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 from its 2023 lows, but in calendar-year terms in 2025 it is only marginally stronger against the dollar, underscoring how tightly managed and range-bound the currency remains.
Any recent strength in the yuan, the bank argues, is likely seasonal, and the medium-term outlook points to a stable and range-bound trajectory as authorities prioritize export competitiveness and deal with entrenched deflationary pressure.
The bank warned that the bar for significant appreciation of the yuan 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 from sustained yuan appreciation to liquidity transmission.
