96% of the tariff cost is borne by the United States, which drains the liquidity of the crypto market.

According to a study by the Kiel Institute for the World Economy in Germany, between January 2024 and November 2025, 96% of the tariffs imposed by the United States are borne by American consumers and importers, with foreign exporters only bearing 4%. This research reveals a truth often masked by political discourse: tariffs ultimately compress domestic disposable liquidity in the U.S., which is affecting the trend of the crypto market.

The True Bearers of Tariff Costs

The common political narrative is that “tariffs are paid by foreign producers,” but the data from the study breaks this assumption. Nearly all of the approximately $200 billion in tariff revenue is paid domestically, highlighting the severity of the issue.

The process of tariff cost transmission is as follows:

• Foreign exporters keep prices stable but reduce shipment volumes
• U.S. importers pay tariffs at the border
• The costs are passed on to retailers and end consumers

However, this transmission process is not rapid. The study shows that only about 20% of the tariff costs are passed on to consumer prices within six months; the remaining costs are absorbed by importers and retailers, directly squeezing their profit margins. This means that most of the costs are stuck in the middle of the supply chain in the short term.

Micro Mechanisms of Liquidity Compression

Why does this seemingly macroeconomic phenomenon affect the crypto market? The key lies in the concept of liquidity.

As disposable funds for consumers and businesses are slowly drained by tariffs, their funds available for speculative assets decrease. The crypto market, being the most liquidity-sensitive among risk assets, is the first to feel this pressure. Rather than direct policy suppression, it’s more about indirectly weakening market participants’ speculative capacity through economic chain effects.

The “Stagnation” Phenomenon in the Crypto Market

This liquidity compression manifests in the crypto market as a unique phenomenon: neither a crash nor a rally. Since October 2025, the market has entered a liquidity stagnation phase.

This contrasts with previous market behaviors. When liquidity is abundant, markets either rise rapidly (risk appetite increases) or fall sharply (risk appetite decreases). But stagnation means there is no influx of new funds pushing prices higher, nor is there a mass panic exit. The market is stuck in a “lack of momentum” state.

Trends Worth Noticing

Several directions are worth observing:

• Continuity of tariff policies: if tariffs continue or even increase, liquidity compression could become prolonged
• Accelerated cost transmission: over time, more tariff costs will pass through to consumer prices, further weakening disposable income
• Corporate investment behavior: when profit margins are squeezed, their funds for innovation and expansion will decrease, potentially impacting blockchain ecosystem development investments
• Changes in policy expectations: if signals of tariff policy adjustments emerge, suppressed liquidity could be quickly released

Summary

This study reveals an important causal chain: U.S. tariff policies, through cost transmission mechanisms, compress domestic disposable liquidity, thereby weakening market participants’ speculative capacity in the crypto space, leading to a market stagnation phase. This is not a traditional policy ban, but an indirect effect via economic leverage.

For the crypto market, liquidity stagnation usually does not last long, as markets are always seeking new growth drivers. But before that, paying close attention to the real impact of macro policies on liquidity is more meaningful than focusing on short-term price fluctuations. The future direction of tariff policies may be the key variable to unlocking the next phase of crypto market trends.