Tariffs vs. Crypto: Balaji Says Smart Contracts Will Win

• Former A16Z investor Balaji Srinivasan says tariffs could hurt the U.S. economy but drive global adoption of crypto.
• Smart contracts may soon replace cross-border agreements as trust in traditional economic policies erodes.
• The shift from fiat to crypto is accelerating as economic uncertainty pushes capital into decentralized systems.

U.S. tariffs are back in the limelight but Balaji Srinivasan, former A16Z investor and crypto advocate, believes they could weaken the economy but could accelerate global crypto adoption by pushing more financial activity on-chain. With rising nationalism and economic protectionism, global capitalism will transition to decentralized, trustless smart contracts, making crypto the ultimate winner.

Srinivasan explained that tariffs trigger price rise faster than production can recover, and reshoring industries is significantly harder than building them from scratch. Meanwhile, the U.S. continues to profit from money money-printing business, making domestic manufacturing far less attractive.

Tariffs vs. Crypto: Balaji Says Smart Contracts Will Win 3

However, the real beneficiaries of rising tariffs may not be domestic industries but the crypto sector. Srinivasan believes that as trust in traditional economic policies declines, businesses and investors will look to blockchain-based solutions for cross-border transactions.

“Because internationalist capitalism will move onchain, even as nationalism and socialism gain ground offline. Because the only truly binding cross-border contracts will soon be smart contracts. And because you might not be able to trust a country’s economic promises, but you can trust cryptography’s mathematical guarantees,” he stated, emphasizing how decentralization provides mathematical guarantees that traditional economies cannot.

Code vs. Tariffs: Balaji’s Bold Prediction Comes True?

The argument aligns with predictions made in 2021 when Srinivasan forecasted a shift toward a code-based financial order. He reiterated that while tariffs historically coincided with U.S. industrial expansion, they are unlikely to reverse economic decline. “If the U.S. can print a dollar with 100% margin, why sell a screw for 1% margin, even with a tariff?” he questioned.

While some users pushed back, questioning whether tariffs could ultimately benefit the U.S., Srinivasan remained firm. He acknowledged both sides of the debate but argued that the real shift is happening on-chain. As fiat-based economies struggle with inflation and protectionist policies, the crypto sector is poised to absorb capital fleeing traditional financial systems.

Balaji’s statement comes as Trump unleashed tariff bombshell—25% on Canada and Mexico—sparked a crypto meltdown, wiping out over $110 billion from the market. Bitcoin slid below $89K, and altcoins crashed, as trade war fears rattled investors.

With the rise of decentralized finance (DeFi) and the ability to trade assets trustlessly, Srinivasan’s warning make sense—moving away from traditional economies and securing their wealth in crypto.