Aides to President-elect Donald Trump are dialing back his much-hyped tariff plans, and the U.S. dollar is paying for it. The Dollar Spot Index dropped 0.9%—the biggest fall since November—while the euro flexed, surging over 1% against the dollar for its biggest gain since August. Investors freaked out after a Washington Post report said that Trump’s broad, inflation-driving tariff threats could shrink into a plan targeting only a few “critical imports.” Treasury yields, which had climbed earlier in the day, reversed course as Wall Street processed the news. For a currency that had been coasting on expectations of economic chest-thumping and protectionism, the report was a gut punch. The possibility that Trump might actually rein in his aggressive trade rhetoric hit like a bucket of cold water. Trump’s focus allegedly moves to key industries According to the Post , the new plan could slap tariffs on steel, aluminum, copper, and iron—the lifeblood of the defense industry. Think tanks and insiders speculate that Trump wants to rebuild America’s supply chains for military equipment right here at home. It doesn’t stop there. Medical supplies are allegedly also on the chopping block. Needles, vials, syringes, and raw pharmaceutical materials are rumored to be high on the priority list. Then there’s energy. Tariffs could hit imports of rare earth minerals, solar panels, and high-performance batteries—essential components for everything from electric cars to the nation’s energy grid. Trump denies report, lashes out at media Trump, true to form, wasn’t having any of it. He took to Truth Social to call the Washington Post report “fake news.” In a post dripping with trademark bombast, the president wrote, “The story in the Washington Post, quoting so-called anonymous sources, which don’t exist, incorrectly states that my tariff policy will be pared back. That is wrong.” Despite the pushback, the damage was done. The greenback’s strength over the past few weeks had come from expectations that Trump would hit his biggest trading partners—China, the EU, and beyond—with heavy, across-the-board tariffs. A narrower approach? That’s a different game altogether. The markets responded immediately. The yuan and euro, currencies that had taken a beating in recent months, bounced back as traders recalibrated their outlook. But the so-called “one-size-fits-all” approach, where all countries would face the same rates, is apparently still under discussion. However, the political and economic risks are enormous. Blanket tariffs of 10%-20% could hike prices on everything from cars to electronics, hammering American households already grappling with inflation. Global trade experts are also raising red flags. A universal tariff policy could trigger a domino effect of retaliatory measures from other countries, squeezing global economic growth and further rattling financial markets, including crypto. Land a High-Paying Web3 Job in 90 Days: The Ultimate Roadmap
