Trump Denies Reported Plans To Walk Back Tariffs—Dollar Still Falls, Stocks Rally

Topline
President-elect Donald Trump denied a market-moving report he plans to enact more targeted tariffs rather than the across-the-board levies touted on the campaign trail, a move which would likely whet investors’ risk appetite due to less severe inflation risks.
President-elect Donald Trump speaks at his Mar-A-Lago Club last month.Getty Images

Key Facts

Officials in the incoming Trump administration are targeting tariffs solely on goods in “critical” areas, according to the Washington Post report based on three anonymous sources, a break from the 10% or higher tax on all imports backed by Trump.

The first Trump tariffs will focus on sectors like national security such as steel and other metal imports, medical supplies like syringes and needles, and energy production like batteries, in an effort to encourage domestic manufacturing, according to the Post.

The scaled back plans would still be universal, as they would apply to goods coming into the U.S. via all countries, and it’s not known if Trump still hopes to target a more severe 25% tariff on Canada and Mexico, the Post noted.

Trump may still eventually pursue the widesweeping tariffs, one unnamed official indicated to the Post, who asked, “why not at least start with these targeted measures” which are “easier for everybody to stomach.”

The report named Treasury Secretary nominee Scott Bessent, incoming Domestic Policy Council director Vince Haley and Commerce Secretary nominee Howard Lutnick as the most influential voices in guiding Trump’s tariff policy.

Chief Critic
The Post report “incorrectly states that my tariff policy will be pared back,” Trump wrote on his Truth Social platform, calling it “just another example of Fake News.” Trump has not given up much ground on his tariff plans, but Bessent and Lutnick, the highest-ranking economic officials in Trump’s administration, have each indicated they at least partially view the threat of tariffs as a bargaining chip with other countries.
The Dollar Drops And Stocks Rally
The dollar weakened by its steepest margin in five months and U.S. and European stock indexes rallied following the Post report. The DXY dollar index, which measures the value of the dollar against a basket of six foreign currencies, fell as much as 1% Monday, flirting with its steepest single-day drop since August. The Stoxx 600, which follows 600 of Europe’s most valuable public companies, rose 0.7% to its highest level since Dec. 18, while the S&P 500, the American benchmark stock index, gained 1% shortly after market open. Among the most notable individual stock risers Monday were companies heavily reliant on global supply chains, as shares of semiconductor chip firms like the Dutch ASML, Taiwanese TSMC and American Nvidia all gained at least 3%.

Key Background
A tariff proponent in his first presidential term, Trump leaned heavily into the power of import taxes heading into the 2024 election, declaring in October tariff is the “most beautiful word in the dictionary.” Trump and other major tariff proponents, including Bessent, argue tariffs are a tool to boost domestic manufacturing and wield influence across foreign policy, while critics largely focus on the inflationary effects of tariffs, the cost of which many economists say are passed down to consumers. Tariffs delay the projected return to policymakers’ 2% target, according to economists at Goldman Sachs, who upped their end-of-2025 core personal consumption expenditures inflation forecast from 2.1% to 2.4% to account for the trade policy.

Further ReadingForbesWill Trump’s Tariffs Raise Prices? What To Know As He Targets Goods From Canada And MexicoBy Alison Durkee
ForbesFed’s Favored Inflation Metric Ticked Up To 6-Month High In OctoberBy Derek Saul

This article was originally published by a www.forbes.com . Read the Original article here. .