U.S Dollar Falls on Tariff Pause

Markets Await Trump’s Moves

The dollar fell sharply on Monday after an official from the incoming U.S. administration indicated that President-elect Donald Trump would not impose new trade tariffs on his first day in office. This announcement eased fears of an immediate tariff blitz.

(U.S Dollar Index Daily Chart, Source: Trading View)

Trump, who is set to take office later in the day, has previously proposed tariffs of 10% on global imports, 60% on Chinese goods, and a 25% surcharge on imports from Canada and Mexico. Such measures could disrupt trade flows, increase costs, and provoke retaliatory actions.

Markets appear to be reassured by headlines suggesting that “day-one tariffs” are off the table. However, we believe this confidence may be misplaced. While broad-based tariffs on the first day were always unlikely, more targeted import levies shortly after the inauguration remain a possibility.

Adding to this, reports suggest that Trump plans to direct federal agencies to evaluate U.S. trade relationships with China and neighboring countries. The specifics of these evaluations remain unclear, and as details emerge, markets may reverse this initial reaction in the coming hours and days. The impact will also depend on how quickly Trump moves to sign executive orders. Reports indicate he could sign up to 100 orders today, potentially including deregulation measures for the energy and financial sectors, as well as crypto-related policies.

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