The Dollar Slumps as Trump Aides Explore Targeted Tariffs
The US dollar slumped 1% on Monday after a report suggested that President-elect Donald Trump was considering targeted tariffs that would only apply to critical imports, potentially alleviating concerns among countries that were expecting broader levies.
According to the Washington Post, Trump’s aides are exploring plans to apply tariffs to every country, but only on sectors deemed critical to national or economic security. The news caused the dollar to fall to as low as 107.86, down from a more-than-two-year high of 109.54 on Thursday.
The dollar had been trading lower, but the report sparked a sharp decline. Expectations of broad-based tariffs had weighed on foreign currencies such as the euro and yen in recent months, helping to send the dollar soaring.
The euro rallied 1.13% on Monday to $1.0433, its highest in a week, while the yuan also gained, rising 0.5% to 7.325 per dollar. Sterling, the Australian dollar, and the Canadian dollar also strengthened against the US currency.
The dollar’s decline is a relief for many investors, who had been worried about the impact of broad-based tariffs on the global economy. Economists had warned that such tariffs could stoke US inflation, potentially limiting the Federal Reserve’s ability to cut interest rates and supporting the dollar.
The market is also waiting for Friday’s US non-farm payrolls jobs report for December, as well as comments from Federal Reserve policymakers, who are expected to reiterate their concerns about inflation.
