Zinger Key Points
- Trump’s revised tariff plan targets key industries like defense, medical supplies and energy, signaling a softer stance.
- Markets give a 49% chance tariffs will hit within Trump’s first 48 hours, with China as the most likely target.
President-elect Donald Trump's transition team is reworking his universal tariff proposal, signaling potential upheaval in global trade as markets brace for his inauguration on Jan. 20.
According to an exclusive report by The Washington Post published Monday, the new approach focuses on specific sectors deemed critical to U.S. economic and national security, marking a watered-down version of his 2024 campaign pledge for blanket duties on all imports.
While the plan's final structure remains undecided, early discussions suggest tariffs could target industries such as defense materials, medical supplies and energy production.
If enacted, these tariffs could still significantly disrupt global trade, elevate consumer prices and potentially produce wide-ranging impacts on the U.S. dollar.
Trump’s Tariff Playbook: Targeted But Aggressive
Instead of implementing a sweeping tax on all imports, discussions among Trump aides suggest that tariffs could be limited to specific sectors. Industries under consideration reportedly include:
- Defense materials: steel, aluminum, copper
- Medical supplies: syringes, vials, pharmaceutical components
- Energy production: batteries, rare earth minerals, solar panels
The plan appears designed to avoid widespread consumer price shocks that would accompany a blanket tariff on all imports. Still, the policy is being framed as an aggressive move to incentivize domestic manufacturing, a central goal of Trump's trade agenda.
A member of Trump's team described the approach to The Washington Post as a more politically viable way to kick off the administration’s trade agenda.
"The sector-based universal tariff is a little bit easier for everybody to stomach out the gate," the source said. "And it would still give CEOs a massive incentive to start making their products here."
While the revised strategy may appear more focused, it is no less ambitious.
Trump's advisers view these measures as a cornerstone of their efforts to bring manufacturing jobs back to U.S. soil.
Yet, the economic fallout could be significant. Liberal and conservative critics argue that the plan could still raise costs for domestic producers reliant on imported components, driving up prices for consumers and businesses alike.
Will Tariffs Hit In Trump's First 48 Hours?
Markets are closely watching how quickly Trump will move to implement his tariff strategy once inaugurated. CFTC-regulated Kalshi markets estimate a 49% chance that global tariffs will be announced within the first 48 hours of his presidency, by January 23.
Kalshi data also breaks down the likelihood of tariffs targeting specific trade partners. China leads the list at 45%, followed by Canada at 32%, Brazil at 29% and Mexico at 25%.
China is no stranger to Trump's tariff agenda. During his first term, Trump imposed duties on more than $360 billion worth of Chinese goods, citing trade imbalances and intellectual property concerns.
Trump's new focus on critical sectors may still escalate tensions with America's largest trade partner.
Goldman Sachs Sees Tariffs Boosting The Dollar
Goldman Sachs analysts suggest new tariffs could strengthen the U.S. dollar throughout 2025.
"We expect the Dollar to be ‘stronger for longer' in 2025. Tariff risks and divergent growth prospects will eventually allow the Dollar to strengthen," Kamakshya Trivedi, forex strategist at Goldman said in a recent note.
Trivedi indicated that tariffs directly influence exchange rates by altering the cost of international production.
Historically, Goldman's data shows the U.S. dollar index – as tracked by the Invesco DB USD Index Bullish Fund ETF UUP – has appreciated 2.5% for every unexpected $100 billion in U.S. tariff revenue from China, equivalent to a 20 percentage point tariff increase.
The analyst highlighted that foreign exchange markets often struggle to fully price in tariff risks ahead of time due to uncertainty over policy implementation and potential retaliation.
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