WP "Trump Tariffs Reduced from Original Plan" Report... Dollar Plummets

"Trump Aides Consider Tariffs Only on Items Important to Security"

Considering Universal Tariff Program Rather Than Targeting Specific Countries

Euro, Mexican Peso, Canadian Dollar Surge Over 1%

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The Washington Post reported on the 6th (local time) that Trump's tariff plan has been reduced from the original plan and will only apply to imports important to national and economic security. This news caused the US dollar to plummet against most major currencies on the morning of the 6th local time. The Mexican Peso, Canadian Dollar, and Euro, which were targets of the tariff threat, all surged over 1% against the dollar.

On the 6th, the Washington Post reported that Trump's aides are reviewing a tariff plan that applies only to essential imports. It also stated that they are considering a so-called 'universal tariff' program that applies to all countries rather than specific ones like China, Mexico, and Canada.

After this report, the 10-year US Treasury yield offset its previous rise, which had surpassed 4.6%. The Mexican Peso and Canadian Dollar, which were immediately exposed to Trump's tariff threat, each surged over 1%. The Euro also rose more than 1% against the US currency, marking the largest increase since August.

The Bloomberg Dollar Spot Index, which calculates the relative value against a basket of six major currencies, fell by 0.9%, the largest drop since November.

The newspaper, citing three sources familiar with the matter, revealed that Trump's aides are focused on imposing tariffs only on specific sectors deemed important to national and economic security.

Trump has consistently advocated high tariffs during his election campaign, such as a 60% tariff on all Chinese goods and a 25% tariff on Canada and Mexico. This was expected to harm global economic growth and reduce inflationary pressures in the US.

Jordan Rochester, head of macro strategy at Mizuho, added, "The new administration seems to be intentionally avoiding high tariffs on all imports to avoid consumer price increases."

However, it is still unclear what imports important to national and economic security refer to.

Two sources interviewed by the Post added that this includes imposing tariffs on "defense industry supply chains (steel, iron, aluminum, and copper), essential medical supplies (syringes, needles, vials, and pharmaceutical ingredients), and energy production (batteries, rare earth minerals, and solar panels)."

Kyle Chapman, a foreign exchange market analyst at Bollinger Group, said, "Officials seem to be preparing to narrow the scope of tariffs to weaken Trump's worst pledges."

Guest reporter Kim Jung-ah kja@hankyung.com