Donald Trump won’t impose tariffs ‘from day one’
Donald Trump will not impose tariffs on trading partners on day one of his presidency, according to a report from the Wall Street Journal.
Citing a memo, the newspaper reported that Trump will direct officials to investigate the US’s trading relationship with China, Canada and Mexico, but to avoid any immediate new duties.
Rather than imposing tariffs, the memo instructs officials to address unfair trade practices and remedy persistent trade deficits.
A senior policy adviser in the Trump team told the WSJ that the memo was an attempt to lay out the President’s agenda in “a measured way”.
Trump had previously threatened to impose a 25 per cent tariff on all goods from Canada and Mexico from the first day of his presidency as well as an additional 10 per cent duty on China.
The report will likely trigger a sense of relief among the US’s major trading partners, and prompted the dollar index to lose around 1.0 per cent.
Sterling gained over 1.1 per cent against the greenback to hover just under $1.23.
Punitive tariffs would strengthen the dollar, as most economists think protectionist policies will reinforce inflationary pressures, keeping interest rates higher for longer.
“The dollar is incredibly sensitive to the tariff outlook right now, and the new administration is already setting a tone suggesting that the fast-moving, shock-and-awe trade policy that Trump had promised is likely to be more measured than the market had expected,” Kyle Chapman, FX Markets Analyst at Ballinger Group said.
During the election campaign, Trump promised to impose a blanket tariff of at least 10 per cent on all foreign goods entering the US, rising to 60 per cent for imports from China.
Speaking over the weekend, Darren Jones, chief secretary to the Treasury, said the government was “prepared for all scenarios”, but expected to avoid the worst of Trump’s tariffs.
“I don’t think we’re going to be in that scenario,” he said.
“We shouldn’t be looking at president-elect Trump’s inauguration as a risk, or a bad thing for the UK. It could be an enormously positive thing with lots of opportunities,” he added.