Trump holds off on tariffs, cheering markets
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President Trump held off imposing broad tariffs on Day 1 of his presidency, instead ordering reviews of trade and currency imbalances.
Yes, but: In Oval Office remarks, he also raised the prospects of huge tariffs on Canada and Mexico in a matter of days.
Why it matters: Global markets feared Trump would immediately make good on his campaign promise to place sweeping tariffs on most or all U.S. imports, which could have sparked both inflation and a trade war.
- The mixed messages — holding off on ordering tariffs, but then casually mentioning their looming imposition — points to the deep economic uncertainty that will affect global policymaking in coming months.
Driving the news: Trump's trade memo orders federal investigations of trade deficits, alleged unfair trade practices and purported currency manipulation by other countries.
- The memo directs specific attention to trade deals with China, Canada and Mexico and whether their terms are being honored.
- An unnamed senior adviser told the Wall Street Journal the memo showed Trump was approaching trade "in a measured way."
- Reports on findings are due from senior officials on April 1, per the memo.
- Despite those deadlines, Trump said during an Oval Office signing ceremony late Monday that he was looking at 25% tariffs on Canada and Mexico as soon as Feb. 1, citing the flow of both migrants and fentanyl from both countries.
By the numbers: The U.S. dollar, which is sensitive to the rise and fall of tariffs, was mostly weaker on the news, which first broke Monday morning.
- The U.S. Dollar Index, which measures the value of the dollar against a basket of foreign currencies, dropped 1% after the initial Journal report.
- European stock markets rose, while Asian markets were flat early Tuesday.
- The Canadian dollar, which surged on the initial expectation tariffs were off the table, plunged again after Trump's late comments.
The intrigue: Trump didn't say by what mechanism he'd impose such large tariffs so quickly.
- Imposing tariffs is usually a months-long process, unless Trump utilizes a never-tried method of levying them via declaration of an economic emergency.
What to watch: Trump has vehemently denied any softening of his tariff plans in recent weeks, despite reports to the contrary.
- The memo could signal an overall more moderate approach, even as Trump continues to call tariffs "the greatest thing ever invented" and among "the most beautiful words" in the language.
Editor's Note: This story has been updated with President Trump's Oval Office comments.
