The President-elect’s transition team Donald Trump is reworking its universal tariff proposal, signaling a potential upheaval in global trade, as markets prepare for its Jan. 20 inauguration.
According to an exclusive Washington Post report released 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 promise for across-the-board tariffs on all imports.
While the final structure of the plan is still undecided, early discussions suggest the tariffs could target industries such as defense materials, medical supplies and energy production.
If implemented, these tariffs could still significantly disrupt global trade, raise consumer prices, and potentially produce profound impacts on the U.S. dollar.
Trump’s pricing playbook: targeted but aggressive
Instead of applying a blanket tax on all imports, discussions among Trump aides suggest that tariffs could be limited to specific sectors. The industries in question include:
- Defense materials: steel, aluminum, copper
- Medical supplies: syringes, vials, pharmaceutical components
- Energy production: batteries, rare earth minerals, solar panels
The plan appears aimed at avoiding the widespread shocks to consumer prices that would accompany a blanket tariff on all imports. Nonetheless, the policy is framed as an aggressive move to incentivize domestic production, a central goal of Trump’s trade agenda.
A member of Trump’s team described the Washington Post’s approach as a more politically viable way to launch the administration’s trade agenda.
“The universal tariff based on sectors is a little easier to digest for everyone,” the source said. “And that would still provide a massive incentive for CEOs to start making their products here.”
While the revised strategy may seem more focused, it is no less ambitious.
Trump’s advisers view the measures as a pillar of their efforts to bring manufacturing jobs back to American soil.
However, the economic repercussions could be significant. Liberal and conservative critics argue that the plan could nonetheless raise costs for domestic producers, who rely on imported components, and therefore raise prices for consumers and businesses.
Will tariffs hit in the first 48 hours of Trump’s presidency?
Markets are closely watching how quickly Trump will implement his pricing strategy once he is inaugurated. CFTC-regulated Kalshi Markets estimates a 49% chance that global tariffs will be announced in the first 48 hours of his presidency, by January 23.
Kalshi’s data also breaks down the likelihood of tariffs targeting specific trading partners. China tops the list with 45%, followed by Canada at 32%, Brazil at 29% and Mexico at 25%.
China is no stranger to Trump’s tariffication agenda. During his first term, Trump imposed tariffs on more than $360 billion in Chinese goods, citing trade imbalances and intellectual property concerns.
However, Trump’s new program targeting critical sectors could further aggravate tensions with the United States’ largest trading partner.
Goldman Sachs thinks tariffs will strengthen the dollar
The analysts of Goldman Sachs suggest the new tariffs could strengthen the U.S. dollar throughout 2025.
“We believe the dollar will be stronger for longer in 2025. Tariff risks and diverging growth prospects will ultimately allow the dollar to strengthen,” said Kamakshya Trivedicurrency strategist at Goldman, in a recent note.
Trivedi said tariffs directly influence exchange rates by changing the cost of international production.
Historically, Goldman data shows that the U.S. Dollar Index – tracked by the ETF Invesco DB USD Index Bullish Fund (NYSE:UUP) – rose 2.5% for every unexpected $100 billion in U.S. tariff revenue from China, the equivalent of a 20 percentage point tariff hike.
The analyst pointed out that foreign exchange markets often struggle to fully assess tariff risks in advance, due to uncertainty over policy implementation and potential retaliation.
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