14 Jan 2025

Currency markets are breathing a sigh of relief after a report suggested that the incoming Trump administration could follow a “gradual” trajectory in ratcheting tariffs higher. According to Bloomberg, officials are considering an approach that would entail raising import taxes by 2 to 5 percent a month on major US trading partners, preserving the president-elect’s negotiating leverage while giving the government time to assess the impact on inflation. The greenback is retreating against many of its major peers, with the euro, Canadian dollar, Australian dollar, and Mexican peso making the biggest advances. Flaws in the concept’s underlying logic suggest that...