According to Zhitong Finance APP, the latest reports reveal that the elected president Donald Trump's team is brewing a tariff plan targeting specific key imported products, which covers all countries, but the specific affected industries or commodities have not been disclosed. This strategy marks a significant reduction from the 10% to 20% blanket tariff range advocated during Trump's campaign and has raised concerns among economists about rising Consumer prices and distortions in Global Trade patterns.

Although the exact tariff targets have not yet surfaced, the market speculates that the Trump administration may focus on areas aimed at promoting the return of American domestic industries, especially the national defense industrial supply chain, such as key materials like Steel, Iron, Aluminum, and Copper, as well as essential Medical Supplies like syringes, needles, vials, and pharmaceutical materials. Additionally, according to insiders, Energy materials like Batteries, rare earth minerals, and solar panels may also become subjects of tariff imposition.

This series of dynamics quickly triggered dramatic reactions in the financial markets. The USD fell sharply by more than 1% after the news was released, dropping to 107.86, a significant decline from the two-year high of 109.54 reached on Thursday. As of the time of writing, the USD spot index is down 0.9%, marking the largest single-day drop since November. The L in the US stock index futures expanded, with the Nasdaq futures rising over 2%.

In recent months, the market's expectations of large-scale tariff measures that Trump may take have pressured foreign currencies like the Euro, prompting a significant appreciation of the USD. However, Monday's market trends showed that the Euro rose 1.13% against the USD, reaching a week high of 1.0433 USD.

In this regard, Lee Hardman, a senior Forex strategist at Mitsubishi UFJ Financial Group, commented, "The market's initial reaction shows a certain sense of relief among investors." He further pointed out, "Perhaps the tariff increase implemented in the early stages of Trump's second term will be lower than the market's previous concerns, which led to the recent reversal of the USD's strength."

Other currencies also displayed positive momentum, with the British Pound rising 0.95% against the USD to 1.2542 USD; the Australian Dollar rising 1.13% against the USD to 0.6284 USD; the offshore Renminbi rising 0.5% against the USD to 7.3215; while the USD fell 0.96% against the Canadian Dollar.

Economists generally believe that widespread tariff measures will stimulate inflation in the USA, possibly limit the Federal Reserve's flexibility to cut interest rates, keep Bond yields running at high levels, and support Dollar Exchange Rates.

However, if the tariff plan is limited to key areas such as the defense industry's supply chain, its impact on the Global economy and inflationary pressures in the USA will be less than a plan that covers all imported products, suggesting that the Dollar still has room for depreciation.

Valentin Marinov, head of G10 Forex strategy at Crédit Agricole in France, pointed out that if these plans are confirmed, "they could boost risk sentiment and put pressure on the Dollar," while the report "aligns with the stance of the Trump administration to proceed cautiously and avoid exacerbating inflation risks through aggressive universal tariffs."

It is worth noting that the so-called "universal tariff plan" being considered by Trump means that it will apply to all countries. Since Trump's victory in November, the trade tariff threats he has proposed have been a hot topic among investors and economic policymakers. A comprehensive tariff plan could damage Global economic growth and push up Consumer prices, especially if met with retaliation from other jurisdictions.

Meanwhile, investors are closely watching the USA non-farm employment report for December, to gain further insights into the Federal Reserve's interest rate cut prospects.

After the tariff report was released, traders increased their bets on US monetary easing policies, expecting the Federal Reserve to cut interest rates by 42 basis points before 2025, up from a previous forecast of 38 basis points.

Jordan Rochester, head of macro strategy at Mizuho, commented: "The latest report reveals that a unified tariff plan could be a path considered by the new government. But the good news is that they seem intent on avoiding imposing a uniform tariff on all imported goods to prevent a rapid spike in the Consumer Price Index (CPI)."

This week, several Federal Reserve policymakers will deliver speeches, and they may reiterate the recent statements of their colleagues, asserting that the battle against inflation has not yet been won. This series of policy dynamics and economic data releases will continue to provide the market with important clues about the future direction of the economy.