The newly elected president of the USA, Trump, denied on social media on Monday reports that he might ease his comprehensive tariff plan after taking office, bringing uncertainty to one of his most closely watched policy initiatives.

This might be the key to the problem.

Trump and his team have kept the markets, businesses, and other countries guessing about how he intends to impose new tariffs, and a report by the Washington Post on Monday added to the uncertainty.

The paper cited sources familiar with the matter stating that Trump's aides are exploring a plan to reduce comprehensive tariffs. Instead, they would impose more limited tariffs on all countries, targeting only significant import products.

Trump responded by saying, "Not so fast." He stated that the report "incorrectly indicated that my tariff policy would be scaled back." "This is wrong."

However, what is correct is not so clear. During the campaign, Trump promised to impose comprehensive tariffs of 10% to 20% on all imported goods and up to 60% on Chinese goods. After being elected, Trump shocked the markets again by threatening to impose an additional 10% tariff on goods from China and a 25% tariff on all products from Mexico and Canada.

The news from the Washington Post caused a huge shock in the global stock, bond, and currency markets on Monday. Although Trump later personally refuted it, the mystery does not seem to be fully resolved, and the markets' tense nerves cannot relax in the short term.

Whether his team has developed a plan remains an unresolved question. But it is almost certain that Trump is preparing to implement a major package plan, which he believes is a way to increase revenue, revive US manufacturing, and compel other countries to comply with his policy priorities through tariffs.

Everett Eissenstat is a trade lawyer who held key positions in Trump's first term and served as a congressional advisor. He said Trump 'is firmly convinced of this.' 'In recent weeks, Trump has made several remarks on Social Media, reaffirming that tariffs are central to his economic policy. This seems not just to be for trading purposes.'

Eissenstat said: 'Tariffs can serve multiple purposes, and he seems to still insist on multiple purposes. This proves one point again: if you want to know what the president wants to do, you have to ask the president.'

In the past 24 hours, Trump stated that Congress will use tariff revenue to help pay for the extension of its 2017 tax cut policy, and this "powerful" bill will eliminate the tip tax. He also mentioned that tariffs will help rejuvenate.$United States Steel (X.US)$Last week, President Biden ordered to block Japan's Nippon Steel Corporation from acquiring United States Steel.

"Since tariffs will make United States Steel more profitable and valuable, why would they still want to sell United States Steel now?" Trump murmured on Social Media.

It is not surprising that Trump would take this stance. After all, Trump said during an interview with Bloomberg News editor John Micklethwait last October: 'The most beautiful word in the dictionary is “tariff.”'

For free traders, the last and biggest hope is whether Trump can really implement his tariff threats. Although the elected president is verbose on Social Media, the daunting challenge of imposing a significant package of tariffs may be one reason why Trump's advisors are considering other options.

Trump's tariff plan may face legal challenges, just like during his first term, and Congress may also oppose using tariff revenue to pay for tax cuts. Some members—especially stubborn free trade Republicans—may fundamentally oppose using them, especially if they exceed a certain threshold.

In addition, tariffs may lead to inflation and reduce the GDP of the USA. A study by Bloomberg Economics found that if only China retaliates, the GDP of the USA could decline by 0.8% by 2028; if Other countries also impose tariffs on USA Commodities, the GDP of the USA could decrease by 1.3%. Maeva Cousin and Eleonora Mavroeidi believe that raising tariffs will also increase the prices of imported goods, potentially leading to higher inflation.

However, some supporters of Trump's economic plan argue that this does not necessarily justify not using them.

Oren Cass, founder and chief economist of American Compass, said on PBS last November: "Tariffs will certainly have an effect on prices, especially in the short term. This is partly to enhance the attractiveness of shopping in the USA."

Editor/Rocky