Trump cools down on tariff threats and the US dollar instantly suffers as a result

The advisors of elected President Donald Trump are moderating their highly publicized tariff plans, and the US dollar is paying the price. The Dollar Spot Index fell 0.9%, the largest drop since November, while the euro strengthened, rising more than 1% against the dollar, its biggest gain since August.

Investors were spooked after a Washington Post report stated that Trump's broad tariff threats, which drive inflation, could be narrowed down to a plan targeting only some 'critical imports'.

Treasury yields, which had risen earlier in the day, changed direction as Wall Street processed the news. For a currency that had been riding on expectations of economic self-praise and protectionism, the report was a harsh blow. The possibility that Trump might actually rein in his aggressive trade rhetoric fell like a bucket of cold water.

Trump's focus is reportedly shifting towards key industries

According to the Post, the new plan could impose tariffs on steel, aluminum, copper, and iron, the vital flow of the defense industry.

Think tanks and informants speculate that Trump wants to rebuild military equipment supply chains here at home.

It doesn't stop there. Medical supplies are reportedly also on the chopping block. It is rumored that needles, vials, syringes, and pharmaceutical raw materials are high on the priority list.