U.S. stock-index futures added to gains and the dollar fell sharply after the Washington Post said President-elect Donald Trump’s aides are exploring tariff plans that would be applied to every country but would only cover critical imports.
Markets had feared that Trump would follow through with previous pledges of wholesale tariffs of up to 20% on the imports from most countries, and 60% on those from China.
Traders took the apparent scaling back of tariff plans to mean a global trade war may be less likely and thus less damaging to the world economy.
The dollar, which has been seen as a beneficiary of Trump tariffs, partly because it may increase U.S. inflation and thus keep interest rates higher for longer, fell swiftly on the news, shedding 1% versus the British pound and losing 1.1% against the euro. The Mexican peso, which has been particularly badly hit of late on tariff fears, also rose 1%.
The prospect of less chance of a trade war boosted stocks, too. Germany’s DAX index, which contains many of Europe’s biggest car manufacturers – a favorite target of Trump – jumped 1.2%, while the CAC 40 in France surged 1.8%.
The S&P 500 future added to gains, trading up 0.7% as the chances of less inflationary pressures helped turn benchmark Treasury yields lower.