The Trump administration is getting ready to implement exemptions on tariffs for certain goods to help lower high food prices that worry American shoppers. Some potential goods for exemption include beef and citrus products, but a final decision is still pending. In the meantime, the US Dollar Index (DXY) has dropped by 0.23%, now at 99.25. Tariffs help local producers by giving them a pricing edge over imported items.

Difference Between Tariffs and Taxes

Tariffs are prepaid when goods enter the country, while taxes are paid at the time of purchase and apply to both people and businesses. Opinions among economists are split; some favor tariffs for protecting local businesses, while others see them as harmful, leading to higher prices and trade conflicts. President Donald Trump intends to use tariffs to strengthen the US economy and support American producers. In 2024, Mexico, China, and Canada accounted for 42% of US imports, with Mexico at the forefront at $466.6 billion. Trump plans to focus on these countries for tariffs and hopes to use the revenue to lower personal income taxes. As the administration considers tariff exemptions on beef and citrus, we are entering a time of uncertainty in policy. This response is to the rising food prices, with the latest Consumer Price Index data from October 2025 showing food prices at home have increased by 6.8% from a year earlier. Traders should see this as a practical change rather than a complete policy reversal, especially if inflation continues. For those dealing in commodities, this news could negatively impact agricultural futures. Live cattle futures on the CME, already at high levels, might drop significantly if cheap beef imports are allowed back in. Traders should be alert for chances to sell these commodities short or use options to bet on price declines.

Impact on Currency and Stock Markets

In the currency markets, the US Dollar could weaken due to this news. Protectionist tariff policies typically support the dollar, so any indication of exemptions may cause it to drop, particularly against major food exporter currencies like the Mexican Peso. A similar pattern occurred during the 2018-2019 trade disputes, where changes in policy led to short-term market fluctuations. This possible policy shift may result in both winners and losers in the stock market. Companies that purchase large amounts of beef and citrus, such as restaurant chains and food processors, might see their costs decrease, leading to higher stock prices. However, local producers who have benefited from tariffs may encounter more competition and a dip in share prices. In the coming weeks, the key factor will be the uncertainty regarding when and how the final decision will unfold. This uncertainty suggests that implied volatility in related sectors is likely to rise. Therefore, strategies that take advantage of larger price movements, such as buying options on agricultural ETFs, could be a smart way to manage the situation. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now