The U.S. Dollar Index (DXY) has strengthened following President Trump's announcement of new tariffs, according to a recent report from Citi. Starting Tuesday, 25% tariffs on imports from Mexico and Canada, and 10% on imports from China, will be implemented, with potential tariffs on Europe also on the horizon. Citi analysts suggest that while these tariffs are expected to be short-lived, their persistence could lead to inflationary pressures. "A 10% tariff on Canada oil could raise headline inflation 0.1pp," the report notes, highlighting potential impacts on food prices due to Mexico's significant share of U.S. agricultural imports. The market's initial reaction reflects a belief that these tariffs will incentivize negotiations on issues like fentanyl and immigration, potentially leading to their removal. However, if tariffs remain for an extended period, the economic landscape could shift, affecting both inflation and production incentives.