Since U.S. President Donald Trump first began discussing reciprocal tariffs, the scope and rate of these measures have remained unclear, fueling speculation and stoking fears of a full-blown trade war.

As markets remain focused on Trump's reciprocal tariffs expected to be announced on April 2, his comments on Monday sent mixed signals.

Speaking to reporters, Trump hinted that the upcoming reciprocal tariffs would not be sector-based but instead applied on a country-by-country basis, targeting taxes and other trade barriers imposed on U.S. products.

Trump also pointed to potential exemptions and reductions by saying, "I may give a lot of countries breaks." This suggested that he might leave room for negotiations and may initially avoid a fully aggressive stance. These comments somewhat eased market concerns, although risks remain elevated.

In the same remarks, Trump announced plans to reveal customs duties related to auto imports-an industry he has long described as under threat-within the next few days. In recent weeks, he had stated that sector-specific tariffs would be implemented alongside reciprocal tariffs.

While offering no specific details, he indicated that other sectoral tariffs-such as those on lumber and semiconductors---may be postponed to a later date. Meanwhile, he reiterated his threat to impose tariffs on pharmaceuticals, saying such measures could arrive very soon.

As markets were still digesting Trump's remarks, he posted on social media that starting April 2, countries purchasing Venezuelan oil would face a 25% tariff. China is seen as the primary target of these potential secondary tariffs.

Trump's mixed signals throughout the day once again highlighted the unpredictable and erratic nature of his approach to trade policy. His actions remain highly fluid, suggesting that uncertainty is likely to stay elevated in the period ahead.

Markets now expect the upcoming tariffs to be less broad than initially feared, likely focused more on specific countries rather than sectors. It is still unclear which countries will be targeted, but Trump has previously named Mexico, Canada, China, the European Union, Japan, South Korea, and India as trade abusers.

While many of these countries are making efforts to engage in possible negotiations, some have already retaliated-or announced plans to do so-in response to previously implemented tariffs. This raises the risk that the April 2 tariffs could further strain trade relationships and trigger another round of retaliation, potentially reigniting full-scale trade war concerns.

Market fears around tariffs continue to manifest through expectations of higher inflation and slower growth. While Trump has previously downplayed these concerns, his top economic adviser Stephen Miran argued Monday that the tariffs were unlikely to cause any significant short-term pain.

The Federal Reserve, in contrast, emphasized tariff-driven uncertainty in last week's meeting, revising inflation forecasts higher and growth forecasts lower. Still, Chair Jerome Powell argued that the inflationary impact of tariffs would likely be temporary. Some policymakers, however, appear less convinced and are taking a more cautious stance regarding the potential economic fallout.

Atlanta Fed President Raphael Bostic, in a Monday interview, notably refused to use what he called "the T-word." He warned that tariff hikes risk undermining progress in fighting inflation and said that instead of two rate cuts, one may be more likely this year.

While Fed officials continue to signal patience regarding further rate cuts, President Trump has renewed his calls for lower interest rates. Following a recent social media post, he repeated his demand during a Cabinet meeting, reigniting debate over whether he will try to exert political pressure on the central bank. Although Trump previously stated he would not interfere with the Fed, his recent comments have raised fresh doubts.

Looking at market reactions, the growing expectation that the April 2 tariffs will be more targeted contributed to modest dollar strength and some outflows from safe-haven assets like gold. However, lingering uncertainty continues to weigh on overall risk sentiment.

As Duhani Capital Research team, we expect tariff-related volatility to persist. Should the countries targeted by Trump's reciprocal tariffs respond with retaliatory measures, we believe inflows into gold may accelerate. In addition, the currencies of the affected countries could experience sharp movements in response to these developments next week.