The U.S. dollar index continues its steady climb, marking three consecutive days of gains. Tariffs have played a key role in the dollar’s strength, and Trump’s tough stance on trade is far from over.

The gauge, measuring the dollar’s value against six major currencies, pumped to 108.40 early Tuesday but has been fluctuating around the flatline.

Trump is expected to reveal his next round of tariffs, escalating trade tensions and reshaping global industries. While he didn’t name specific countries, analysts have a few in mind. 

Currently, the European Union imposes a 10% tariff on all auto imports from the U.S., while the U.S. charges only  2.5% extra on European cars. Trump has criticized this imbalance. He is looking for ways to impose reciprocal tariffs to ensure the U.S. is “treated evenly with other countries.” 

How will all of this impact the dollar? One thing is certain — volatility is here to stay.

Tariffs are a controversial way to protect domestic industries. They act as taxes on foreign imports, which U.S. companies have to pay. As domestic activity picks up, the dollar could strengthen further.

The U.S. Dollar Index also slightly increased in reaction to the latest jobs data. The January nonfarm payrolls report showed that the U.S. economy added 143,000 jobs, missing Wall Street’s expectations of 169,000. However, the unemployment rate edged down to 4.0% from 4.1%, softening the blow.

While the January report was somewhat disappointing, December’s job numbers were revised upward — from 256,000 to 307,000 — providing a more positive outlook.

What does this mixed data mean for the markets? Fewer job additions alongside a lower unemployment rate are mostly good news for traders and investors, especially in relation to the Federal Reserve’s next moves.

The dollar’s strength suggests that investors view the labor market as resilient, reinforcing expectations that the Fed will maintain its “wait and see” approach and likely delay interest rate cuts until at least June.