China has repeated its position against using tariffs to pressure other nations. The Chinese foreign ministry pointed out that these measures do not bring any benefits in a tariff dispute. As trade disagreements grow, interest in trade policies is rising. President Trump announced that the US would send out notifications about tariffs starting at noon on July 7. This suggests he plans to issue 12 to 15 letters regarding tariffs. Additionally, the US’s Bessent has warned about possible tariff hikes if trade deals are not completed by August 1. The trade discussions are heating up, with China already facing tariffs from the Trump administration for more than two months. New developments are constantly changing the trade situation. Currently, tensions between China and the United States are still unresolved, with tariff threats looming and new communication from Washington expected soon. China is firmly rejecting the idea that using taxes can lead to good results for either side. Meanwhile, discussions about tariffs are ongoing and deadlines are approaching. Bessent has increased pressure by setting a clear deadline; if there is no deal by the beginning of August, expect additional tariffs on imported goods. This could disrupt prices in affected industries. These are not just empty warnings, especially considering past actions. Markets, particularly those reliant on bulk inputs or raw materials from strained regions, are likely to adjust gradually. The key takeaway is that this situation is not just noise; it relates to planned government actions and timing. The US communications expected around July 7 are significant. They will probably outline new or changed policies, potentially naming specific sectors or goods under scrutiny. This focus indicates that decisions will be made, rather than just diplomatic gestures. Pricing models that assume tariffs will remain stable through the summer may need to be reevaluated. This situation puts short- to medium-term derivative positions at risk. If you hold options or futures tied to overseas input costs, these positions will need careful monitoring. With just under a month to assess risk and tighten spreads as needed, consider rolling shorter positions into August or adjusting delta in either direction, especially for assets sensitive to tariffs. Changes in trade policy do not just affect goods in storage; they also impact implied volatility for many commodities, affecting consumer prices and valuations. However, this situation comes with increased risk if new tariffs are announced. History shows that even the belief that policies will become stricter can widen spreads. It’s best to avoid assumptions this time. Washington’s deadline for communication suggests careful planning rather than hurried decisions. Meanwhile, China seems firm in its stance, signaling it is not willing to negotiate. Pay attention to volume, especially in late July. Option premiums may increase quickly, driven not by current data but by the anticipation surrounding the gap between announcements and deadlines. What isn’t resolved before August may shift from mere talk to reality, making it crucial to reflect this in current positions. It may be helpful to review the average true range figures for trade-sensitive assets, ensuring liquidity remains stable to avoid sharp exits. The recent compression of some volatility linked to tariffs may unwind quickly. Prepare for deliberate actions. The coming weeks require swift reactions based on facts, leaving little room for speculation.

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