Tariffs of around 100% on chips and semiconductors are being planned. This action aims to change the dynamics of the international market in the industry. It’s expected that iPhones sold in the US will be made domestically. Apple is being urged to produce chips in Texas, Utah, Arizona, and New York.

Apple’s Proposed Actions

Apple is also encouraged to create its own power supply and to open a manufacturing academy in Detroit. In addition, Apple is being asked to set up a rare earth recycling program in California. These steps are part of a larger strategy. With the potential 100% tariff on semiconductors, we should expect strong downward pressure on the entire chip sector. This means we are looking into buying put options on semiconductor ETFs like the SOXX to profit from a possible decline in the coming weeks. This threat is serious because the US relies heavily on foreign chip production. A study from July 2025 indicated that over 75% of advanced semiconductors come from Taiwan and South Korea, making the tech supply chain very vulnerable. In May 2019, during a similar tariff increase, the SOXX ETF dropped over 15%, providing a clear historical example for this trade.

Market Volatility and Trading Strategy

Right now, uncertainty is driving the market, so we can expect increased volatility. Buying calls on the VIX, or products related to the VIX, is a straightforward way to trade this fear. These instruments will likely become more expensive as the market reacts to this news. Apple (AAPL) has drawn attention, making it a prime target for bearish bets. The demands to bring manufacturing back to the US and develop power infrastructure will be costly, affecting profit margins that were reported at a solid 47% last quarter. We should think about buying AAPL puts with expiration dates a few months out to take advantage of a possible sustained decline. While the tech sector may struggle, some US industrial companies might benefit. Constructing new factories in the US requires materials and engineering, suggesting a potential pairs trade. We could go long on an industrial ETF like XLI while shorting a tech ETF like QQQ. The wider tech market, which is heavily weighted in the Nasdaq 100, faces rising input costs. The index has already increased by 12% since the start of 2025, making it susceptible to a sharp correction. Therefore, we are considering protective puts on the QQQ ETF to hedge our other positions or as a standalone bet. Looking beyond the US, Taiwan Semiconductor (TSM) is the most vulnerable non-US company since it controls over 60% of the global foundry market. A 100% tariff would severely hurt its business with American clients like Apple and Nvidia. Buying puts on TSM is a direct way to respond to this specific geopolitical situation. Create your live VT Markets account and start trading now.

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