US President Trump announced new tariffs through tweets, claiming they would bring billions of dollars into the United States. He stated that these tariffs mainly target countries that have benefited from trade with the US for many years. Last month, tariff revenue hit $30 billion, a 242% increase from the previous July. This money is expected to help manage the growing US debt and deficit, although inflation worries are also rising.

Market Uncertainty

With the new tariffs in place, market uncertainty is increasing. The CBOE Volatility Index, or VIX, has risen from a low of 15 to over 19 in just a week. For traders, this signals the need to consider strategies that take advantage of these price fluctuations, such as buying options instead of stocks. Concerns that tariffs will drive up inflation are gaining attention, and recent data backs this up. The latest Consumer Price Index report for July 2025 showed a month-over-month increase of 0.5%, much higher than analysts’ prediction of 0.2%. As a result, Fed fund futures now show only a 40% chance of an interest rate cut by year-end, down from 60% last month. It’s important to pay attention to the sectors most affected by trade disputes. For instance, November soybean futures have fallen 8% in the past two weeks, echoing the patterns seen during the 2018-2019 trade conflicts. This could present opportunities for bearish strategies on agricultural ETFs or futures contracts. Industrial and technology companies that rely on overseas parts are also facing new challenges. Companies with high import costs or significant sales in targeted countries are becoming more exposed. Purchasing protective puts on broad market indices like the Nasdaq 100 can help hedge against this specific supply chain risk.

Currency Markets

The currency markets will be crucial to watch in the upcoming weeks. While a strong U.S. narrative may boost the dollar in the short term, ongoing trade friction could weaken it over time. Close attention should be paid to currency pairs like USD/CNY, as sudden movements can indicate larger issues for the global economy. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now