Scott Bessent, the US Treasury Secretary, spoke about trade deals and disagreed with the idea that we are experiencing the biggest trade reset since 1935. He pointed out that the trade shock with China is the largest reset we’ve seen. Bessent mentioned that regulations are pushing US manufacturing overseas. He believes annual tariff revenue could start at $300 billion and might exceed that by 2026.

Trade Policy Uncertainty

The main takeaway for us is that the period of uncertainty in trade policy is mostly over for now. With major trade agreements wrapped up, we can expect less market volatility from unexpected news. The CBOE Volatility Index (VIX) reflects this, staying in the 14-16 range over the past month. This is a sharp decrease from the spikes we saw during earlier negotiations. Given this stable environment, it might be better to sell options instead of buying them in the upcoming weeks. Since implied volatility is likely to stay low without new surprises, strategies like writing covered calls or selling cash-secured puts could lead to steady returns. In contrast to the trade disputes of 2018-2019, market volatility isn’t a constant concern right now.

Impact on Industries

The $300 billion in annual tariff revenue is a known burden for some industries. Companies in retail, automotive parts, and electronics that rely heavily on imports have already taken this into account. This has been evident in the market, where the SPDR S&P Retail ETF (XRT) is lagging behind the S&P 500 by about 8% so far in 2025. Considering this, there might be opportunities to buy put options on some of the most exposed import-heavy companies before their next earnings calls. While the tariffs are already known, any unexpected drop in consumer spending could hurt their outlook significantly. Recent data from the Commerce Department for Q2 2025 shows a slowdown in spending on durable goods, which could be a warning sign. This new stability is also calming the currency markets, with the US Dollar Index (DXY) settling around the 105 level. This indicates that forex traders have already accounted for the impact of tariffs on the dollar. As a result, we do not anticipate significant currency fluctuations due to ongoing trade policies. Create your live VT Markets account and start trading now.

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