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    Lagarde talks about Trump’s tariffs and possible Fed leadership changes impacting global economic stability

    by VT Markets
    /
    Sep 1, 2025
    The court case challenging Trump’s tariffs adds more uncertainty to the economic situation in the US. This could change how people view the US economy. Lagarde has raised worries about Trump possibly removing the head of the Federal Reserve. Such a move could disturb the stability of the US economy, affecting other countries too.

    Dollar Confidence and Economic Credibility

    These issues are shaking confidence in the dollar. The US economy’s credibility is under examination due to these changes. Talk about new tariffs and changes at the Federal Reserve is creating a lot of uncertainty in the market. This is showing up in the options market, where fear of price swings is growing as we approach the November election. Traders might want to buy protection or get ready for bigger price changes since clear trends are unlikely in the next few weeks. The CBOE Volatility Index (VIX) rose above 25 in late August, a big jump from the low teens earlier in summer 2025. This pattern is similar to what we saw before the elections in 2016 and 2020. Taking long positions on VIX futures for October and November could be a smart way to prepare for expected market turbulence.

    Trade Disputes and Market Reactions

    Confidence in the US dollar is not strong, as uncertainties about trade and monetary policy weigh it down. The Dollar Index (DXY) has recently tested support around the 102 level after losing earlier gains. This has led to increased interest in EUR/USD call options, as traders speculate that the euro might perform better if US policies become less stable. The possibility of renewed trade disputes puts certain sectors at risk. Looking back at 2018-2019, we remember how tariff announcements led to sharp ups and downs in industrial and tech stocks due to their global supply chains. Buying put options on ETFs that track these sectors could be a smart hedge against sudden policy changes. Create your live VT Markets account and start trading now.

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