President Donald Trump criticized China for its trade practices, especially the possibility of new rules on rare earth minerals and extra fees for foreign ships. While he initially hoped for better trade ties, he later threatened restrictions on goods that China wants. Trump called China’s decision to avoid U.S. soybeans economically hostile. He suggested the U.S. might stop trading cooking oil and other products with China, emphasizing that the U.S. can produce these items itself. He also touched on international relations with various countries.

International Relations

He mentioned his fluctuating relationship with Xi Jinping and expressed frustration with Spain, hinting at possible trade penalties. Trump discussed his views on Vladimir Putin, criticizing Russia’s ongoing conflict and predicting an economic collapse. He voiced concern over the U.S. government shutdown, suggesting it allowed for actions that were previously blocked, and mentioned plans to propose a list of Democrat program cuts by Friday. The changing tone on U.S.-China trade suggests more market volatility ahead. We saw similar patterns in the trade disputes of 2018-2019, which caused sharp ups and downs in the equity markets. With the VIX, a key fear measure, at a low 14.8 this week, buying options for protection against a market drop seems affordable. In the commodities market, Trump’s direct mention of soybeans offers a clear trading signal. November soybean futures have already dropped 3% this week due to this talk, and there may be further declines if China acts on its threats. We recommend shorting soybean futures or buying put options on agricultural ETFs to take advantage of this pressure.

Rare Earth Mineral Exports

China’s threat to control rare earth mineral exports targets U.S. tech and defense industries. This creates an opportunity for paired trades: consider taking long positions in non-Chinese producers like MP Materials (MP), while shorting semiconductor ETFs that depend heavily on Chinese imports. In 2021, similar threats caused some rare earth stocks outside of China to spike over 40%. In currency markets, geopolitical uncertainty usually strengthens the U.S. dollar. The offshore yuan is testing the 7.45 level, and we expect it could weaken further if trade restrictions occur. Comments about Spain and Russia also suggest a bearish outlook for the Euro and Ruble, making long U.S. dollar positions against those currencies appealing. Lastly, the potential for new Chinese port fees could hurt the global shipping industry. The Baltic Dry Index, which measures shipping costs, has already dropped 8% in the last two weeks due to fears of a trade slowdown. This atmosphere supports taking short positions on major shipping lines that rely on U.S.-China trade. Create your live VT Markets account and start trading now.

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