US President Donald Trump posted comments on social media attacking Canada. His posts included threats to block the opening of a US-Canada bridge named after a Canadian hockey player. He also claimed that a Canada-China trade deal would end ice hockey in Canada.
UBS economist Paul Donovan said these outcomes are unlikely. He added that markets may treat the comments as noise.
He noted that several previously threatened tariffs did not happen. These included tariffs on US importers of goods from Iranian trading partners, 100% tariffs on US importers of Canadian goods, and 50% tariffs on US importers of Canadian aircraft.
The article says it was produced with help from an Artificial Intelligence tool and reviewed by an editor.
We have learned that political rhetoric often creates market noise, not real policy. From our early-2026 viewpoint, we can look back at analysis from 2025 about Trump’s social media posts targeting Canada. The main point was simple: even when the threats sounded extreme, many tariffs never happened. Over time, markets learned to ignore much of the bluster.
This headline-driven volatility creates repeat opportunities, especially as new geopolitical tensions build today. During the 2018–2019 trade disputes, the VIX often jumped above 25% after tariff headlines, then fell back in the following weeks as details were delayed or softened. Current data shows implied volatility in the semiconductor sector (SOXL options) is up 15% over the last two weeks on little more than diplomatic chatter, which looks similar to past overreactions.
Selling Volatility Into Headline Spikes
Over the coming weeks, this supports a strategy of selling volatility after it spikes. When trade headlines or political standoffs push implied volatility higher, selling out-of-the-money puts on affected indices like the SPX or QQQ can be profitable. Markets have often overpriced the real impact of these events, which leads to predictable options premium decay.
Another approach is to use calendar spreads to keep risk more defined. You can sell a front-month option to capture the elevated, fear-driven premium, while buying a longer-dated option with lower volatility. This can benefit as short-term panic fades and the volatility term structure normalizes.
Overall, history suggests that aggressive trade rhetoric often has limited follow-through. A Peterson Institute for International Economics study covering 2018–2020 found that nearly one-third of threatened trade actions were never implemented, or were later reduced. Because of this, politically driven market dips may be less of a fundamental shift and more of a short-term chance to position against fear.
Rhetoric Versus Policy Follow Through
Create your live VT Markets account and start trading now.
here to set up a live account on VT Markets now
