Asian markets are soon going to react to a ruling by a US Federal Appeals court, which said most of Trump’s tariffs are illegal. This decision is likely to change trading behaviors in the region. However, the ruling will be challenged in a higher court, meaning the legal journey is far from over. This appeal could affect market stability and future economic projections.

Importance of Monitoring Developments

It’s crucial for those in the market to keep an eye on the appeals process. It could reshape trade relations between the US and its partners. As Asian markets open, we might see an initial rise in risk appetite due to the US court ruling against the tariffs. The catch is the uncertainty caused by the upcoming appeal, making a spike in implied volatility very likely. We should think about buying straddles on major indices like the Hang Seng or Nikkei 225 to profit from significant price movements in either direction over the next few days. The ruling specifically targets the Section 301 tariffs, which at their highest in 2020 affected over $350 billion in annual imports from China. This news should boost the offshore yuan (CNH), prompting us to look at short-term call options on the currency against the US dollar. Recent data from the US Commerce Department showed a slight increase in US-China trade to $160 billion in Q2 2025, which this news could further enhance. Let’s not forget the market swings from the 2018-2020 period, where tariff announcements led to sharp fluctuations in equity futures. Given the appeal, this isn’t a clear signal to invest long-term, but rather a cue to prepare for increased volatility. Keep an eye on futures contracts for the Shanghai A50 index for a possible initial bump, but be ready with hedges since the US administration will likely respond strongly.

Focus on Sector-Specific Volatility

Also, pay attention to sector-specific volatility, especially in technology and manufacturing exchange-traded funds (ETFs) that are closely tied to US-China supply chains. Many of these companies saw their valuations drop during the trade war, and options on these ETFs could be a smart way to navigate the upcoming uncertainty. Significant moves in commodity futures, particularly for soybeans and industrial metals, are also expected. The appeal process will take months, leading to a long period of uncertainty that is ideal for using derivative strategies. This isn’t just a one-day event; we should consider options that expire in three to six months to capture the ongoing news from the higher court. The initial market response will likely be positive, but the real chance lies in capitalizing on the sustained volatility that the appeal will bring. Create your live VT Markets account and start trading now.

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