China eases trade restrictions on 12 US companies, permitting case-by-case license applications for exporters
by VT Markets
/
Aug 12, 2025
China has updated its export control lists, allowing companies to apply for permission to trade with restricted entities. This includes removing export controls on 12 US-based entities and granting licenses to compliant exporters.
These changes indicate a more selective approach, providing exemptions for specific cases instead of enforcing broad restrictions. This strategy could help ease tensions while still allowing China to maintain control in areas deemed strategic or sensitive.
Impact on Market Volatility
With China’s flexible approach to export controls, we can expect less overall market volatility. Tensions with the US have kept implied volatility high, with the VIX around 18 for much of this summer. This change might push the VIX down to the 14-15 range in the coming weeks.
The easing of restrictions particularly helps the semiconductor and technology sectors, which have been affected by trade limitations. The PHLX Semiconductor Index (SOX) already gained 5% in August 2025, and this news could lead to even more growth. We might consider buying call options or selling puts on major tech ETFs and the 12 US companies that have now been removed from the restricted list.
This news could also spark a rally in Chinese stocks, especially the Hang Seng Tech Index, which has lagged behind global peers by over 10% in 2025. A policy shift could reverse some of the recent outflows that have hurt these stocks. We could explore long futures contracts on the Hang Seng or A50 indices to take advantage of a possible rebound.
Conditional Nature of the Policy
It’s important to note that this is a conditional policy and not a complete removal of trade barriers. Reflecting on market reactions during the 2018-2019 trade disputes, it’s clear that sentiment can change quickly. Therefore, using defined-risk strategies, such as bull call spreads, may be smarter than opting for the unlimited risk of naked short puts or futures.
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by VT Markets
Aug 12, 2025
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