Trade talks are still ongoing beyond the August 1 deadline for many countries. Taiwan is actively involved, hoping to secure a more “reasonable tariff rate” after facing a hefty 20% in recent tariffs. Other countries like the EU, UK, Japan, and China are in a similar boat. Although they reportedly reached “deals” with the US before the deadline, these seem to be more like framework agreements. They offer short-term relief with lower tariffs while negotiations continue for better terms.

Tariff Negotiations Ongoing

The tariff negotiations are not finished, even after the August 1 deadline. These temporary deals with countries like Taiwan are merely keeping the peace right now, without resolving the main issues. This means we can expect continued market fluctuations in the upcoming weeks. You can see this uncertainty reflected in market volatility indicators. The VIX, which tracks expected S&P 500 volatility, rose to over 22 in late July 2025 as the deadline neared. Although it has since decreased to around 18, this is still higher than the calmer periods earlier this year, bringing back memories of the raised levels during the 2018-2019 trade disputes. The 20% tariff threat on Taiwan highlights concerns for the semiconductor sector. As of the latest 2024 data, this sector made up more than 40% of Taiwan’s total exports. We need to keep a close eye on stocks like Taiwan Semiconductor Manufacturing Company (TSM). Any bad news from the negotiations could quickly impact their stock prices, presenting chances for put option strategies.

Global Supply Chain Concerns

This situation isn’t limited to just one country; the “framework” agreements with the EU and Japan indicate that our entire global supply chain is at risk. For traders, this means that protective puts on broad indices like the S&P 500 or Nasdaq 100 could be wise. We might also see erratic movements in currency pairs like the EUR/USD as traders process news from both sides of the Atlantic. Since the outcome of these talks is uncertain, it could be beneficial to consider strategies that capitalize on large price moves in either direction. Buying straddles or strangles on highly exposed stocks or indices might be a smart tactic. This way, we don’t need to predict the outcome; we just need to expect the final news to be significant enough to shift the market from its current rut. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now