The White House press secretary announced new tariffs will be implemented soon after correspondence.

    by VT Markets
    /
    Jul 31, 2025
    New reciprocal tariffs will take effect on Friday. Countries that haven’t received notifications about these tariffs will get an Executive Order or a letter by tonight. Recent talks have been fruitful, especially with South Korea. We are also making progress in discussions with China, maintaining direct communication with their representatives.

    Preparing for Market Volatility

    With these new tariffs coming this Friday, we expect market volatility to rise sharply. This uncertainty usually increases the VIX, so we plan to buy August VIX call options to protect ourselves. The VIX has been relatively stable around 15 for the past month, making options affordable before the news hits. We need to pinpoint the sectors most vulnerable to these new trade barriers. Companies in the industrial and technology sectors, especially those with complex global supply chains, face the highest risk of decreased profits. Considering put options on ETFs like XLI or semiconductor funds in the coming weeks could help safeguard against a sudden market drop. The mixed signals regarding China—suggesting both progress and new tariffs—make the situation unclear. This could lead to a significant shift in Chinese equities once the details of the tariffs are unveiled. A straddle on an ETF like FXI would enable us to benefit from any large price change, regardless of whether it goes up or down.

    Possible Effects on Asian Markets

    Positive news with South Korea positions them as a likely winner in this scenario. We could consider a pair trade, going long on the South Korean market through the EWY ETF while shorting an index of other Asian markets that might face new limits. We should keep an eye on the Korean won for strength relative to other regional currencies. This news comes at a sensitive time for the broader economy, as recent data for Q2 2025 shows US GDP growth slowing to just 1.6%. The trade disputes of 2018 and 2019 led to a similar economic slowdown. Tariffs act like a tax on businesses and consumers, which could jeopardize the fragile growth we’ve seen since inflation eased in 2024. Create your live VT Markets account and start trading now.

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