The US House of Representatives rejected an effort by Speaker Mike Johnson to block votes on resolutions that would overturn President Donald Trump’s tariffs, the Wall Street Journal reported on Tuesday. This opens the door to votes that could challenge the tariff policy and allow Democrats to push to remove US tariffs on Canada.
The procedural vote failed 217 to 214. Three Republicans joined 214 Democrats in voting against it. In markets, the US Dollar Index (DXY) was near 96.65 at the time of writing, down 0.22% on the day.
The uncertainty around US tariff policy points to higher market volatility. The quick drop in the US Dollar Index suggests markets expect a weaker dollar if protectionist policies are rolled back. This new political setup supports buying volatility using options.
With Canada in focus, we are watching USD/CAD closely. The pair has broken below the 1.3400 support level that held through late 2025. The move could accelerate if the chance of removing tariffs increases. Derivatives traders may consider Canadian dollar call options to position for more strength versus the US dollar.
This shift is likely positive for US equities, especially multinational firms hurt by trade restrictions. The CBOE Volatility Index (VIX) has jumped from 14 to above 17 in the last day, showing that investors expect more turbulence ahead. One way to express a moderately bullish view while limiting risk is to sell out-of-the-money put spreads on the S&P 500.
The trade disputes of 2018–2019 showed how sensitive markets can be to tariff headlines. Markets often rallied sharply on any sign of de-escalation. That period also showed that political news can overpower economic data in the short term. This pattern may return, so it is important to track legislative updates closely.
Recent data shows US exports to Canada fell 4% year over year in the last quarter of 2025, largely blamed on trade frictions. Rolling back these policies would likely help key sectors such as autos and agriculture. For more targeted exposure, call options on sector ETFs could be a practical approach.
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