Michigan Governor Gretchen Whitmer met with President Donald Trump in the Oval Office on Tuesday. She conveyed a crucial message: his tariffs were harming the auto industry he promised to protect.

Tariff Effects on Michigan

During their third meeting since Trump took office, Whitmer warned that the tariffs could lead to serious economic problems in Michigan. This state played a key role in Trump’s 2024 election victory. She also asked for federal assistance after a recent ice storm and requested a delay in Medicaid changes that could impact healthcare coverage. Sources who attended the meeting, speaking anonymously, said that Trump did not make any firm commitments. While he listened, he showed no intent to change his trade policy. The president seems to be sticking to his trade decisions, despite warnings about the auto industry. This indicates that the pressure from tariffs on carmakers and their suppliers will likely continue. Derivative traders should be aware of this ongoing risk as fall approaches. We’ve observed the effects of these trade policies on the market. Recent figures reveal that U.S. auto sales in the second quarter of 2025 dropped almost 4% compared to last year. This decline is likely due to higher costs for materials like steel and aluminum, which have reduced profits for manufacturers.

Investor Considerations

Given the president’s unwavering position, traders might want to consider buying put options on major automakers like Ford and General Motors. These options could help protect against potential drops in stock prices in the coming weeks. The absence of any commitment to change policy raises the risk for these companies. Remember, market volatility surged during the trade disputes in 2018 and 2019. The CBOE Volatility Index (VIX) spiked whenever new tariff announcements were made. This historical trend suggests that implied volatility on auto stocks could increase, making options pricier but also potentially more rewarding. This issue goes beyond tariffs; unresolved matters like federal aid for storm recovery and Medicaid changes add to the uncertainty. This broader policy uncertainty could shake investor confidence across various sectors. As a result, traders should also monitor ETFs in the broader industrial sector for signs of weakness. Create your live VT Markets account and start trading now.

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