Insights 
VT 
U.S. White House trade adviser Peter Navarro indicated that the U.S. is not in a hurry to impose more tariffs on China due to its purchases of Russian oil. This contrasts with the recent increase in duties on Indian imports for similar reasons.
Navarro pointed out that many Chinese goods already face a 50% tariff, emphasising the need to avoid potential self-damage. He suggested a cautious approach by stating, “Let’s wait and see,” implying no immediate actions are planned against China.
Us Trade Sanctions Intensify
The comments come as the U.S. intensifies trade sanctions on nations buying Russian energy but considers the negative impacts of escalating the tariff conflict. Additionally, President Trump has warned that China holds leverage in these negotiations and mentioned the possibility of a 25% extra tariff on China linked to Russian oil purchases.
The signal of caution on new China tariffs suggests the immediate threat of escalation is fading. For derivative traders, this could mean that implied volatility, which recently spiked the VIX above 19 on these fears, may begin to settle down. We see this as a window for markets to find some stability in the coming weeks.
This approach makes sense, especially after China’s latest Caixin Manufacturing PMI for July came in at 49.8, showing a slight contraction. Piling on more tariffs now could backfire by further weakening global demand, which supports the view that the administration is talking tough but acting pragmatically. It suggests a strategy of selling volatility may become favorable.
We remember the sharp market drops during the 2018-2019 tariff escalations, which often came with little warning. The current “wait and see” stance is a notable change in tone from those days. This suggests that while headline risk remains, the probability of an immediate, unexpected tariff hike has been reduced for now.
Potential Impacts On Currency And Commodity Markets
In the currency markets, this may put a floor under the Chinese yuan, which has been weak. We’ve watched the offshore yuan (CNH) trade near 7.35 against the dollar on fears of new duties. A de-escalation could see it strengthen back toward the 7.30 level as this specific tariff risk is priced out.
This cautious stance also helps cap oil prices, with WTI currently trading around $85 a barrel. By not sanctioning China’s energy purchases from Russia, it keeps that supply integrated into the global market. We might also see traders begin to price out the risk premium in agricultural futures like soybeans, which are highly sensitive to trade tensions.
