Insights 
VT 
The Chinese Finance Ministry has announced that China will lift certain tariffs on US agricultural goods from 10th November. There will be a suspension of 24% US tariffs for a year, while a 10% tariff will be maintained.
The US Dollar Index remains largely unchanged, trading around 100.20. The announcement follows ongoing trade tensions between the US and China that have fluctuated since 2018.
History of Conflict
The trade war, initially sparked by US tariffs on China under President Trump, led to retaliatory tariffs by China. The tensions somewhat eased with the US-China Phase One trade deal in January 2020, which aimed to bring economic and trade stability.
Donald Trump’s return as US President in 2025 has reignited these tensions, with his campaign promise of imposing 60% tariffs on China. This has led to renewed trade conflicts, impacting global supply chains, reducing investment, and contributing to Consumer Price Index inflation.
Given today’s date of November 5th, 2025, we see China’s announcement as a small but significant gesture in the ongoing trade conflict. While the market’s initial reaction is muted, this partial tariff relief on agricultural goods, effective November 10th, creates specific short-term opportunities. We must act on the direct implications before focusing on the broader, more uncertain picture.
We see this as a clear signal to look at agricultural futures, particularly soybeans, which have been depressed since the new tariffs were imposed in January 2025. Looking back at the first trade war, US soybean exports to China fell by over 70% in 2018, so even a partial reopening of that market could significantly lift prices. We anticipate that commodity trading houses will begin pricing in renewed Chinese demand over the next few weeks.
Opportunities in Volatility and Commodities
This move, while small, could also reduce market anxiety, which is why we are considering short volatility plays. With the CBOE Volatility Index (VIX) having trended above 22 since the broader tariffs were introduced this year, selling out-of-the-money options could be profitable. Any sign of further de-escalation could push the VIX back towards its historical average below 20.
In the currency markets, we believe the Australian dollar could be an interesting proxy trade for this easing of tensions. The AUD has been under pressure for most of 2025 due to its sensitivity to Chinese economic performance, which has been hampered by the trade war. A long AUD/USD position could benefit if this tariff reduction is the first step toward a more stable trade environment, similar to the relief rallies we saw in late 2019.
For equity traders, we are looking at call options on agricultural companies like Deere & Co. and Archer-Daniels-Midland. These stocks have underperformed the broader market since January, and this news provides a direct catalyst for a potential rebound in their earnings outlook. We are structuring these as short-term trades, expecting a positive reaction in the next few weeks leading into year-end.
