Insights 
VT 
US President Donald Trump recently issued a threat of imposing increased tariffs on Chinese goods if a trade deal is not reached soon. He mentioned that tariffs could rise by 155% starting 1 November unless an agreement is made.
Trump stated that China is making substantial payments to the US via tariffs and has been respectful towards the US. He expressed confidence in reaching a fair deal with China’s leader, Xi Jinping, and is optimistic about China returning to negotiations.
Us Advancements In Artificial Intelligence
Furthermore, Trump discussed the US’s advancements in artificial intelligence, asserting a lead over China. He mentioned being invited to China in early 2026 and highlighted collaborations with other countries for rare earth materials, anticipating a significant stock in a year.
This article was authored by Joshua Gibson, a member of the FXStreet team, who has expertise in economics and finance. Please note that investing in markets carries risks, and the information provided here is for informational purposes only. Readers should conduct thorough research before making any investment decisions. FXStreet and the author do not provide personalised recommendations, and the accuracy or completeness of the information is not guaranteed.
With a potential 155% tariff deadline of November 1, we are expecting a significant spike in market volatility. The conflicting messages of a major threat alongside expectations of a fair deal create a classic binary event for the markets. This uncertainty is the key factor to trade in the coming days.
We should be looking at buying protection and positioning for sharp moves. Looking back at the trade disputes of 2019, we saw the VIX, the market’s fear gauge, jump over 40% in a single month on similar tariff escalations. Implied volatility on S&P 500 options expiring in early November is already up 15% this past week, showing the market is pricing in a significant move.
Us Government Shutdown Impact
The ongoing US government shutdown adds another layer of domestic pressure, which may push for a quicker resolution to avoid further economic drag. Adding to this, the latest jobs report from October 3rd showed a weaker-than-expected gain of only 110,000 jobs. A trade war escalation on top of this could be seriously damaging.
On the other side, China’s economy is not in a position to easily absorb this kind of shock. Their Q3 2025 GDP growth was just announced at 3.9%, missing forecasts and marking the second consecutive quarter of slowing growth. This economic fragility likely increases their incentive to negotiate and avoid these tariffs.
Therefore, we see opportunities in derivatives tied to specific sectors most exposed to Chinese trade. Puts on semiconductor ETFs like the SOXX are a direct hedge, as the sector derives over 30% of its revenue from China. We are also watching for weakness in industrial and agricultural commodity futures, which would be immediately impacted by new tariffs.
This trade uncertainty is also fueling a flight to safety, which is why gold is trading near its record high of $4,350 per ounce. We should consider call options on gold miners or futures to capitalize on a potential break-out if a deal doesn’t materialize by the deadline. The Japanese Yen could also strengthen, creating opportunities in USD/JPY put options.
The comments on developing rare earth material sources are a longer-term theme, but it does little to change the immediate November 1 risk. The market is focused squarely on the short-term deadline. Our main play is on the immediate volatility this creates across equities, commodities, and currencies.
