How to Profit From Trump's Tariff Playbook  | | Shah Gilani
Chief Investment Strategist | Donald Trump has distinct approach to tariffs. And it has a lot of traders and investors on edge. Over the past week, Trump's mix of brinksmanship and strategic extensions pressured trading partners to improve their deals at the bargaining table. While these tactics added uncertainty into the markets, they also created a new type of market volatility... one that oscillates between bullish optimism and bearish uncertainty tied directly to these trade negotiations. But once you understand how it works, a whole new set of opportunities emerge. | SPONSORED | | The DOGE Agenda (9 Stocks to Buy Immediately) Every investor in America is trying to figure out what Musk will do in Washington, D.C. in the coming weeks. Now one Boston based think tank - who has studied Elon's work for decades - is stepping forward to share what they've found. They believe his TRUE plan is far more radical than anyone realizes. It could change the way you live, work, get paid, and collect Social Security... AND could make more people rich than all of Elon's previous ventures - PUT TOGETHER. Full breaking story here. | | | Our New World President Trump sees tariffs as more than just trade instruments. They're levers he can pull to achieve broader political goals like border security and drug control. Canada and Mexico became early targets. Trump threatened 25% across the board tariffs. Few expected him to follow through. But he announced over the weekend they would go into effect at the end of the day Monday. Futures plunged Sunday, with the Dow falling hundreds of points. Investors panicked about the potential disruption to supply chains and increased costs. Then another announcement came... Mexico agreed to send 10,000 troops to the U.S. border to address immigration, buying it a 30-day tariff reprieve. Equities immediately breathed a sigh of relief, recovering much of their losses by the close. Canada followed up with measures that bought it the same 30-day window. These extensions served two purposes: - It signaled a flexible, though firm, stance on tariffs.
- It provided an incentive for trading partners to present better terms to avoid the economic strain of higher tariffs.
This "Trumpian" negotiation tactic underscores a broader theme in Trump's economic approach... Leverage the United States' massive market size and import volume to extract favorable terms from trade partners. Our New Markets Markets now live and die by two things... - The direction of interest rates
- And trade talks.
It's a dramatic shift from traditional market drivers. And it's created what I'm calling "Bullish" and "Bearish" volatility. Bullish volatility happens when markets expect Trump will secure favorable trade deals without imposing severe tariffs. This suggests a potential boost in sectors that benefit from lower trade barriers and better foreign relations. Bearish volatility is the opposite. People see harsh tariffs coming down the pipe and begin to worry about retaliatory measures and a possible global trade war. Say talks with China teeter on the brink of collapse, and tariffs loom large. Markets will react swiftly with sell-offs in vulnerable sectors like technology and manufacturing. However, news of progress or temporary truces will lead to equally rapid recoveries, buoyed by relief and renewed optimism. This market response pattern has become more pronounced as traders and investors closely monitor the developments in trade policies for cues on market direction. And while we watch what's going on... we can profit either way. Our New Strategy There are volatility trading strategies smart investors can use in this new environment. You can buy VIX call spreads going out 30-60 days at close to the money strikes when the VIX falls below 14 or 13. If the VIX gets above 23-25, you can buy VIX put spreads. But it's critical to lock in profits quickly. VIX moves are often short-lived. And even if you consider yourself an investor only, you need think about putting on trades as opposed to investments. Why? The idea of thinking like a trader puts you in a position to play volatility and cut your losses quickly if you're wrong. But it also lets you turn a trade into an investment. Say you buy Ford - with its 6% dividend yield - around $9, because it's been knocked down by tariff fears. If you're right, your trade can turn into an investment and potentially make you a lot of money. Tariff volatility is an opportunity not an opportunity cost. Our New Outlook Looking further into 2025, as I've been warning, we can expect more volatility driven by geopolitical tensions and evolving global trade. The potential for abrupt policy shifts and trade disputes will grow. Countries will become more protective of their domestic industries and tech advancements. Investors need to watch both the immediate effects of trade policies and how they might play out in the long run. The way Trump used tariffs as bargaining chips has changed how markets react to trade news. The best way to handle this? Take a page from successful traders - stay flexible and be ready for quick market moves. Cheers, Shah Want more content like this? | | | | | | 
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