The US and EU have begun trade talks focused on tariffs, digital trade, and investment. Reports indicate that USTR Greer has suggested reintroducing 20% tariffs on EU goods. These discussions are expected to be challenging, as European leaders have rejected a 10% threshold similar to one accepted by the UK. This week’s talks also included possible agreements with Japan and South Korea, though Japan has reportedly decided to withdraw. The EU trade commissioner spoke with Greer and expressed interest in meeting next month in Paris. The outcome of these discussions is still unclear, reflecting the shifting dynamics between these global powers. This article marks a new phase in US-EU negotiations, with tariffs, digital rules, and cross-border investments as key topics. Greer, the US Trade Representative, raised the possibility of new 20% tariffs on EU products, indicating a change in stance that many thought had been settled. European leaders have already rejected a 10% cap—something the UK had accepted—showing they are unwilling to compromise on those terms. This week’s discussions also included South Korea and Japan as part of a broader strategy. However, Japan seems to have opted out, possibly due to dissatisfaction with proposed terms or a desire to wait for more stable dealings with the US. The EU’s trade commissioner has invited Greer to meet again in Paris next month, but no commitments have been made, leaving many issues unresolved. For those watching price movements and market volatility, these talks are more than just bureaucratic maneuvering—they signal potential changes in tariffs, which can affect everything from market forecasts to volatility. If Greer moves ahead with higher tariffs, it could lead to significant price adjustments in various sectors almost instantly, impacting related asset classes. Our focus isn’t on the politics—it’s about anticipating direction amidst the noise, as this will influence the value of positions that last beyond a few days. The rejection of the 10% cap by European leaders indicates a reluctance to compromise based on previous agreements. They are crafting their own deal this time, and if the US escalates, we may see retaliatory actions that limit currency movement and affect specific sectors. For assets linked to international trade or heavily reliant on exports, we expect broad testing of positions across implied levels, with rising premiums at the front end. With Japan stepping back, the chances for a trilateral agreement diminish. This shifts the balance of potential hedging options in East Asia, narrowing choices for those who rely on regional stability as a signal for market movements. If these negotiations drag into next month without resolution, implied rates may rise further due to uncertainty. Looking ahead, the next few weeks should not be about chasing quick moves but observing which parties are likely to make firm commitments. This will help identify which aspects of the market carry weight. Sensitivities will change based on discussions behind closed doors in Paris. The best trades now are those that minimize assumptions and emphasize protection.

here to set up a live account on VT Markets now