Japan’s Prime Minister Ishiba confirms meeting with President Trump in Canada to discuss removal of US tariffs

    by VT Markets
    /
    Jun 13, 2025
    Japan’s Prime Minister Ishiba will meet President Trump in Canada. He still wants the US tariffs to be removed. President Trump has said that auto tariffs might be coming soon. This meeting is important for both leaders to discuss trade issues.

    High Trade Tensions

    The fact that Prime Minister Ishiba is meeting with President Trump shows how serious trade tensions have become. They are expected to discuss the possibility of new tariffs, especially on cars. When Trump talks about potential auto tariffs, it’s not just talk. It affects manufacturing across borders and overall exports. If these tariffs happen, shipping volumes, prices, and industrial output forecasts could be significantly impacted. Simply put, if tariffs are introduced soon, especially on vehicles, there’s a short time to adjust to this risk. Markets are already reacting to these potential threats. We are seeing price changes in short-term futures and options tied to transport and manufacturing, indicating that hedging is increasing. The unusual volatility suggests that traders are taking action now rather than waiting. Traders still hope for a deal, but they are preparing for higher costs by the end of the quarter. Strategies relying on calm markets might struggle if talks hit a snag. We know from past experience that a simple comment from Trump can shift prices significantly. Dealers are also positioning themselves for both scenarios—if the tariffs are delayed or if they happen all at once. It makes sense to use wide straddle moves around monthly expiries in this environment. We’ve noticed this trend not only in autos but also in textiles and consumer goods. The credit index options market reflects a similar situation—lower-quality stocks are being repriced quicker than investment-grade ones, suggesting a shift in risk confidence.

    Short-Lived Opportunities

    We view any signs of weakness in certain markets as temporary, not as a sign that risks have vanished. This also impacts hedging positions in yen and dollar pairs. A real stabilization will need more than just a pause on tariffs; it requires clear reductions in threats. Without this, we expect prices to remain too unpredictable for large, unhedged bets. Ishiba’s ambition to have all tariffs removed is higher than what current market prices suggest. This difference between political goals and market expectations creates short-lived opportunities if managed carefully. Convexity trades are increasing in areas heavily impacted by trade tensions. These opportunities rely on specific triggers and require follow-through. We are focusing on rolling two-week averages of skew and term structure to catch early changes. Regardless of what happens in Canada, reactions will likely come quickly. Create your live VT Markets account and start trading now.

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