German Chancellor Merz is cautiously optimistic about a trade deal between the EU and the US. He believes that an agreement could be finalized by the end of the month, thanks to ongoing discussions with the US government and the EU Commission about tariffs. Recent updates show that negotiations are moving faster, making a deal more likely. While the US might keep the 10% tariff, other concessions are expected, which could help in finalizing the agreement. Merz’s comments indicate a surprising quick change in negotiations between the two regions. In the last two weeks, talks have shifted from broad interests to more detailed planning. This pattern is familiar; negotiations often gain momentum when both sides show a willingness to compromise. His mention of in-depth discussions suggests that the drafting stages of a deal may be well underway or even nearing completion. Keeping the 10% tariff may not be ideal, but it indicates that both sides are engaging in strategic negotiations. Instead of seeking a full removal of the tariff, the US may be using it as leverage to gain other benefits later on. Traders should view this as a sign of stability, rather than a new source of uncertainty. The primary focus should be on potential additional concessions. Looking at past deals, we often see side agreements, like quotas or changes in regulatory recognition, being developed. These arrangements will influence future pricing strategies, especially in metals and industrial sectors, where tariffs significantly affect cost projections. These changes usually don’t cause immediate disruptions in the spot market. However, for those dealing with structured products or calendar spreads, adjusting to the evolving policy environment now is crucial. The key isn’t whether headlines announce a deal, but when expectations within the industry solidify. That’s when implied volatility for sensitive exports will likely adjust. It’s important to note that Washington’s reluctance to fully lift the tariff reflects ongoing domestic pressure and a desire to secure wins. This is something we need to pay attention to. It suggests that while a framework deal may be announced, it won’t eliminate all tensions. We should monitor how European industrial indices react. Any early optimism could become entry points for strategic investments, especially if comments from Brussels show increased confidence. The moment the language shifts from “potential” to “expected adjustments,” we are likely to see changes in Q3 derivatives. Our strategy will focus on sectors influenced by trade. While tariff impacts might not be huge, markets often overreact to stories of resolutions, especially if they’ve anticipated deadlock. In this context, Merz’s statements are more than political updates; they signal the start of potential volatility changes.

here to set up a live account on VT Markets now