France’s finance minister believes the EU could have been more assertive in trade negotiations. Some say the UK didn’t secure a better deal than the EU. France is critical of the trade agreement. President Macron pointed out that the EU’s tariff deal with the US appears unbalanced. While he sees some positives, he expects further talks on the EU-US tariff plans.

Need for Greater European Sovereignty

President Macron highlights the urgency for Europe to enhance its sovereignty. He stressed that discussions about the EU-US trade deal are ongoing and the importance of appearing strong. There are clear signs that trade relations between the EU, US, and UK remain unsettled, indicating a time of uncertainty and market instability in Europe. The call for European “sovereignty” suggests a more aggressive approach, which could affect trade and investment flow. This situation may weaken the Euro against the US dollar. We recall that the EUR/USD rate fell over 2% after protectionist comments from the US in late 2024. Recent data from the German ZEW Economic Sentiment survey shows a drop in confidence, linked to renewed trade tensions with the US.

Implications for Equity Traders

For equity traders, this raises potential risks for major European indices such as the Euro Stoxx 50. Key sectors that rely on exports, like German car manufacturers and French aerospace, could be hit hard by new tariffs. German factory orders for June 2025 were lower than expected, as manufacturers pointed to trade uncertainties. This is a clear signal to consider buying volatility as a safeguard. The VSTOXX, Europe’s main volatility index, is near historic lows, making long volatility positions affordable before any political changes. A formal move by the EU to renegotiate could lead to sharp volatility spikes, similar to those seen during the 2018 steel tariff disputes. The renewed criticism of the UK trade deal adds pressure to the EUR/GBP exchange rate. Official data from Q2 2025 showed that UK-EU trade volumes dropped 6% compared to pre-Brexit levels, and this rhetoric hints at new tensions. In this landscape, options that profit from currency swings between the two could be a smart strategy. Create your live VT Markets account and start trading now.

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