The European Union has decided to delay its planned tariffs on the United States. This choice comes after an agreement between President Trump and European Commission President Ursula von der Leyen. Following weeks of talks, the EU will suspend its countermeasures for six months. This move aims to ease trade tensions between the EU and the US.

Agreement For Stability

An EU trade spokesperson said the agreement made on July 27 is meant to provide stability and predictability for businesses and citizens. The suspension will start on Tuesday. Both sides are also preparing a Joint Statement on trade as tariffs are temporarily paused. We remember a similar deal from the summer of 2020, which also suspended retaliatory tariffs for six months. That agreement created a stable, short-term environment for trade between the two regions. This history suggests a strategy for the upcoming weeks as trade tensions lessen. Traders can expect to see lower implied volatility in major European and U.S. indexes. In 2020, for instance, the VSTOXX index, which measures European market volatility, dropped significantly, creating favorable conditions for traders who sell options. Selling out-of-the-money call and put options on indexes like the DAX and S&P 500 could be a good way to earn premium as market fears ease.

Effects On Automotive And Aerospace Industries

European car manufacturers, who have faced challenges from recent tariff threats, are likely to experience a rally. In 2020, companies like BMW and Volkswagen outperformed the market in the weeks following the truce announcement. Given that the German Association of the Automotive Industry reported a 4% drop in exports to the U.S. year-over-year in the first half of 2025, any positive updates could lead to significant gains, making call options on these stocks a good bet. The aerospace sector will also benefit from this situation. The long-standing Boeing-Airbus dispute had created major tensions, but any break in hostilities tends to boost their stock prices and those of their suppliers. We should also monitor futures contracts for U.S. agricultural products like soybeans, which exported over 15 million metric tons to the EU in the 2022/2023 marketing year and often rise when trade disputes ease. It’s important to remember that these agreements are typically temporary. As soon as the pause starts, uncertainty can return to the market as deadlines approach. Though we can capitalize on the short-term calm, it’s wise to think about purchasing longer-term protections, like puts for early 2026, to safeguard against the possibility of tariffs coming back. Create your live VT Markets account and start trading now.

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