South Korea’s trade chief, Ahn Duk-geun, asked for relief from US tariffs during the APEC conference. However, it’s unclear how the US responded, and there is no history of anyone getting a full exemption from these tariffs. If the US grants an exemption, other countries might also want similar treatment, complicating trade talks even more. This situation raises global concerns about fairness and consistency in US trade policies. There’s tension between the interests of individual countries and the larger goals of international trade policy. Ahn has formally made his request, but there has been no official reply, suggesting that the issue may still be under review or overlooked. A waiver would be a significant change from past US practices, where no such exemptions have been granted. Every action from Washington is closely monitored, and even a simple waiver could increase tensions with established trade partners. Other countries might see this as special treatment, which could lead them to ask for similar exemptions or change their own tariffs in response. This uncertainty might prompt US trade officials to remain neutral in the coming weeks. For those observing pricing in the short term, especially in trade-sensitive areas, there is now more uncertainty. The lack of confirmation or denial means we can’t ignore the possibility of changes in key trade flows. If hedging strategies depend too much on stable trade terms, they could face significant pricing risks. Lee, South Korea’s Minister of Trade, previously suggested that semiconductor exports might be affected by this ambiguous policy. While he isn’t directly mentioned here, it’s clear that high-value tech products are a priority for Seoul. If the US keeps its tariffs, these items could end up costing more indefinitely. This is more about pricing than politics and impacts options linked to supply chains. A practical step now is to watch bid-ask spreads in sectors related to Asia-Pacific exports, especially where volatility has lessened recently. A widening spread could signal a repricing due to real uncertainty, particularly for those holding large positions. We should also be careful with long-term contracts relating to trade metrics. With the potential for diplomatic tensions rising, sudden policy changes could happen. This would particularly impact contracts whose prices depend on the flow of goods across borders. It’s not a time for panic; it’s about adjusting our positioning realistically, knowing these moments don’t happen often and usually lead to either more openness or greater restrictions in the market. In our analysis, the best approach now is to tighten hedge ratios and hold off on making directional bets on export-dependent stocks. Because some policy announcements may come over the weekend, when markets are closed, our positioning reflects this risk. There have been more overnight gaps in risk proxy pairs, which we include in our forecasts for future volatility. Currently, markets have not fully anticipated these risks. So, while discussions continue between governments, we should not assume that terms have changed—or will definitely change. From a trading viewpoint, being patient for clarity while maintaining exposure discipline will be crucial in the coming weeks.

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