The Trump Administration has asked countries to submit their best offers in tariff negotiations by Wednesday. Although there were some deals made earlier, like tariff reductions between the US and China, no new agreements have been reached in the last two weeks. Japan and India are still far apart from reaching deals, which adds to the frustration. The high steel tariffs of 50% could also complicate negotiations with Canada and Mexico.

Pressure Builds in Negotiations

The request for quick offers shows increased pressure behind the scenes. Initial negotiations raised hopes, especially with the US and China reducing tariffs, but progress has stalled. What once seemed like broad cooperation is now slowing down, with deadlines approaching and concessions becoming scarce. Japan and India have not moved closer together in their positions. Their hesitation—whether from domestic issues or strategic concerns—continues to slow progress. This also puts extra pressure on discussions with other partners. For instance, the sharp 50% steel tariff remains a major hurdle for Canada and Mexico, especially if they continue to be denied exemptions or waivers. These tariffs significantly impact trade terms and alter assumptions in markets that were once stable. We shouldn’t expect an immediate breakthrough. When looking ahead, we need to consider not just the implied volatility in related sectors but also the likelihood that no offers will be accepted before the deadline. Traders must watch for potential reaction patterns in both equity-linked instruments and commodities, especially metals.

Deadlines as a Strategy

Lighthizer seems to use deadlines as a strategy rather than just final goals. The request for “best offers” will likely help distinguish between those willing to negotiate and those who prefer to wait. In this situation, waiting can have its own costs. Pay attention to movements in industrial and shipping sectors, which often act on anticipation rather than confirmed trade changes. For us, this means positioning ourselves against the trend might be wiser than chasing positive headlines. Regarding steel-heavy inputs, any short-term hedging should assume prices will stay high leading up to the next settlement, unless an adjustment to the tariff schedule is announced in advance. Additionally, the widening spreads in options related to Indian and Japanese markets deserve attention, given the recent disconnect between demand and forward pricing in these areas. In the short term, we shouldn’t expect announcements to determine outcomes. We should focus on the remaining gaps instead of the statements made. The current pattern suggests that actions will matter more than words. This is especially important this week, which might otherwise seem quiet. Keep tracking futures levels and changes in open interest, as they are likely more telling than any public announcements made this week. Create your live VT Markets account and start trading now.

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