The European Union has decided to pause countermeasures against US tariffs for 90 days, as stated by EU President von der Leyen. This decision aims to allow negotiations to progress, although further preparations for additional countermeasures are ongoing.
Originally, the EU was set to implement countermeasures on 15 April, following a decision by former President Trump to pause actions. Currently, the EU faces a 10% tariff imposed by the US, rather than the initially proposed 20%.
Short Term Relief
The delay in implementing further tariffs offers a short-term relief, but doesn’t remove the pressure that has built over the past months. Negotiators are attempting to bridge long-standing trade differences, and this 90-day pause is a temporary thaw rather than a resolution. For those of us studying price action and anticipating volatility in derivative markets, it’s time to consider how these decisions ripple out across risk sentiment.
Von der Leyen’s announcement reflects a willingness to de-escalate—at least for now. However, Brussels remains prepared to act if talks fail. Preparations for retaliatory tariffs are not being shelved, only held back. This ongoing posture suggests that, while rhetoric may soften temporarily, the fundamental disagreements haven’t been resolved. The potential for sudden shifts remains very much alive.
Washington’s current tariff position, maintaining duties at 10% instead of 20%, should not be misread as a long-term concession. It’s part of a broader tactic aimed more at leveraging negotiations than offering stable terms. The original threat still looms in the background, casting a shadow over any immediate optimism. That makes the coming weeks particularly sensitive for those of us modelling risk across global indices.
Calculated Decisions
It’s clear that the EU’s decisions are carefully calculated, not reactive. They realise that trade politics can shift swiftly, especially with changing administrations and economic pressures building domestically. With countermeasures still being drafted, there’s no guarantee this pause won’t end abruptly. It follows that short-dated options, particularly around European equities and sector-specific exposures like automotive or aerospace, warrant attention.
Traders should be aware that volatility might not wait until the 90 days are up. Market responses often anticipate policy rather than react to it. If leaks or policy drafts circulate from Brussels suggesting a hardening stance, implied volatility could spike quickly. That makes gamma exposure to related assets potentially more expensive, especially when liquidity conditions tighten.
We’ve already seen in previous episodes that tariff-related negotiations inject noticeable swings in currency pairs, particularly EUR/USD. Even if tariffs themselves are industry-specific, the broader implications can pull foreign exchange markets into play. Moves in rates and bonds could appear less connected at first, but second-order effects aren’t unlikely—especially in sovereign debt tied to export-driven performance.
Lastly, investors should not treat this pause as stability, but as a warning that friction hasn’t ended—only stalled. Reacting appropriately involves reassessing hedges, avoiding complacency, and keeping positions flexible. Messages between negotiators may remain behind closed doors, but the pricing on complex derivative instruments often foreshadows the next turn.
