Ursula von der Leyen expressed the EU’s dedication to constructive discussions with the US regarding tariffs. She noted that Trump’s recent decisions are a step towards stabilising the global economy.
According to von der Leyen, clear and predictable conditions are vital for effective trade. The EU remains focused on achieving frictionless, mutually beneficial trade and has continuously pushed for a zero-for-zero tariffs agreement with the US.
Negotiation Period
There is a three-month period for negotiations before any changes might occur. While Trump’s tariffs are no longer seen as extremely detrimental, they still negatively impact growth conditions.
This article outlines von der Leyen’s recent remarks positioning the EU as prepared and willing to engage in structured talks with the US over tariffs. She framed the policy moves from Washington not as an outright threat, but rather as a shift that—if managed through the right channels—could contribute to steadier conditions for trade across borders. Her emphasis was on the importance of transparent rules and consistency, pointing to the EU’s ongoing aim of scrapping tariffs entirely between the two sides. The specific reference to a zero-for-zero agreement shows a desire not for incremental concessions, but for full removal carried by reciprocity.
The three-month window referenced functions as a formal interval for negotiations, a clear timeframe in which any outcomes might be shaped. These weeks will prove essential—not because of any immediate shock—but because of the medium-term effects these moves could have if left unattended. Although the tariffs imposed by the prior US administration are no longer considered as harshly destabilising, they continue to present a drag on economic pace, dragging down conditions that serve as a base for further policy-making.
Market Reaction
For those of us involved in tracking price expectations, shifts in policy confidence, and changes to volatility premiums, this is a moment to sharpen focus—not to rush, but not to idly wait. The pricing of relative risk now hinges not on emotion, but on reading these diplomatic cues efficiently. Tariffs that feel temporary can still disrupt long-term contracts, migration of capital, and repositioning across exposure baskets. Even perception—if it starts adjusting friction models—could drive unexpected rerates in out-of-the-money carries.
From our view, opportunities in rate differentials and sector spreads are likely to reprice first based on clarity—not resolution—but one leads to the other. As we roll closer to the midpoint of the negotiation period, index deflections tied to FX volatility will likely accelerate. If further de-escalation is signalled in Washington or Brussels, shorts in forward volatility could become inefficient to maintain, particularly in calendar spreads over Q3 expiries.
Where McConnell’s faction aligns, or doesn’t, could also create asymmetry in pricing USD versus structured exposures into German manufacturing names or French luxury exports—both historically sensitive to tariff hedging instruments. The better part of positioning involves interpreting comments like von der Leyen’s not only as wishes, but as soft guides to what they anticipate policymakers might deliver, especially when trade agreements need parliamentary cooperation.
If trade language starts moving from requests to resolution—especially if numbers or timelines are accompanied—we’ll adjust our skew assumptions and monitor delta decay for options on export-heavy ETFs and industrial majors. Until then, short-dated contracts warrant tight protection bands, and recalibrating gamma exposure more frequently will likely prove worthwhile.
