EU officials are coming to terms with accepting 10% tariffs as a baseline in trade talks with the US. Efforts are underway to negotiate for lower tariffs, although outcomes may be limited.

A source indicated that “10% is a sticky issue,” pointing to challenges in changing the baseline. Reports suggest US officials are benefiting financially from these tariffs.

Current Standoff In Trade Discussions

This piece outlines the current standoff in trade discussions between the European Union and the United States, where a 10% tariff level has become an accepted reference point, albeit reluctantly. EU negotiators appear to be striving for reductions, but internal consensus remains weak, and any downward adjustment carries more friction than expected. That this figure is being “accepted” tells us more about the constrained position of one party than any actual victory in talks.

It was also reported that some in Washington may be finding these trade barriers beneficial—not just economically via revenue, but also politically, as a stance against perceived imbalances. That added dimension makes compromise slower, as there’s clearly little domestic urgency to scale things back. The comment from an official that “10% is a sticky issue” may downplay how embedded this figure has become in strategy circles, making any deviation uphill work.

From our standpoint, what matters now is how policy chatter reshapes expectations in pricing models. If tariffs at this level are no longer temporary, we have to adjust positions to reflect tighter forward conditions. That means reconfiguring certain hedging structures, because what was assumed to be transitional is now firming up in investor sentiment. Forward volatility will change in kind, so positioning needs to reflect a tilt toward persistence in trade friction rather than its resolution.

Secondary Effects And Market Impact

Markets will soon factor in secondary effects. Demand sensitivity shifts once an import tariff settles near double digits. Traders and pricing desks alike may want to view trade-sensitive sectors with a sharper eye, as reactions to changes in talks will not be instantaneous but will likely feed through via earnings and FX signals. More dismantling appears unlikely in the short term, which should matter especially for those building strategies off mid-cycle stabilisation themes.

We handled similar scenarios before—historically, once a barrier becomes a benchmark, it creates behavioural inertia. Price discovery then follows a different path. This isn’t merely about what’s being said on either side of the Atlantic—it’s about how slow structural shifts affect premium expectation and how that translates into basis adjustments and near-month recalibrations.

Moving forward, be objective in applying this context to paired exposures. Look beyond headline optimism. Shift the lens to actual adjustment lags in supply chains, mark-to-market shifts, and narrowed settlement windows. Tariff talk is setting tone again, and the numbers shared—however arbitrary they might feel—are shaping implieds in real time.

Create your live VT Markets account and start trading now.