The United States will start sending letters to countries on Friday, detailing the specific tariff rates they will encounter. President Trump expressed a preference for setting fixed tariffs instead of negotiating with over 170 nations.

The letters, issued 10 at a time, will outline tariff rates between 20% and 30%. Previously, it was mentioned that around 100 countries are poised to receive a 10% reciprocal tariff.

Shift In Trade Policy

What the current content signals is a shift in trade policy enforcement – away from mutual negotiation formats and toward unilateral imposition of standardised terms. By opting for a set structure rather than country-by-country bargaining, Trump aims to streamline the notorious complexity that comes with dealing with over 170 trade arrangements. At the heart of this is a broader campaign to assert control over trade dynamics, using tariff incentives and penalties as a behavioural tool.

The dispatch of these letters in batches of ten hints at a methodical rollout rather than a universal enforcement starting on a single date. This staggered approach gives room for selective targeting and a measured public response, avoiding a sudden global retaliation. The initial range of 20% to 30% marks a sharp contrast against the previously signalled rate of 10% for a larger group of countries. It tells us which nations the White House deems less cooperative or more strategically important for leverage.

From our point of view, traders must prepare for a more fragmented structure in international pricing. This structure won’t mirror previous years’ seasonal rhythms or usual tariff tranches. Rather than isolated measures, these tiered tariffs will likely provoke legal reviews and responses from both allies and rivals, with longer-term supply redirection expected.

Keen eyes should turn toward volatility around container goods and industrial inputs connected to the countries receiving the earlier batches. Pricing models that rely on consistent duty rates—especially in sectors like electronics or consumer staples—require recalibration now, not later. Hedging strategies designed in the past 24 months may no longer respond predictively. The directional risk has now taken on a political tone, targeting compliance and reciprocity rather than conventional trade imbalances.

Impact On Financial Strategies

Those who previously relied on a stable tariff baseline for arbitrage will find themselves without a working denominator. As fixed rates become enforceable targets rather than negotiable talking points, the room for speculative flexibility tightens. Spread positioning should account for sudden moves in response to leaked letter content or statements from trade partners now under pressure to reciprocate further.

Mnuchin, previously vocal in defence of bilateral engagements, appears sidelined. The shift from his preferred model to flat rates reflects an internal alignment that has bypassed Treasury diplomacy in favour of hardline executive directives. That tells us who is driving this policy momentum—and that tide isn’t headed for compromise.

We must reassess contract rollover timing and exposure to margin disparities these new tariffs will bring. Currency hedges could provide only partial insulation if swing countries implement retaliatory taxes on high-demand exports in sectors we’re overweight in. Focus should move away from the notional size of exposure and instead toward jurisdictional risk relativity. Not all effects will be felt in total volume; some will emerge in inter-month pricing shifts and customs delays.

Domestic press briefings suggest officials are less concerned with immediate countermeasures, expecting a lag in response. That assumption provides an opportunity window. But it will narrow quickly. Position reductions ahead of the third tranche of letter deliveries may reduce tail risk in the fortnight ahead. We can quietly realign without triggering broader market signals.

While statements from Lighthizer have remained sparse since the rollout date was confirmed, his previous support for symmetrical duties fits this exact approach. It lends predictability to what would otherwise seem abrupt. Backward-looking models tied to historical tariff differentials will overstate fairness and understate reaction. Forward approaches need reweighting.

We must go into the next round of settlement with new guidance limits and realigned volatility stress tests. Options with short Gamma will underperform in these shifts unless tied directly to shipping or customs-burdened assets. We expect total trade duration per leg to increase until clearer exceptions are released by the Office of the United States Trade Representative.

It’s not just about tariffs—it’s about the structure they replace. The removal of case-by-case negotiation, for us, recalibrates how we should model earnings reliability, particularly for globally exposed midcaps. Not all risk is headline risk. The real story is in the cost embedded at port terminals, waiting on paperwork that hasn’t even been printed yet but will be within the month.

Create your live VT Markets account and start trading now.