President Trump announced on Truth Social that he plans to send a letter to Japan. Trump communicated separately with a handwritten note to the Federal Reserve’s Powell.

Bloomberg reported that the EU is considering agreeing to Trump’s universal tariff. The EU, however, is looking for certain exemptions from this tariff.

Exemption For Rolls-Royce

Rolls-Royce in the UK has already received an exemption from these tariffs. It remains uncertain whether luxury items like Hermes Birkin bags will also be exempt.

So far, the article outlines a few key developments that, while seemingly political and diplomatic on the surface, carry direct implications for global trade flows and policy signals. Most notably, Trump has resumed an assertive communication style ahead of the election cycle, choosing both public and private channels. A handwritten message to Powell, for instance, suggests an attempt to influence or at least unsettle expectations regarding central bank independence. Traders will recognise this sort of manoeuvre as a way to pressure monetary policy indirectly.

On the EU side, discussions around adopting a unified approach to tariffs—likely shaped to avoid financial retaliation—introduce a forward risk on both import costs and revenue distributions. Not all sectors will be impacted equally, but the push for exemptions points to contested ground ahead. Rolls-Royce securing its carve-out early indicates intense sectoral lobbying behind closed doors, which could skew expectations in ways that won’t be reflected in the broader trade readings.

For those of us in derivatives, particularly those watching commodities and FX volatility, the mention of luxury goods like Hermès under potential scrutiny shifts part of the tariff debate to discretionary consumption. Market expectations around European exports may need a second look, especially where synthetic positions bake in margin pressures from tariffs that potentially won’t materialise.

Implications For Global Markets

These new threads do not just shift pricing but also signal how policy anchors are beginning to move. A unified tariff framework with exceptions isn’t a straightforward outcome—it creates tiered exposure. Some assets will chase protection, while others will be left in play. Now would be a good time to revisit theta exposures across any basket that assumes flat tariff dynamics.

What’s more, while the media cycle will orbit around names and personalities, the financial message here is layered elsewhere. Global equity vol is unlikely to remain flat if rate guidance is pulled into uncertain territory owing to pressure, subtle or otherwise, from executive figures. We’ve seen this pattern before: a power cue aimed in Powell’s direction often acts as an accelerant for rebalancing long-term yield expectations.

From a positioning standpoint, anyone holding exposure to luxury goods indices, or betting on smooth EU–US trade talks, will need to reassess hedging timelines. Exemptions are not just binary—they create leakages in reform intent. As traders, we interpret these exemptions not as policy kindness, but as structural imbalance forming before the rules are final.

Keep an eye on the initial reactions by credit spreads in export-heavy sectors. That’s often where recalibration starts before sentiment shifts fully into equity or volatility markets. Our bets are best aligned with visibility. Right now, few things are more visible than a hand-written message or a tariff being tested in plain sight.

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