Im not a bit wrong here, the 20% from the trait is still present in the damage formula and is interacting with tenacity always http://allaganstudies.akhmorning.com/guide/damage/, so it will suffer the same diminishing retuns as any other mitigation buff as they are all multiplied together.
Think of it like this in Stormblood as a simplified example (i.e. not taking into account all the other variables which would make ten even smaller)
Scenario A): Tank in no tank stance with 5% tencacity mitigation takes a hit that would do 50k
50000*0.95= 47500
Scenario B): The same tank in tank stance
50000*0.8*0.95 = 38000, or this to say because of diminishing returns tencacity only provided 4% not its "raw" 5%.
We now exist in a perpetual scenario B as of ShB where the tank stance defence buff is always active, so is always interacting with any buffs you use, tenacity or otherwise



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