The 30% tariff on European goods threatened by U.S. President Donald Trump would, if implemented, be a major blow to Europe, potentially dismantling large segments of transatlantic trade and compelling the bloc to reassess its export-driven economic strategy.

European ministers meeting in Brussels on Monday remained convinced they can bring Trump back from the brink before his Aug. 1 deadline and reach a deal that would keep the $1.7 trillion two-way trading relationship broadly intact.

But the wild swings in Trump’s mood toward the European Union – which he has sometimes labelled as friendly and at other times accused of being set up specifically to destroy the United States – keep the 30% threat very much alive for now.

“It will be almost impossible to continue the trading as we are used to in a transatlantic relationship,” EU trade chief Maros Sefcovic said of the 30% rate before meeting ministers and officials of the 27 EU capitals to give them an update.

“Practically, it prohibits the trade.”

EU officials had been hoping they could limit the damage by agreeing on a baseline tariff of around 10% – the one currently in place – with additional carve-outs for key sectors like autos.

Last year, the United States accounted for a fifth of all EU exports – its largest partner. Trump’s bugbear is the $235 billion U.S. deficit generated by the goods component of that trade, even though the U.S. earns a surplus on services.

Upend policy plans

The impact of making European exports – from pharmaceuticals to autos, machinery or wine – too expensive to be viable for American consumers would be instantly tangible.

Economists at Barclays estimate that an average tariff rate on EU goods of 35% including both reciprocal and sectoral duties, combined with a 10% retaliation from Brussels, would shave 0.7 percentage points off eurozone output.

This would eat up most of the eurozone’s already meagre growth and likely lead the European Central Bank (ECB) to cut its 2% deposit rate further.

“Inflation would likely undershoot the 2% target more deeply, and for longer, prompting a more accommodative monetary policy stance – with the deposit rate potentially reaching 1% by (March 2026),” the Barclays economists said.

An earlier estimate by German economic institute IW found tariffs of 20% to 50% would cost Germany’s 4.3 trillion euro economy more than 200 billion euros between now and 2028.

While arguably small in percentage terms, that lost activity could still upend Chancellor Friedrich Merz’s plans to push through tax cuts and spend more on renewing the country’s long-neglected infrastructure.

“We would have to postpone large parts of our economic policy efforts because it would interfere with everything and hit the German export industry to the core,” Merz said at the weekend of a 30% rate.

Nowhere to run

Further down the line, it raises bigger questions over how Europe recoups the lost activity to generate the tax revenues and jobs needed to fund ambitions ranging from caring for ageing populations to military rearmament.

Under its existing policy of trade diversification, the EU has done well in striking preliminary deals with new partners but – as the continued delay over completion of the giant EU-Mercosur trade pact shows – it has struggled to get them fully signed and sealed.

“The EU does not have different markets to pull up to and sell into,” Varg Folkman, policy analyst at the European Policy Centre think tank, said of the long and complex timelines involved in classic free trade deals.

Some observers have argued the standoff with Trump is what the EU needs to complete long-delayed reforms of its single market, boosting domestic demand and rebalancing its economy away from exports, which account for around half of output.

The International Monetary Fund (IMF) has estimated the EU’s own internal barriers to the free flow of activity are the equivalent of tariffs of 44% for goods and 110% for services. Mooted reforms such as creating freer cross-border capital markets have made little headway in more than a decade.

“It is easier said than done. There isn’t an agreement to deepen. The barriers are imposed by the EU members themselves to benefit their own,” Folkman said of the web of national regulations.

How all this plays into the EU’s negotiating strategy in the less than three weeks ahead remains to be seen – but for now, the bloc has stuck to its line of being open to talks while readying retaliatory measures if they break down.

One thing that might persuade Trump to reach a deal, some European observers suggest, is that the lingering uncertainty may by itself push back the timing of the Federal Reserve (Fed) interest rate cut the U.S. president so desires.

“The latest developments on the trade war suggest that it will take more time to get a sense of the ‘landing zone’ on tariffs … which of course raises uncertainty for everyone, including the Fed,” AXA chief economist Gilles Moec said.

“With this new salvo … calls for cutting quickly get even harder to justify.”

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Türkiye and Malaysia can and should work together in a time when the world is seeking more direction and clarity, the chairperson of a Malaysian center focusing on Islamic finance said in an interview published on Tuesday.

“Türkiye and Malaysia can and should work together in a time when the world is seeking more direction and clarity. We are in a phase where we must continue to build and strengthen our relations,” said Tan Sri Azman Mokhtar, the chairperson of Malaysia International Islamic Financial Centre (MIFC) Leadership Council (MLC).

Speaking to Anadolu Agency (AA), Mokhtar emphasized Türkiye’s significance, both in its region and globally, explaining that they aim to advance the strong economic, financial, and investment ties between Türkiye and Malaysia.

“The Future of Islamic Finance: Türkiye-Malaysia Business Forum” was held recently in cooperation with the Presidency’s Investment Office and MIFC MLC.

As part of the program, more than 20 senior financial representatives operating in areas such as Islamic banking, capital markets and takaful (Islamic insurance) came to Türkiye, along with heads of regulatory and supervisory institutions.

The program focused on promoting the Istanbul Financial Center (IFC), showcasing investment opportunities in Türkiye, strengthening public-private cooperation and evaluating investment prospects through one-on-one meetings.

Islamic finance, which has emerged in recent years as an alternative model, continues to grow and is expanding its influence, especially in the Gulf countries, Southeast Asia and Africa.

Due to its promotion of financial inclusion in developing countries and its foundation on ethical principles, Islamic finance is expected to become more widespread across broader geographies in the future. Türkiye stands out as a key part of this growing trend.

Legal reforms in participation finance, the establishment of new participation financial institutions, and the aim of turning Istanbul Financial Center into a global hub are all strengthening Türkiye’s Islamic finance ecosystem.

As of 2024, participation banking holds an 8.5% share in the country’s banking sector, and this is expected to reach double digits in the coming years.

Additionally, initiatives such as participation-based insurance, sukuk issuance (Islamic bonds) and the diversification of interest-free financial products support Türkiye’s goal of becoming a regional Islamic finance center.

In his remarks to AA, Mokhtar noted that trade between the two countries exceeds $5 billion (TL 200.87 billion), adding, however, that there is room to “grow this even further.”

“Our relationship is truly strong,” he said.

Mokhtar explained that in Malaysia, Islamic finance constitutes almost half of the banking system and two-thirds of the capital markets.

Highlighting Türkiye’s significance regionally and globally, Mokhtar added: “Malaysia currently holds the chairmanship of the Association of Southeast Asian Nations (ASEAN). Türkiye and Malaysia can and should work together in a time when the world is seeking more direction and clarity. We are in a process where we must continue to build and strengthen our relations.”

He also mentioned witnessing the development of the Istanbul Financial Center closely and recalled opening an office in Istanbul during his time as CEO of Khazanah Nasional to invest in Türkiye and the region, a branch that is still active today.

Moreover, he drew attention to Türkiye’s regional influence and its role in participation finance.

“Türkiye is not just about Türkiye. It is a bridge economy for Central Asia, Africa, the Middle East and North Africa. There is serious potential in the participation finance,” he remarked.

“Much of this potential is already being realized. As Malaysia, we will continue to be part of this bridge, just as we are in our own region,” he added.

Mokhtar emphasized that the global financial world is searching for direction, with ongoing issues and instability in monetary policy, climate initiatives, and environmental, social and governance (ESG) efforts.

He said that Islamic finance is rooted in social justice, and that they have transformed this tradition into a modern framework.

Highlighting the system’s growth potential, he added: “Islamic finance is growing much faster than the global financial system today, but in percentage terms, we are still relatively small. That means there is plenty of room for growth.”

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China’s economy grew by more than 5% in the second quarter, despite global headwinds and tensions with the U.S., official data showed Tuesday, buoyed by strong exports, but analysts warned that more work was needed to address sluggish consumer demand.

The figures offer a rare bit of good news for the country’s leadership as it fights a multi-front battle to kickstart growth – a challenge made all the more difficult by U.S. President Donald Trump’s tariff war.

But the knock-on effects of the trade turmoil abroad and persistent sluggish consumption mean the economy could slump in the second half of year, analysts warned.

The U.S. president has imposed levies on China and most other major trading partners since returning to office in January, threatening Beijing’s exports just as it becomes more reliant on them to stimulate economic activity.

The two superpowers have sought to de-escalate their row after reaching a framework for a deal at talks in London last month, but observers warn of lingering uncertainty.

On Tuesday, Beijing’s National Bureau of Statistics (NBS) said the Chinese economy grew 5.2% from April to June, matching a prediction by an Agence France-Presse (AFP) survey of analysts and topping an official growth goal for the year set by the government.

But it marked a slowdown from the 5.4% seen in the first quarter, which was boosted by exporters rushing to shift goods ahead of swingeing U.S. tariffs kicking in.

“The national economy withstood pressure and made steady improvement despite challenges,” NBS deputy director Sheng Laiyun told a news conference.

“Production and demand grew steadily, employment was generally stable, household income continued to increase, new growth drivers witnessed robust development and high-quality development made new strides,” he said.

Markets were mixed in response – after a strong start to the day, Hong Kong pared an early rally while Shanghai dipped into negative territory.

“The figures probably still overstate the strength of growth,” Zichun Huang, China Economist at Capital Economics, said in a note.

“With exports set to slow and the tailwind from fiscal support on course to fade, growth is likely to slow further during the second half of this year,” Huang added.

Retail sales rose 4.8% on-year last month, below a forecast in a Bloomberg survey of economists, suggesting efforts to kickstart consumption have fallen flat.

The weak readings come as Beijing battles to shift towards a growth model propelled more by domestic demand than the traditional key drivers of infrastructure investment, manufacturing and exports.

Factory output, meanwhile, gained 6.8%, higher than the estimate – reflecting continued high demand for Chinese exports that has boosted growth.

‘More deflation’

But analysts warn that strong exports could be driving deflationary pressures and further dampening already sluggish consumer demand.

“Recent efforts to boost spending, such as the broadening of the consumer goods trade-in scheme earlier this year, did temporarily lift retail sales,” said Sarah Tan, an economist at Moody’s Analytics.

“However, this support proved unsustainable, with funding reportedly drying up in several provinces. The scheme’s limitations highlight the need for policymakers to address the deeper structural challenges behind consumer caution.”

Data last week showed consumer prices edged up in June, barely snapping a four-month deflationary dip, but factory gate prices dropped at their fastest clip in nearly two years.

“The economy posted a solid first half, supported by resilient exports, though this momentum is contributing to deepening deflationary trends,” Louise Loo, Head of Asia Economics at Oxford Economics, said in a note.

“The cost of strong exports is more deflation,” she said.

Disagreements also persist between Beijing and Washington, despite the framework agreement reached last month.

“We are resolved to handle our own affairs well,” The NBS’s Sheng said Tuesday, noting “high tariffs” and “pressure in the external environment”.

Yue Su, principal economist for China at the Economist Intelligence Unit, told AFP that Tuesday’s data demonstrated “notable resilience,” warning that “trade frontloading will overdraw demand for the second half.”

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U.S. President Donald Trump could dismiss Federal Reserve (Fed) Chair Jerome Powell for cause if supported by evidence, White House economic adviser Kevin Hassett said on Sunday, noting that the Fed “has a lot to answer for” regarding cost overruns in the renovation of its Washington headquarters.

Any decision by Trump to try to fire Powell over what the Trump administration calls a $700 million cost overrun “is going to depend a lot on the answers that we get to the questions that Russ Vought sent to the Fed,” Hassett told ABC’s “This Week” program.

Vought, the White House budget director, last week slammed Powell over an “ostentatious overhaul” of the Fed’s buildings and answers to a series of questions about the $2.5 billion project. In a posting on social media platform X, he compared the project to France’s Palace of Versailles, with rooftop gardens, water features and “premium marble.”

Hassett’s comments confirm that the Trump administration is actively exploring the renovation costs and Powell’s testimony about the project as a possible avenue to try to fire the Fed chief well before his term as chair ends in May 2026.

Trump has repeatedly called for Powell’s resignation for failing to lower interest rates since Trump returned to office in January.

Vice President JD Vance piled on more criticism in a post on X on Sunday: “Fed has been totally asleep at the wheel. As President Trump says, they’re TOO LATE–both in fighting inflation during Biden and in lower rates now.”

Roof terrace no, asbestos yes

The Fed on Friday appeared to rebut some of Vought’s claims in a “Frequently Asked Questions” posting about the project, describing it as the first complete renovation of the buildings since their construction in the 1930s, including removing lead contamination and more asbestos than initially anticipated.

It shows pictures of leaky pipes and roofs and notes that costs have risen due to increased material, equipment and labor costs. It denied assertions that there were VIP dining rooms or elevators being installed.

The project will have a “green roof” using plants to help manage water runoff and aid with heating and cooling, as many other federal buildings have used for decades, but no terrace access.

“There are no new water features, there’s no beehives, and there’s no roof terrace gardens,” Powell told U.S. senators in testimony in June, denying excessive spending on the project.

Powell said the almost 90-year-old headquarters “was not really safe, and it was not waterproof,” while acknowledging cost overruns.

The Fed has said that the project, which includes upgrades to an adjacent building, will consolidate staff into a single campus and reduce off-site lease costs. As of February, a Fed Inspector General report estimated that costs had risen to $2.4 billion from an estimate of $1.9 billion two years earlier, a $500 million increase.

Authority debated

Asked if Trump had the authority to fire Powell, Hassett, whose name has emerged as a potential candidate to take over the Fed chair job, said: “That’s a thing that’s being looked into, but certainly if there’s cause, he does.”

Republican Representative French Hill, who chairs the powerful House Financial Services Committee, said Trump did not have the authority to fire the Fed chair, but Congress would continue to provide strong oversight of the central bank.

“Just because Congress created the Fed and that we believe that it should be independent in the setting of monetary policy, it doesn’t mean that it’s immune from criticism,” Hill told CBS’ Face the Nation.

“Every president since World War II has had choice words for the Fed chair when they’ve not been in sync with the direction of the president.”

Regime change

Separately on Sunday, Kevin Warsh, a former Fed Board of Governors member who is considered a potential candidate to replace Powell, said the U.S. central bank needs a “regime change” that goes beyond the chair position.

“The Fed has lost its way. It’s lost its way in supervision, it’s lost its way in monetary policy,” Warsh said in a Sunday interview on Fox’s Sunday Morning Futures program.

“We need regime change at the Fed, and that’s not just about the chairman. It’s about a whole range of people, it’s about changing their mindset and their models, and frankly, it’s about breaking some heads, because the way they’ve been doing business is not working.”

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Turkish authorities have issued arrest warrants for 85 individuals, including employees of two private banks and a fintech company, as part of an investigation into an alleged money laundering network, according to media reports.

The probe, led by the Istanbul Chief Public Prosecutor’s Office, centers around allegations of organized criminal activity, usury, violations of banking and electronic payments regulations, and the laundering of assets derived from criminal activity.

The investigation targeted individuals and legal entities suspected of violating the Law No. 5464 on Bank and Credit Cards and Law No. 6493 on Payment and Electronic Money Institutions, Anadolu Agency (AA) reported.

The coordinated operation took place on July 8 across six provinces, the report said.

Among the suspects are 16 employees from Denizbank, Şekerbank and Ozan Elektronik Para.

The probe gained momentum following a July 8, 2024 report from the Financial Crimes Investigation Board (MASAK), which uncovered suspicious transaction patterns involving a total volume exceeding TL 47.5 billion ($1.18 billion) between 2022 and 2024.

According to the MASAK report, the transactions were processed via 312 POS terminals registered to 21 different companies. Nearly all of the transactions were conducted using foreign credit cards, with the majority consisting of same-day, same-amount charges across multiple cards.

A large proportion of these activities reportedly occurred at night, and investigators found a clear mismatch between the transaction times and the firms’ stated business operations.

Moreover, the POS devices were predominantly provided by Denizbank, Şekerbank and Ozan Elektronik Para. Authorities allege the POS infrastructure was used in a deliberately structured manner to give the impression of legitimate commercial activity.

Denizbank is still reeling from an alleged Ponzi scheme targeting high-profile football players. A former branch manager is accused of defrauding players, including Arda Turan, a former Barcelona midfielder, and Uruguayan Galatasaray goalkeeper Fernando Muslera.

Denizbank has denied any role in wrongdoing.

The lender got a new CEO this January after Hakan Ateş stepped down after 27 years at the helm. He was succeeded by Recep Baştuğ, a former BBVA executive.

Ateş was also indicted for his alleged role in the alleged Ponzi scheme. The court later returned the indictment to prosecutors, citing insufficient evidence. Ateş has repeatedly denied the allegation.

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President Donald Trump on Monday warned he would slap tariffs on Russia unless the war in Ukraine is resolved within 50 days.

The Republican president made the announcement during an Oval Office meeting with NATO Secretary General Mark Rutte.

“We’re going to be doing very severe tariffs if we don’t have a deal in 50 days,” Trump said. He did not provide specifics on how the tariffs would be implemented.

“I use trade for a lot of things,” he added. “But it’s great for settling wars.”

Trump’s special envoy to Ukraine and Russia met with Ukraine President Volodymyr Zelenskyy in Kyiv on Monday, as anticipation grew over a possible shift in the Trump administration’s policy on the three-year war.

Trump last week said he would make a “major statement” on Russia on Monday. He was due to meet with NATO Secretary-General Mark Rutte in Washington. Rutte also planned to hold talks with U.S. Defense Secretary Hegseth and Secretary of State Marco Rubio, as well as members of Congress.

Trump made quickly stopping the war one of his diplomatic priorities, and he has increasingly expressed frustration about Russian President Vladimir Putin’s unbudging stance on U.S.-led peace efforts.

Trump has long boasted of his friendly relationship with Putin, and after taking office in January, repeatedly said that Russia was more willing than Ukraine to reach a peace deal. At the same time, Trump accused Zelenskyy of prolonging the war and called him a “dictator without elections.”

But Russia’s relentless onslaught against civilian areas of Ukraine wore down Trump’s patience. In April, Trump urged Putin to “STOP!” launching deadly barrages on Kyiv, and the following month said in a social media post that the Russian leader ” has gone absolutely CRAZY!” as the bombardments continued.

“I am very disappointed with President Putin, I thought he was somebody that meant what he said,” Trump said late Sunday. “He’ll talk so beautifully and then he’ll bomb people at night. We don’t like that.”

Zelenskyy said he and Trump’s envoy, retired Lt. Gen. Keith Kellogg, had “a productive conversation” about strengthening Ukrainian air defenses, joint arms production and purchasing U.S. weapons in conjunction with European countries, as well as the possibility of tighter international sanctions on the Kremlin.

“We hope for the leadership of the United States, because it is clear that Moscow will not stop unless its … ambitions are stopped by force,” Zelenskyy said on Telegram.

Russia has pounded Ukrainian cities, including the capital, Kyiv, with hundreds of drones and cruise and ballistic missiles that Ukraine’s air defenses are struggling to counter. June brought the highest monthly civilian casualties of the past three years, with 232 people killed and 1,343 wounded, the U.N. human rights mission in Ukraine said. Russia launched 10 times more drones and missiles in June than in the same month last year, it said.

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