U.S. President Donald Trump intensified his trade war with Canada a day ahead of his Aug. 1 deadline for a tariff agreement, saying it would be “tough” to make a deal with Canada after it gave its support to Palestinian statehood.

Trump is set to impose a 35% tariff on all Canadian goods not covered by the U.S.-Mexico-Canada trade agreement if the two countries do not reach an agreement by the deadline.

“Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them,” Trump said on Truth Social.

Canadian Prime Minister Mark Carney previously said tariff negotiations with Washington had been constructive, but the talks may not conclude by the deadline. Talks between the two countries were at an intense phase, he added, but a deal that would remove all U.S. tariffs was unlikely to be reached.

Canada is the second-largest U.S. trading partner after Mexico and the largest buyer of U.S. exports. It bought $349.4 billion of U.S. goods last year and exported $412.7 billion to the U.S., according to U.S. Census Bureau data.

Canada is also the top supplier of steel and aluminum to the U.S., and faces tariffs on both metals as well as on vehicle exports.

Last month, Carney’s government scrapped a planned digital services tax targeting U.S. technology firms after Trump abruptly called off trade talks, saying the tax was a “blatant attack.”

Carney followed France and Britain as he said on Wednesday that his country was planning to recognize the State of Palestine at a meeting of the United Nations in September.

In announcing the decision, Carney spoke of the reality on the ground, including starvation in Gaza.

“Canada condemns the fact that the Israeli government has allowed a catastrophe to unfold in Gaza,” he said.

Israel and the U.S., Israel’s closest ally, both rejected Carney’s comments.

Carney’s office did not immediately respond to a request for comment on Trump’s post.

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Türkiye’s tourism revenues jumped by 8.4% in the second quarter of the year, continuing a positive momentum from the first three months to bring the total income from the key sector to nearly $26 billion in the first half of the year, official data showed on Thursday.

From April to June, tourism income came in at close to $16.3 billion, up 8.4% from the year ago, the data from the Turkish Statistical Institute (TurkStat) revealed. At the same time, the number of departing visitors increased by 2% compared to the same quarter of the previous year to 16.4 million, TurkStat said.

In six months of 2025, total revenues reached some $25.78 billion, marking the highest-recorded revenue for the half year ever, according to officials. The figure was up 7.6% from the same period in 2024, the data showed.

Announcing the figures, Culture and Tourism Minister Mehmet Nuri Ersoy hailed the increase in revenues and per capita nightly revenue, despite what he described as “very challenging” first six months.

“As you know, it was a very challenging and risky six months. It was a period marked by many global challenges, especially those unfolding within ‘a ring of fire’ around us. These factors were bound to impact the figures. However, thanks to the measures taken, we see that the data is positive compared to last year,” Ersoy told the event in Istanbul.

He cited several impacts, including the earthquake in Istanbul that coincided with the Easter holiday, the India-Pakistan conflict, which came short afterward, in addition to global risks.

“Furthermore, we encountered a global climate shift, a process we’ve been increasingly aware of for several years. If you’ve noticed, due to this global climate shift, we didn’t reach seasonal temperatures until June 15 this year. This is actually an indicator of a shift. A similar situation occurred last year. We expect September, October and November to be above seasonal norms, and we anticipate higher bookings during those periods,” he explained.

Moreover, he also pointed to concerns that came amid the escalation of tensions between Israel and Iran, which included fears of potential nuclear fallout. “This negatively impacted not only existing reservations but also future booking flows,” Ersoy said.

“Last year’s first six months’ revenue was $24 billion. This year’s first six months’ revenue reached $25.8 billion,” he informed.

“Second-quarter revenue, which was $15 billion last year, rose to $16.3 billion this year,” he added.

“Our year-end target is to increase from $61.1 billion last year to $64 billion. We are targeting a 4.7% revenue increase,” the minister also said.

“However, when we look at the first six months, we achieved a 7.6% revenue rise. The significant surge in per capita nightly revenue and the above-expected average length of stay positively impacted total revenue. In the first six months, we achieved the highest six-month tourism revenue in the history of the republic with $25.8 billion.”

Tourism is one of the key sectors of the Turkish economy, contributing significantly to the country’s gross domestic product (GDP).

Commenting on the data, Treasury and Finance Minister Mehmet Şimşek said that tourism revenue “reached an annual $62.9 billion in the second quarter of 2025, with the number of visitors reaching 62.7 million.”

“Despite the tensions in our region, tourism continues to maintain its strong performance,” he said in a post on X.

“The tourism sector, which supports our goal of a sustainable current account balance, continues to strengthen our economy,” he added.

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Türkiye’s trade deficit widened in June to slightly above $8 billion (TL 324.63 billion), as imports outweighed exports, despite a surge in outbound shipments, according to official data from the Turkish Statistical Institute (TurkStat) released on Thursday.

Turkish exports posted a rise of 7.9% on an annual basis to $20.51 billion in June, according to data from TurkStat. Imports also rose 15.2% year-on-year to $28.68 billion in June, resulting in a trade deficit of $8.17 billion, up 38.8%.

Excluding energy and non-monetary gold, the foreign trade deficit was $3.58 billion, according to the data.

In June, the ratios of the manufacturing industries products sector, the agriculture, forestry and fishing sector and the mining and quarrying sector in total exports were 94.8%, 2.9% and 1.7%, respectively.

High-tech’s share in the manufacturing sector was 3% and medium-high tech’s share was 41.2% in June.

The top destination countries for Turkish exports were Germany, with $1.73 billion, followed by the U.K., with $1.26 billion and the U.S., with $1.20 billion.

China was the top source of imports to Türkiye with $3.83 billion, followed by Russia with $3.31 billion and Germany with $2.7 billion.

In January-June, the country’s exports totaled $131.4 billion, representing a 4.1% increase, and imports reached $180.84 billion, a 7.2% increase.

The foreign trade deficit for the six months was $49.43 billion, up 16.3% compared to the same period in 2024.

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U.S. President Donald Trump has largely succeeded in convincing nations to accept higher tariffs on exports to the U.S.; yet for now, some experts see little threat to the post-war trend of lower duties, although potential changes in the global trade system are visible.

Since World War II, most politicians and economists have viewed free trade as a pillar of globalization, enshrined in the 1947 signing of the GATT accord.

It was the precursor to the World Trade Organization (WTO), which now has 166 members and covers 98% of global commerce.

“What we’ve learned in the postwar is that lower tariffs are better for the prosperity of your own country,” said Richard Baldwin, a professor at the IMD Business School in Switzerland.

“And it’s also good if other countries lower their tariffs, so we have a vibrant international economy,” Baldwin, who was a member of former U.S. President George Bush’s Council of Economic Advisors, told Agence France-Presse (AFP).

Trump, however, has embarked on a punishing trade war, claiming that deficits with other nations show they are “ripping off” the U.S.

He has recently landed accords with Japan, the Philippines, Indonesia and, most importantly, the European Union.

For dozens of other nations, U.S. “reciprocal” tariffs are set to increase from 10% to various steeper levels starting Aug. 1, including major economies such as South Korea, India and Brazil.

“To me, the most beautiful word in the dictionary is ‘tariff,'” Trump repeatedly said during the 2024 election campaign that returned him to office.

‘Pyrrhic victory’

Despite the headline figures, many economists expect the overall impact on the global trade system to be limited.

U.S. importers may well decide to procure more from American producers as the tariffs are applied, or pass along the higher costs to consumers.

“That won’t have a systemic impact” outside the U.S., Pascal Lamy, a former WTO chief, told AFP, calling the tariffs a “Pyrrhic victory” for Trump.

He noted that Trump is targeting only the U.S. deficits for goods, not services, “the part of global trade that is increasing the fastest.”

“You need to change your outlook when it comes to international trade,” Lamy said, adding that “Donald Trump has a medieval view” of the issue.

And instead of making a country more prosperous, the accepted economic wisdom is that by making goods more expensive, tariffs weigh on economic growth for everyone involved.

“Putting up your own tariffs is not a way to make yourself richer – that’s something that people have given up on many years ago,” Baldwin said.

“Trump has not screwed up the entire world trading system yet because the rest of the world hasn’t changed their opinion as to whether trade is good or bad,” he said.

“And generally speaking, it’s good.”

Indeed, others, including China, which joined the WTO in the early 2000s, have repeatedly called for respecting trade rules and engaging in dialogue.

Yet, from Aug. 1, although smaller than initially announced, South Korean exports to the U.S. would face 15% levy and those from Brazil a steep 50%, the highest announced rate so far.

And, although touted as the “deal” by the Trump administration, Seoul, similarly to the EU, has pledged to invest billions in the U.S.

Trade alliances

Global trade has risen sharply in recent decades, totalling nearly $24 trillion in 2023, according to WTO figures.

U.S. imports represent just 13% of overall imports – meaning the vast majority of international commerce will not be directly affected by Trump’s levies.

“It’s significant, but it’s only a small part of imports worldwide and the rest of the world still wants the system of engagement and interdependence to work,” said Elvire Fabry, a specialist in geopolitical economics at the Jacques Delors Institute.

Several countries have moved in recent years to forge new trade deals, a trend Trump’s tariffs blitz could accelerate.

In March, Japan, South Korea and China pledged to speed up negotiations on an accord, while Brazil’s President Luiz Inacio Lula da Silva has called for a deal between the Mercosur Latin American bloc and Japan.

The EU has also signed a free-trade deal with Mercosur, although its ratification has been held up, particularly by France, over concerns about unfair agricultural competition.

The EU has also relaunched efforts to secure a deal with Malaysia and countries in Central Asia.

Like this, it appears that many nations are attempting to quickly adjust to the new norm and form trade alliances to mitigate the vulnerability posed by the duties.

Tariff impact

In April, the WTO stated that global merchandise trade would decline by 0.2% this year before experiencing a “modest” recovery to growth of 2.5% in 2026.

However, those forecasts only took into account the tariffs Trump had announced up to that point – not the more severe levels he has threatened to implement starting Aug. 1 for countries that have not signed deals with Washington.

Still, as a sign that the impact of tariffs might not be as much as initially thought, the International Monetary Fund (IMF) earlier this week also revised slightly upward its growth forecasts for this year and next and the U.S. economy returned to growth in the second quarter.

On the other hand, industry-dependent economies, steel, aluminum and auto exporters, as well as those having individually large trade volumes with the U.S., stand at risk due to the quickly changing trade environment.

The tariff increases by the U.S. could result in medium-term export losses of up to 31 billion euros ($35.8 billion) for German industry in its business with the U.S., according to calculations by the consultancy firm Deloitte, released on Wednesday.

German exports to the U.S. could, therefore, decrease by a fifth, Deloitte said.

Indian Tata Motors will acquire Italy’s giant Iveco Group for 3.8 billion euros ($4.4 billion) in a bid to create a “global champion” in the commercial vehicles sector, the two companies announced officially Wednesday.

The deal excludes Iveco’s defense division for armored vehicles, which is to be sold to the Italian defense and aerospace group Leonardo in a 1.7 billion euro deal announced earlier on Wednesday.

The combined company, after Tata’s takeover, aims to sell around 540,000 vehicles a year for total annual revenues of 22 billion euros, of which half would come from Europe, 35% from India and 15% from the Americas.

Tata and Iveco – which also manufactures engines and buses – stated in a joint announcement that there was “no overlap in their industrial and geographic footprints, creating a stronger, more diversified entity.” This entity would utilize a shared strategic vision to drive long-term growth.

The deal is expected to close in the first quarter of 2026, underscoring Tata’s presence in Europe, with Jaguar Land Rover being a wholly owned subsidiary of Tata Motors.

“The reinforced prospects of the new combination are strongly positive in terms of the security of employment and industrial footprint of Iveco Group as a whole,” Iveco’s chairperson, Suzanne Heywood, said in the statement.

Defense unit

For Natarajan Chandrasekaran, chair of Tata Motors, “this is a logical next step following the demerger of the Tata Motors Commercial Vehicle business and will allow the combined group to compete on a truly global basis with two strategic home markets in India and Europe.

“The combined group’s complementary businesses and greater reach will enhance our ability to invest boldly. I look forward to securing the necessary approvals and concluding the transaction in the coming months,” he added in the statement.

Iveco Group’s CEO Olof Persson said the merger was “unlocking new potential to enhance our industrial capabilities further, accelerate innovation in zero-emission transport and expand our reach in key global markets.”

He added: “This combination will allow us to better serve our customers with a broader, more advanced product portfolio and deliver long-term value to all stakeholders.”

Separately, Iveco’s armored vehicles unit will be sold to Leonardo, whose chief Roberto Cingolani said the move would make it a “reference player in the European land defense market.”

Leonardo has announced it plans to integrate its electronic systems, including new-generation combat sensors, into Iveco Defense vehicles to “guarantee optimal effectiveness of operational solutions offered.”

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The U.S. Federal Reserve (Fed) kept interest rates unchanged on Wednesday, as expected, defying mounting political pressure from President Donald Trump to lower borrowing costs – although divisions emerged among policymakers.

The central bank’s call to hold interest rates at a range between 4.25% and 4.50% for a fifth consecutive meeting came with two dissents, marking the first time since 1993 that two Fed governors voted against a rate decision.

It also came amid a flurry of data releases this week, including an estimate showing the world’s biggest economy returned to growth in the second quarter.

But the uptick was heavily influenced by a pullback in imports after businesses rushed to stockpile inventory in the first quarter ahead of Trump’s expected tariffs.

In announcing its decision Wednesday, the Fed cited a moderation in economic activity in the first half of the year and “solid” labor market conditions.

It warned, however, that “uncertainty about the economic outlook remains elevated,” while inflation too is somewhat heightened.

Asked about U.S. tariff deals and whether they brought more certainty to policymakers assessing the effects of duties, Fed Chair Jerome Powell said: “It’s been a very dynamic time for these trade negotiations.”

“We’re still a ways away from seeing where things settle down,” he told a press conference.

Trump has also vowed to impose an incoming raft of new tariff rates come Friday.

Despite the dissents by Fed governors Christopher Waller and Michelle Bowman, Powell maintained that it had been a “good meeting” with thoughtful arguments around the table.

High-wire act

The dissents by Waller and Bowman, who had preferred a 25-basis-point cut, were largely expected by financial markets. Both officials had earlier indicated openness to a July reduction.

But KPMG chief economist Diane Swonk said: “We should expect the Fed to become less unified as we get closer to a potential cut in rates.”

The hardest challenge for the central bank would be a worsening in employment alongside a pick-up in inflation, she added in a note.

“The extent of those shifts is the point of contention and subject to uncertainty. That leaves the Fed in the uncomfortable position of traversing a high wire without a safety net,” Swonk added.

It can take anywhere from six to 18 months for the full effects of tariffs to materialize, she said.

But Swonk also flagged the “hyper-politicized environment” in which divisions are happening.

Trump has lashed out repeatedly at the independent Fed chair for not lowering rates sooner – calling him a “numbskull” and “moron.”

The president, citing Wednesday’s gross domestic product (GDP) figures, earlier said Powell “must now lower the rate.”

The repeated attacks have fueled speculation that Trump may attempt to fire Powell or otherwise pressure him to resign early.

Powell’s term as Fed chair ends in May 2026, and he defended Wednesday the independence of the central bank as having “served the public well.”

‘Wait-and-see’

Powell appears to be opening the door slightly to a September rate cut, although this is not guaranteed, said Navy Federal Credit Union chief economist Heather Long.

“He repeatedly described a solid and resilient economy, but he acknowledged there are ‘downside risks’ to the labor market,'” she added in a note.

“The July and August job reports will be key for the Fed,” Long said.

Official employment numbers for July are due to be released on Friday.

For now, EY chief economist Gregory Daco warned that “tariff-induced price pressures” are starting to filter through the economy.

Companies are citing weaker earnings and higher input costs, while job market conditions are weakening and elevated consumer prices are beginning to weigh on retail sales, he said.

Swonk noted that firms which absorbed much of the initial inflation due to tariffs have been cautioning of price hikes too.

And Trump has signed more orders Wednesday for fresh tariffs, including on copper products, adding to uncertainty, she said.

“We think the uncertainty and balance of risks will push most of the (Fed) to remain in wait-and-see mode at least a few months longer,” said economist Michael Pearce of Oxford Economics.

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