Economy
Top Turkish trade body criticizes EU chief’s Türkiye remarks
The chair of the Türkiye-Europe Business Councils of Foreign Economic Relations Board (DEIK) criticized remarks by European Commission President Ursula von der Leyen, linking Türkiye with Russia and China, saying the country should be seen not as a threat but as a strategic European partner and future EU member.
In a written statement on Wednesday, Mehmet Ali Yalçındağ, the coordinating chairperson of the Türkiye-Europe Business Councils, which represents dozens of business councils engaging with European nations, said that the founding spirit of the European Union was based on the courage to view differences not as threats but as a source of collective wisdom and shared prosperity.
“Its role within the NATO alliance, deep integration through the customs union, and strong interdependence in energy, migration, and security make Türkiye not a ‘threat,’ but a strategic European partner and a future member,” he said.
He said the core idea behind the EU’s creation was to establish lasting peace through economic integration, build bridges and become a global actor through cooperation.
“In this context, placing Türkiye, an EU candidate country, a NATO ally, and a European nation, within the stated geopolitical category reflects an approach that is detached from reality,” he said.
Yalçındağ underlined that Türkiye is “an integral part of Europe’s economic, security and societal fabric.”
His remarks came after the EU chief’s remarks at an event earlier this week. Von der Leyen mentioned her support for EU enlargement but said: “We must succeed in completing the European continent so that it is not influenced by Russia, Türkiye or China.”
This drew criticism from Turkish officials who said the characterization did not reflect the country’s status as a key partner and NATO ally.
Türkiye, a long-time candidate for EU membership, has strong trade ties with the bloc, with the bilateral trade volume exceeding $200 billion a year. Türkiye and the EU base their commercial ties largely on a 30-year-old customs union trade agreement, whose overhaul has long been stalled but which Ankara earlier argued would be a win-win for both sides.
Turkish officials and businesses have long argued that the current agreement is outdated and no longer reflects global trade realities or the depth of today’s economic relationship.
Moreover, Yalçındağ added that the language used and the categorical classifications made in this regard appear to be driven more by tactical considerations than by geopolitical realities, warning that such an approach could weaken Europe’s strategic capacity in the long-term.
He said that said the DEIK, within the framework of its private-sector initiative supporting Türkiye’s EU membership, has emphasized that the EU must become a stronger and more autonomous actor in energy, supply chains and security, and that this objective can be achieved together with Türkiye.
He also said debates in Europe over decision-making mechanisms, especially the constraints created by unanimity, highlight the need for a more agile and responsive union.
According to Yalçındağ, a transition to qualified majority voting and differentiated integration models is a natural outcome of this search, but their implementation still requires unanimity, making the reservations of some member states decisive.
“In this context, it would be beneficial to assess Türkiye not through the lens of domestic European politics, but from the perspective of Europe’s global interests in the 21st century,” he said.
He added that addressing EU-Türkiye relations through the broader framework of the future of Western democracies, economic integration, rapid transformations in the age of artificial intelligence, security cooperation and global competition would offer a more rational and forward-looking approach.
Türkiye one of EU’s largest trading partners
Yalçındağ also pointed to what he described as more balanced and realistic views within the EU regarding Türkiye’s position.
He recalled that European Parliament rapporteur on Türkiye Nacho Sanchez Amor described von der Leyen’s remarks as “a geopolitically flawed analysis,” highlighting what he called a contradiction with recent messages calling for stronger cooperation with Türkiye in security and defense.
He also referred to remarks by European Commissioner for Enlargement Marta Kos, who told the European Parliament that Europe needs Türkiye in light of shifting geopolitical dynamics.
According to Yalçındağ, Kos emphasized that Türkiye is not only a candidate country but also a strategic partner, citing its role as one of the EU’s largest trading partners, its key position on trade routes between Europe and Asia, and its importance for Black Sea security and in the context of Ukraine.
He further said discussions during this year’s Munich Security Conference underlined Türkiye’s role on NATO’s southern flank, its capacity to manage regional crises and its strategic importance for Europe’s security architecture.
“This year’s conference marked one of the clearest articulations yet of the idea that Europe cannot move forward without Türkiye,” he said.
Yalçındağ also noted that Türkiye will host COP31 in November, describing it as a major international conference on the global climate crisis.
He said there are significant opportunities for cooperation between Türkiye and the EU on alignment targets, climate policies and the development of joint solutions to global challenges.
“Rather than defining Türkiye through limiting geopolitical categories, positioning it as a strategic partner that will help shape Europe’s common future represents a more realistic and constructive approach,” he said.
He added that by refraining from labeling an EU candidate country, a NATO ally and a European nation as a “threat,” the European Commission could better advance its goal of building a stronger and more sovereign Europe in the global order.
Türkiye’s exports to African countries surged 12% on an annual basis to $11 billion (TL 515.63 billion) in January through June, reflecting Ankara’s strengthening economic cooperation and trade diplomacy with the continent, according to the data from the Türkiye Exporters Assembly (TIM).
Trade diplomacy has become one of Ankara’s key foreign trade policy tools in strengthening economic ties with Africa since the Turkish Trade Ministry launched an action plan in 2003 to boost commercial and economic relations with African nations.
The plan aims to promote mutual investment, expand the presence of Turkish firms in projects across various sectors and strengthen cooperation between Turkish and African business communities.
In the first half of the year, Morocco was the top African destination for Turkish exports with $2.2 billion, followed by Egypt with around $2 billion, Libya with $1.3 billion, Algeria with $950.9 million and Tunisia with $619.4 million.
Türkiye’s investments in Morocco are mostly focused on sectors including the automotive industry, cleaning products, textiles, mining, logistics, and iron and steel.
The free trade agreement (FTA) between the two countries plays a key role in resolving trade issues and identifying new areas of cooperation.
Some 250 Turkish firms operate in Morocco, which will co-host the 2030 World Cup with Spain and Portugal. The event is expected to offer Turkish firms new opportunities for cooperation in transportation infrastructure, construction, contracting and other areas.
Ankara has set a target of $15 billion in trade volume with Egypt, its largest trading partner in Africa and its second-largest destination for investments on the continent.
Many Turkish companies operating in textiles, chemicals, manufacturing, tourism and other sectors are active in Egypt.
Turkish contractors are expected to play a greater role in Egypt’s 14 planned new smart city projects.
Türkiye and Egypt are focusing on boosting cooperation in areas including energy, mining, shipbuilding and the development of Ro-Ro transportation.
Meanwhile, Türkiye’s exports to Libya are mainly made up of furniture, food, machinery, mechanical devices and tools, and construction materials made from iron and steel.
The two countries cooperate in infrastructure, energy and foreign trade.
Türkiye-Algeria trade relations have also steadily deepened in recent years, with economic cooperation focused on energy, industry, textiles, iron and steel, and construction, while the two countries aim to reach $10 billion in trade volume.
China’s consumer prices stabilized in June as energy and commodities prices eased, official data showed on Thursday.
The consumer price index (CPI), a key measure of inflation, rose 1.0% year-on-year in June, edging lower from 1.2% in May, data from the National Bureau of Statistics showed.
It fell slightly below a Bloomberg forecast of 1.1%.
However, last month’s CPI was still well below the government’s two percent target for the year.
“Factors such as imported international price pressures contributed to a slowdown in the rate of increase for domestic industrial consumer goods prices,” according to Dong Lijuan, chief NBS statistician.
The growth rates of prices for gold jewellery and gasoline also eased, Dong added.
The uptick in Chinese inflation caused by the Iran war “continued to unwind in June, amid lower prices for oil and many other commodities”, said Julian Evans-Pritchard, head of China economics at Capital Economics.
“The latest escalation in U.S.-Iran tensions could deliver some renewed upward pressure on inflation in the near-term,” Evans-Pritchard wrote in a note.
U.S. President Donald Trump ordered new strikes on Iran on Wednesday and warned of “much worse” if Tehran continues to attack vessels in the vital Strait of Hormuz.
He said earlier that a ceasefire with Iran was over, prompting mediators Pakistan and Qatar and the United Nations to call for de-escalation.
But Evans-Pritchard added that the impact of an escalation of U.S.-Iran tensions will “remain limited to a few narrow areas and inflation still looks set to return near zero once energy supply normalizes.”
The June producer price index (PPI), which measures wholesale inflation, increased by 4.1% on a yearly basis, up from 3.9% in May, and was in line with Bloomberg’s forecast.
The figure marked the quickest pace since July 2022, when the PPI came in at 4.2%.
The gauge had been in negative territory since that October and did not reverse until March this year.
The steady rise was partly driven by industries like coal mining and electrical machinery manufacturing “experiencing price increases,” NBS’ Dong said.
U.S. President Donald Trump issued an order for a trade embargo on Spain on Wednesday, asking Treasury Secretary Scott Bessent to “cut off all trade … including visits” with the country amid tensions over defense spending.
The Treasury, Commerce Department and U.S. Trade Representative’s office will work to present Trump with “a menu of Spanish products that may be embargoed in the coming days,” a U.S. official told Reuters. The comments suggest a trade ban could be partial.
Here is a look at Trump’s options to halt trade with Spain and the implications of such a move.
A trade embargo?
Trade lawyers say that the International Emergency Economic Powers Act (IEEPA) remains available for Trump to impose a trade embargo or economic sanctions against a country despite the U.S. Supreme Court’s ruling in February against Trump’s use of IEEPA to impose tariffs.
To invoke IEEPA, Trump must declare a national emergency over an “unusual or extraordinary threat” to U.S. national security, foreign policy, or the economy. The law has been widely used to restrict commerce with Iran, Russia and North Korea and to block dollar-based dealings by thousands of companies, individuals and other entities deemed terrorism or national security threats.
Peter Shane, a New York University law professor, said it was “hard to see” how one of 32 NATO countries missing a peacetime defense spending target by three percentage points of GDP constitutes such an emergency for the United States.
But the Supreme Court did not pass judgment on the nature of Trump’s tariff emergency, leaving his ability to declare a national emergency “undisturbed,” said Mayur Patel, a former U.S. Senate Finance Committee Republican trade counsel.
“IEEPA would allow Trump to do an embargo,” said Patel, now a trade partner with Hogan Lovells in Washington, even if it is later challenged in court.
How much affect?
Total two-way goods trade topped $47.9 billion in 2025 according to U.S. Census Bureau data. Add in services, including travel, and the total grows to $74.5 billion, according to Commerce Department Bureau of Economic Analysis data, making Spain the 23rd largest overall U.S. trading partner.
The U.S. sells more goods to Spain than it buys, exporting $26.6 billion in goods to the country in 2025 and importing $21.35 billion for a U.S. trade surplus of $5.25 billion.
Top U.S. goods import categories from Spain based on Census Bureau data are pharmaceuticals, electrical transformers and power converters, personal care products, petroleum products, glazed ceramics and olive oil. Top U.S. exports to Spain are pharmaceuticals, crude oil, civilian aircraft and corn.
An embargo also could disrupt bilateral investment. Spanish companies have invested €97.2 billion ($111 billion) in the U.S., making it their largest investment destination worldwide, according to Eurostat data cited by the American Chamber of Commerce in Spain.
The U.S. is Spain’s largest foreign investor, with over €116 billion ($132.4 billion) in productive capital investment employing around 200,000 people nationwide.
Travel to and from Spain
It’s unclear how Trump might restrict Spaniards’ travel to the U.S., where their national soccer team plays a World Cup match on Friday. But his administration last year banned citizens from more than 30 countries from entering the U.S., including tourists, students and business travelers, citing security concerns.
Trump also did not indicate whether a travel ban would apply to outbound visitors to Spain, whose spending there constitutes a services import to the U.S.
According to Spain’s national statistics agency INE, about 4.45 million Americans visited Spain for more than a day in 2025, a 4.3% increase from 2024. Americans made up about 4.6% of Spain’s total 96.8 million visitors in 2026, the sixth largest source country after Britain, France, Germany, Italy and the Netherlands.
But according to Bank of Spain data, travelers from the U.S. were Spain’s fourth-largest source of tourism revenue at €6.15 billion in 2024. The bank said Americans tend to stay longer and spend more per trip than other tourists.
What are the options?
Patel said that under IEEPA, Trump could impose a selective embargo, as he and his predecessor Joe Biden have done against Russia, allowing in some goods deemed essential. In Russia’s case these include enriched uranium, fertilizers and palladium.
Trump has previously exempted aircraft parts from his tariffs, so jet engine turbine components from Spain’s ITP Aero used by General Electric and RTX’s Pratt & Whitney could be candidates. Trump also has other tools to impose tariffs or other retaliatory trade measures, including Section 301 of the Trade Act of 1974, an unfair trade practices statute that his administration is now proposing for tariffs related to forced labor on goods from 60 trading partners including the EU.
In addition, Trump has a Cold War-era trade law, Section 232 of the Trade Expansion Act of 1962, that he has used to protect autos, steel, aluminum and other sectors deemed important to national security.
A complicating factor in any potential trade action against Spain is that the EU sets trade policy for its member countries and requires common treatment across the bloc. But the U.S. has previously threatened individual EU countries with tariffs over their digital services taxes.
The Commerce Department also could target certain Spanish imports with anti-dumping and anti-subsidy duty investigations. Trump’s first administration, at the behest of olive producers in California, imposed a 30% anti-dumping tariff on Spanish black olives under the Tariff Act of 1930, with a separate Commerce investigation ruling that they benefited from unfair subsidies.
Previous threats
The first threat of trade punishment came in October 2025, when Trump said he “may” punish Spain with tariffs for refusing at a NATO summit in The Hague four months earlier to commit to raising defense spending to 5% of national output. In March this year he went further, ordering Bessent and Trade Representative Jamieson Greer to begin investigations to embargo all products from Spain. To date, no such investigations have been disclosed on the Federal Register.
Spanish contribution
Spanish core defense expenditure is expected to reach €35.41 billion in 2026 ($40.4 billion), equivalent to 2% of its GDP, according to NATO’s latest estimates, up from €11.17 billion ($12.8 billion) when Prime Minister Pedro Sanchez took office in 2018.
The country was NATO’s seventh-largest defense spender in absolute terms in 2025, according to Spanish government officials citing NATO data. It has mobilised a total of €3.795 billion in support for Ukraine since 2022.
Türkiye’s drone powerhouse on Tuesday called for deeper industrial partnerships among NATO members to accelerate the development and production of unmanned aerial vehicles (UAVs), arguing that cooperation would be more effective than duplicating capabilities across the alliance.
Speaking on the sidelines of the NATO summit in Ankara, Baykar CEO Haluk Bayraktar said the growing demand for drones in modern warfare requires shorter development cycles, faster production and greater manufacturing capacity.
Bayraktar added that while large defense companies such as Baykar can invest ahead of demand, startups require stronger market signals and financing to build manufacturing capacity.
“In our approach in Türkiye, for large-scale companies like ours, we do not even wait for demand to emerge to build capacity,” he said. “What we see on the ground shows that there is a major need for these technologies.”
However, when it comes to new ventures and startups, Bayraktar said it’s crucial for them to build this capacity themselves to meet the demand, which amounts to billions of dollars.
Baykar is the largest exporter of UAVs, he said, noting that the company has made major investments over the past 25 years in platforms ranging from unmanned combat aircraft to strategic-class systems.
It currently exports to 40 countries, including several NATO members, but wants to deepen cooperation within the alliance, according to the chief executive.
Bayraktar highlighted Baykar’s joint venture with Italy’s Leonardo, Leonardo Baykar Aerospace Systems (LBA Systems), as a model for future cooperation.
“It is much faster to cooperate instead of trying to invent everything from scratch or compete,” he said. “We have our platforms and systems. Leonardo has very strong payloads, radars, electronic systems and different mission payloads.
“It is necessary to create synergy by bringing the best together and combining these capabilities. The main point should be to combine these strengths instead of developing everything from zero.”
Bayraktar said the partnership is designed to develop new technologies jointly rather than transfer existing intellectual property.
“Technology sharing can of course happen, but the issue is not sharing intellectual property,” he said. “Under joint ventures, the aim is to create new intellectual property on the existing intellectual property of the parties and build on current capabilities.”
He said building such capabilities from scratch in another country could take decades, while cooperation could allow allies to start developing advanced technology immediately and gain an edge.
FPV capacity
Bayraktar said NATO includes both large and small countries, adding that sharing capabilities and creating synergy would be more efficient than trying to establish the same capacity everywhere from scratch.
He also said different production and cooperation models are needed depending on the type of UAV.
“UAVs are increasingly becoming part of our lives and are now among the main elements of war environments,” he said. “There is demand, there is necessity. What we see on the ground clearly shows that these technologies are greatly needed.”
He said UAVs include combat aircraft-class systems, strategic-class platforms and smaller drones, adding that every country should build capacity in first-person view (FPV) drones.
“These are almost like ammunition; every country needs a bullet manufacturer,” he said. “But for combat aircraft-class UAVs, alliances are needed to build this capability. I believe this is much more beneficial.”
Bayraktar said Türkiye’s defense industry has expanded dramatically over the past two decades, growing from 17 companies to more than 3,000, while annual defense exports have risen from $250 million in 2002 to more than $10 billion today.
“We now make in one week the defense exports that were $250 million at that time. Our weekly defense exports have reached around $450 million,” he added.
U.S. Secretary of Defense Pete Hegseth canceled a meeting that had been scheduled for Wednesday to discuss the possible sale of F-35 fighter jets to Türkiye with Israeli Prime Minister Benjamin Netanyahu, a report said.
Hegseth, who is attending the NATO summit in Türkiye along with U.S. President Donald Trump, had also been scheduled to meet Israeli Defense Minister Israel Katz on a trip that was also expected to focus on Iran, Reuters said, citing a source.
The visit would have come a day after Trump announced he would lift U.S. sanctions imposed on Ankara over its 2019 purchase of Russian air defense missiles, and he signaled a willingness to sell the NATO ally F-35 fighter jets.
Türkiye has long criticized Israeli genocidal operations in Gaza, Lebanon and Syria, and it has repeatedly accused Israel of trying to undermine the U.S.-Iran cease-fire deal mediated by Pakistan.
Trump said on Wednesday that the memorandum of understanding signed to end the conflict that the U.S. and Israel launched against Iran was “over” and that he didn’t want to engage with Tehran.
Netanyahu had on Monday urged the U.S. not to sell the jets to Türkiye, claiming it would “upset the power balance” in the region.
Türkiye dismissed his remarks, saying “Netanyahu and his partners in crime deliberately distort any criticism directed at them and seek to divert attention through a systematic propaganda effort.”
In 2019, the U.S. removed Türkiye from the F-35 program, where Ankara was also a production partner, following its purchase of the Russian S-400 air defense system.
Washington claimed the system would endanger the jets and is incompatible with NATO systems, while Ankara repeatedly said there is no conflict between the two and proposed a commission to study the issue.
Türkiye also said it fulfilled its obligations on the F-35s and that its suspension broke the rules. Ankara maintains that the jets could strengthen not only Türkiye but also NATO.
The International Monetary Fund (IMF) on Wednesday modestly downgraded its outlook for the world economy this year, citing the energy shock caused by the Iran war. But the fallout from the conflict is being partially offset by booming investment in artificial intelligence and other technologies.
The IMF now expects the global economy to expand by a sluggish 3% in 2026, down from 3.5% last year and from the 3.1% it had forecast for this year back in April, according to its latest World Economic Outlook report.
The fund expects worldwide growth to rebound to 3.4% next year.
Iran responded to U.S. and Israeli attacks Feb. 28 by shutting down the Strait of Hormuz, through which a fifth of the world’s crude oil and natural gas passes.
Energy prices soared, squeezing businesses and consumers. The IMF now expects oil prices to be up nearly 32% this year and for global consumer prices overall to increase 4.7% in 2026. That would be up from 4.1% in 2025 and would mean that two years of progress against inflation has stalled.
The IMF forecasts assume that the Strait of Hormuz reopens later this month – even though U.S. strikes on Iran resumed and President Donald Trump declared Wednesday that a cease-fire with Iran was over. They also assume that commerce through the strait returns to normal by next March.
Energy shock
“The world economy has weathered the shock from the war better than feared,” Petya Koeva Brooks, deputy director of the IMF’s research department, told reporters Wednesday.
The economic damage from the energy shock has been limited partly because countries could draw on existing oil stockpiles and because oil-exporting countries outside the Persian Gulf stepped up production.
Countries that produce and export their own energy and that benefit from AI investment are insulated from the war’s economic damage. Among them is the United States.
The IMF expects the U.S. economy – the world’s largest – to grow a solid 2.3% this year, up from 2.1% in 2025 and unchanged from the April forecast.
President Donald Trump’s 2025 tax cuts, big gains in productivity and a strong stock market are also giving the American economy a lift.
The 21 European countries that share the euro currency, hit hard by higher energy prices, are collectively forecast to grow just 0.9% this year, down from 1.4% in 2025.
China, the world’s No. 2 economy, is expected to expand 4.6% this year, down from 5% in 2026 but a bit faster than the IMF had expected in April.
Weighed down by higher energy prices and a property market collapse, the Chinese economy is getting offsetting help from public works spending, a surge in high-tech manufacturing and booming exports.
Türkiye outlook
In Türkiye, the IMF sees the economy growing by 2.9% in 2026, down from 3.4% projected in April.
That marks the second downward revision this year after it had already cut Türkiye’s forecast from 4.2% in its January outlook.
The IMF said it now expects Türkiye’s economy to grow 3.6% in 2027, slightly higher than the 3.5% forecast published in April.
The downgrade follows an earlier reduction in April, when the IMF cited weaker-than-expected economic activity and the impact of higher energy prices.
India is once again forecast to be the world’s fastest-growing major economy, advancing at a 6.4% clip, down from a sizzling 7.7% last year, on strong consumer spending.
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