Economy
Trump’s attempt to squeeze Iran’s economy has big hurdle – China
The “economic onslaught” on Iran’s financial connections around the world that U.S. Treasury Secretary Scott Bessent declared earlier this week may have one major caveat: China.
Beijing is Iran’s biggest trading partner and its leading oil buyer.
While the U.S. is trying to isolate the Islamic Republic from its remaining economic partners, U.S. President Donald Trump also is preparing to host Chinese leader Xi Jinping next month to maintain a fragile trade truce.
Absent from Bessent’s remarks this week were specifics about how the Trump administration would target China, casting doubts on how effective the new campaign would be when the U.S. must balance putting maximum pressure on Iran and avoiding higher tensions with China that could be costly to the American economy.
“The announcement yesterday was very careful in my view to avoid specifics (against China), which could have led to a disruption in the summit,” Edgard Kagan, senior adviser and Freeman Chair in China studies at the Center for Strategic and International Studies, said Tuesday.
“For Xi, a state visit to Washington is a big deal; and for Trump, hosting it is a big deal.”
That means both Washington and Beijing will have a dance to do, said Kagan, who served as U.S. ambassador to Malaysia from December 2023 until this February.
“I think the real question is, is there room to push (the Chinese) to reduce what they’re doing with Iran, to put more pressure on the Iranian regime in a way that doesn’t lead them to say, ‘This is unreasonable, and we’re not going to comply,’” he said.
In response to “Operation Economic Outcast,” which Bessent announced Monday, Beijing said its cooperation with Iran has always been “within the framework of international law.” China receives more than 80% of Iranian oil shipments but usually through indirect channels.
Lin Jian, a spokesperson for China’s Foreign Ministry, said China-Iran cooperation “should not be disrupted or undermined.”
“China is closely monitoring relevant developments and will take all necessary measures to resolutely safeguard its own rights and interests,” Lin said. He repeated China’s opposition to “illegal unilateral sanctions.”
Kagan described Beijing’s remarks as “a holding response” and said Beijing will try to do the least to comply without openly confronting the U.S.
“They’ve tended to be careful, not crossing explicit red lines, but they haven’t addressed the spirit of what the U.S. has sought,” Kagan said, pointing to practices such as ship-to-ship oil transfers that obscure the origin of Iranian crude oil to evade American sanctions.
Sun Yun, director of the China program at the Stimson Center, a Washington think tank, said China will not go along with the new campaign if the U.S. goal is to destroy the Iranian economy and seek the government’s collapse.
But “if the goal is to exert enough pressure for Iran to make concessions on the Strait of Hormuz and potentially ending the conflict, I think China can and will demonstrate its cooperation without having to completely sever ties with Iran,” Sun said.
“China only needs to do enough to demonstrate it is cooperating, such as cut back on its oil imports from Iran.”
‘Neither side wishes major escalation’
With a planned summit between Trump and Xi weeks away, “neither side wishes to have a major escalation bilaterally at this point,” she said.
“China needs to give the U.S. something, and the U.S. needs to understand and accept that it is not going to be everything the U.S. asks for.”
So far, the Trump administration has refrained from imposing sanctions on major Chinese businesses or banks connected to the U.S. financial system and thus vulnerable to American penalties.
The Treasury Department said Monday that it was penalizing nearly 60 Iran-linked entities, accusing them of involvement in Iran’s nuclear and missile programs, cyber activities and oil shipments.
It targeted some entities and individuals based in mainland China and Hong Kong for supporting Iran’s missile and nuclear programs. It sanctioned a China-owned crude oil tanker for transporting millions of barrels of Iranian oil to China this year as well as a Hong Kong-based business for its role in the shadow fleet that ships out Iranian oil.
With Xi’s visit coming up, Trump may not act tough on China now, said Ali Wyne, senior research and advocacy adviser on U.S.-China relations at the International Crisis Group.
“Given how keen Trump has been to maintain both a trade truce between the United States and China and his personal rapport with Xi, he seems unlikely to do a volte-face just a month before Xi’s state visit and adopt a highly confrontational posture,” he said.
Plus, Xi’s visit to the U.S. could pave the way for Trump to return to China in November for the leaders summit of the Asia-Pacific Economic Cooperation (APEC) grouping.
In his second term, Trump has been less hawkish on China than in his first presidency and frequently touts his good relationship with Xi following a major trade war last year that featured back-and-forth escalating tariffs.
The U.S. business community also welcomes Xi’s visit, saying it’s a good sign if the two leaders meet in person, even when any substantial deals may be elusive.
“Beijing is betting that Washington will be reluctant to jeopardize the current leader-level dynamic by targeting major Chinese entities before the summit,” said Craig Singleton, senior director for China at the Foundation for Defense of Democracies, a hawkish Washington think tank.
British Prime Minister Andy Burnham heads into the fall season with a busy agenda and a key question of how to fund some of his ambitious policies after enjoying a couple of well-received weeks and promising to give “people some breathing space now.”
Burnham, who entered Number 10 Downing Street in July, two months earlier than he might have liked, has focused almost exclusively on domestic issues, tweaking a system he wants his premiership to deliver a “circuit breaker” to.
Now, he must go some way to honoring the bigger commitments he made on the steps of Number 10, and set out a 10-year program, expected to offer more detail to his promise to reform social care and end rough sleeping in Britain, while sticking to fiscal rules that limit his room for maneuver.
He enters September from a position of power – he is enjoying higher popularity ratings than his two closest rivals, populist Reform U.K. leader Nigel Farage and head of the opposition Conservative Party, Kemi Badenoch.
But as Britain’s seventh prime minister in a decade, he will be acutely aware that those ratings could slide quickly if his approach alienates voters.
Burnham, the 56-year-old former mayor of Greater Manchester, says he will not pull his punches with his 10-year plan.
First problem: How to fund policies?
“I will give this my all, and I ask you all to pull with me,” he said on July 20 as he took power. “Let us make this the moment when Britain starts to believe again. The moment we bring back hope.”
But he faces a similar problem to his predecessor, Keir Starmer – his Labour government has few levers to raise funds for a policy agenda, which hopes to tackle some expensive areas, such as the provision of social care to the elderly.
With a budget set for Oct. 28, Treasury chief John Healey has said he will honor the fiscal rules, which include a pledge to balance day-to-day spending with tax revenues by the end of the decade. But both have hinted at using the “flexibility” within them.
That could mean more borrowing for investment, and possible tax rises, despite the Labour manifesto promising not to increase the burden on “working people.”
Two reviews on welfare, one looking at youth unemployment and the other on disability benefits, will most probably come after the budget. Burnham has said he is against any sort of “crude cuts.”
Yet, something will have to give to fund changes to social care, which economists say could cost the government billions of pounds a year.
And while that might take some time, there are more immediate problems on the horizon.
Immediate problems
Burnham and Healey need to fill a 4.7 billion pound ($6.4 billion) gap in the Defence Investment Plan, a blueprint that several defense experts say does not go far enough in meeting Britain’s promise to bolster both NATO and Ukraine as support from the U.S. is waning.
Richard Dannatt, a parliamentary peer who was head of the British Army between 2006 and 2009, said he believed that Healey, having served as defence minister under Starmer, would find a way to raise the money he had previously resigned over.
“John Healey … having had many years immersed in defence, actually knows the detail, knows the issues, and officials can’t bamboozle him,” Dannatt told Reuters.
Burnham’s government must also decide whether to approve oil and gas drilling projects that have the backing of U.S. President Donald Trump but risk alienating some voters.
And he has to implement the politically difficult decision of allowing some serious offenders to leave jail early to reduce prison overcrowding.
He has twice changed position on who will be released, charging Justice Minister Alex Norris to find a way of blocking the release of those convicted in 2020 of killing a police officer after a public outcry.
Housing illegal immigrants
Then there’s the arrival of illegal immigrants over the summer – the numbers are down on last year, but they are still high – and where they live poses a threat to Burnham’s popularity.
He has said their accommodation should be spread more evenly across Britain and more in wealthier areas, a message that did little to stem protests outside possible new sites.
Burnham will hope he can take the public with him as he enters the more precarious part of his premiership.
“Once he’s done the big picture stuff … he will absolutely delegate to operational teams and trust that they’re able to deliver,” said Rose Marley, a mayoral adviser in Manchester and the head of Co-operatives U.K., a not-for-profit body.
“He’ll make sure that they’re facing the right direction.”
Favorable weather conditions and rainfall have boosted the yield of many fresh fruits in Türkiye, with exports from the sector topping $1 billion (TL 48.14 billion) for the first time in the January-July period, according to a report on Wednesday.
Higher yields have enabled exporters to meet foreign demand with regular and high-quality products.
The increase in production was also supported by Türkiye’s logistical advantage of being close to European markets.
Accordingly, Türkiye’s fresh fruit exports in the January-July period rose by 59% compared to the same period last year, increasing from $631.66 million to $1.005 billion, according to data compiled by Anadolu Agency (AA) from the Aegean Exporters’ Association.
Thus, for the first time, the sector surpassed the $1 billion export mark in the January-July period.
During this period, Türkiye exported 512,011 tons of fresh fruit to foreign markets, with significant increases particularly in important European markets.
Rise in exports to Spain, Poland
Among European countries, Germany was the largest importer of Turkish fresh fruit. Exports to this country increased by 80%, rising from $63.41 million to $113.92 million.
One of the strongest proportional increases in European markets was observed in Spain. Fresh fruit exports to Spain rose by a staggering 318%, from $1.73 million to $7.21 million.
Poland also became one of the fastest-growing markets. Exports to Poland increased by 295%, rising from $9.39 million to $37.06 million.
Fresh fruit exports to Italy increased by 203%, from $2.02 million to $6.13 million.
The increase continued in other European markets as well. Exports to the Netherlands increased by 53% to $12.58 million, to Latvia by 44% to $4.34 million, and to the U.K. by 19% to $20.59 million.
Cherries, peaches, nectarines stand out
Hayrettin Uçak, the chairperson of the Turkish Fruit and Vegetable Products Exporters’ Sector Board, noted that a productive season has pleased both producers and exporters.
Uçak noted significant increases in revenues from products such as cherries, nectarines, peaches, and apricots, and said that the increase in exports has brought more foreign revenues.
Emphasizing that exports are an indispensable element for the Turkish economy, Uçak suggested that agricultural products were in “truly high demand.”
“The continuous demand for our products due to their quality, flavor, and aroma drives up our exports. In the first seven months, our exports rose from $631 million to $1 billion,” he said.
“This situation pleases both our exporters and producers. This figure is the highest ever reached in the first seven-month period,” he added.
Turkish authorities have, under a new regulation, eased conditions for tradespeople and artisans to access financing, a directive published in the country’s Official Gazette showed on Thursday.
Commenting on the regulation, Treasury and Finance Mehmet Şimşek announced that under it, the government has made it easier for tradespeople who do not fully meet the loan criteria to access financing.
He noted that they continue to strengthen tradespeople’s access to financing under Treasury-backed plans.
“We cover a significant portion of the interest burden in Treasury-backed investment and operating loans,” he said.
“With the new regulation we have enacted, we are making it easier for our tradespeople who do not fully meet the loan conditions to access financing. We will always continue to stand by our tradespeople who produce, invest, and provide employment,” he added.
Accordingly, the regulation indicates that the interest rate reduction ratios applied to Treasury-backed investment and operating loans provided under certain conditions to tradespeople and artisans by state-run Halkbank have been redefined.
The relevant Presidential Decree was published in the Official Gazette and has thus entered into force.
Within the scope of the relevant law, tradespeople and artisans must, with a document obtained no more than 15 days before, have no overdue public receivables or social security premium debts to the tax offices, or, if such debts exist, they must be restructured and the restructuring should not be disrupted.
With the new decree, if this condition cannot be met, two alternatives have been offered for tradespeople and artisans to benefit from loans provided by Halkbank.
First, an amount corresponding to up to 25% of the Treasury-subsidized loan must be paid to the relevant authorities on behalf of the person. The annual amount collected in this scope cannot exceed TL 300,000.
The interest reduction provided by the Treasury on the interest portion of the debt is also set at 25%. After the debt payment is made, the loan is granted to the tradesperson or artisan. The amounts related to disbursement and the Treasury interest subsidy are recorded and monitored separately from the loan itself.
Second, for the relevant tradespeople and artisans who cannot fully meet the specified criteria, the Treasury interest reduction ratio for investment and operating loans will be applied as 40% instead of 50% for some groups, 80% instead of 100%, and 48% instead of 60% for other groups.
Additionally, under this decree, it was also decided that for certain traditional, cultural, and artistic professions that are at risk of disappearing – such as hand weaving, copper processing, tile and pottery making, mother-of-pearl inlay, wood carving, spoon-making, and quilt-making– the aforementioned conditions will not be required for loans to be extended until Dec. 31, 2027.
Previously, the deadline was set to end on Dec. 31, 2026.
Friday marks half a year since the U.S. and Israeli bombing of Iran triggered a conflict that upended the entire region, disrupted global energy supplies and sent shock waves through global financial markets.
The conflict has affected everything, from oil production and prices to equities, safe-haven assets and food prices.
Costly energy
Oil prices soared as Gulf production was disrupted and shipments through the Strait of Hormuz curtailed. Brent crude briefly topped $120 in April and still averages about $90 in 2026, up from roughly $70 last year.
The biggest impact has been on refined fuels. Diesel prices have risen more sharply amid shortages of middle distillates, Russian refinery outages caused by Ukrainian attacks and lost Gulf export flows.
Jet fuel was initially hit hard given the Gulf’s importance, though a surge in U.S. refinery output and exports helped ease supply fears.
With the Northern Hemisphere winter approaching, further disruption to Hormuz shipments coupled with risks to Russia’s energy infrastructure could push up heating-oil and inflationary pressures.
AI boom cushions stocks
Global stocks have largely shrugged off the war, buoyed by the trillions of dollars pouring into the AI sector.
MSCI’s 47-country world stocks index hit a $105 trillion record high this month, gaining almost $7 trillion, or 9%, since the war erupted – though stocks in the Gulf region have underperformed.
Fidelity analyst Pranav Aggarwal said the broader rally suggested investors were taking a “relaxed view” and still expected the war to end this year.
“Equities are actually having a pretty good year,” he said. “They’re up 14% or so (for the year). If we are expecting 8% to 9% in a standard year, 14% up till August is pretty good.”
Searching for safety
None of the assets investors usually pick in times of trouble, such as highly rated government bonds, gold and the dollar, have played the traditional safe-haven role consistently.
The dollar has risen 1.4% against a basket of major currencies since the war began, though much of that reflects the Japanese yen’s weakness, analysts said.
U.S. Treasuries – a traditional mainstay in portfolios – have lost 3.5% on a total return basis as higher inflation has dashed U.S. rate cut bets, while more recent concerns about new Federal Reserve (Fed) chief Kevin Warsh and Washington’s surprise debt buyback plans have also weighed.
Gold fell nearly 25% between the start of the war and July – though it had more than trebled in price since 2022 when Western powers froze Russia’s central bank reserves over the invasion of Ukraine.
Gold has rebounded more than 15% this month, however, amid renewed concerns about dollar debasement.
Food and fertilizers
The closure of the Strait of Hormuz has also disrupted fertilizer shipments, a key input for global food production.
Combined with a strong El Nino and fresh disruptions to grain shipments linked to the war in Ukraine, analysts say the shock increasingly threatens agricultural output.
Food prices rose in July to a more than three-year high, according to the U.N. Food and Agriculture Organization (FAO). However, experts warn that much of the impact is yet to be felt.
The FAO has warned the world could be heading towards another bout of food inflation. JPMorgan estimates that a strong El Niño alone could, at its peak, lift global food inflation by around 0.7%.
The impact is likely to be felt most acutely in Asia, Latin America and Africa, where households spend a larger share of income on food and policymakers remain wary of renewed price pressures.
Gulf region impacted
The direct hit to the Gulf has been stark. Saudi Arabia’s exports shrank by 10% between the first and second quarters.
JPMorgan estimates Dubai’s property sales have plummeted 70%-80%, and Oxford Economics warns Qatar’s economy will shrink almost 30% this year, given the damage to its Ras Laffan gas facility.
Qatar and UAE stocks have both dropped around 14% – a more than 20 percentage point underperformance versus world stocks. The cost of insuring both countries’ debt against a default has also risen, although more heavily indebted Bahrain has been hardest hit, with its credit default swap (CDS) prices up almost 40%.
Trade Minister Ömer Bolat highlighted on Wednesday the importance of forming partnerships among neighbors as he, accompanied by a business delegation, traveled to Syria, where he held talks with top officials.
Bolat arrived in Damascus with a business delegation on Wednesday for the 63rd Damascus International Fair. He also met with Nidal al-Shaar, the Syrian economy and industry minister, to discuss steps to reach a $10 billion bilateral trade volume target.
“People first do business with their neighbors, form partnerships with their neighbors, and provide companionship on the journey (to neighbors),” Bolat said in remarks during the delegations’ meeting in Damascus.
“We will inaugurate the Turkish pavilion. There is very close integration between the Syrian and Turkish economies,” he said.
“After the Dec. 8 revolution succeeded and a new Syria was established, we have been working in very close coordination with the Syrian government and ministries. Turkish and Syrian investors, industrialists, SMEs, traders and exporters have been working in very close cooperation,” he noted.
The officials evaluated cooperation to ease trade, particularly regarding transportation and customs gates, alongside the potential role of the Turkish private sector in the reconstruction of Syria, Bolat separately said on social media.
“On the occasion of the 63rd Damascus International Fair, we arrived in the ancient city of Damascus today with a strong business delegation. In the first part of our visit, we held a meeting with my esteemed friend, Syrian Minister of Economy and Industry, Mr. Nidal al-Shaar,” he wrote.
“In our meeting, we discussed the steps to elevate our bilateral trade volume to the $10 billion target set by our presidents, our cooperation aimed at facilitating trade – particularly through transportation and border gates – and the role that the Turkish private sector can play in Syria’s reconstruction process,” he added.
The ministers also reaffirmed their commitment to implementing the agreements reached during the Türkiye-Syria Joint Economic and Trade Commission (JETCO) meeting in April, according to Bolat.
The minister later also met with Ahmad Rawad Ramadan, the newly appointed head of the Syrian Investment Agency, to discuss the investment interests of Turkish firms, he said in a statement on X.
The two sides evaluated steps to create a predictable investment environment and planned organized industrial zone investments in the Syrian regions of Kamune and Saraqib.
Bolat emphasized that Ramadan’s deep understanding of the Turkish business world will accelerate investment relations between Türkiye and Syria.
Turkish businesspeople attending the meeting also shared their expectations and long-term investment plans to boost production and employment in the region.
“We will continue to further strengthen the economic and trade ties between Türkiye and Syria on the basis of mutual benefit,” the minister said.
Canadian Prime Minister Mark Carney may have more experience in banking than in politics, but he has shown a confident touch in standing up to U.S. President Donald Trump and managing a trade war that threatens his nation’s economy.
“We are masters in our own house,” the prime minister said on Saturday, just hours after breaking off trade talks with the United States and ordering his negotiators back to Ottawa.
Despite the risks this decision poses to Canada, which is heavily dependent on exports to the U.S., Carney can boast of broad support, with 76% of the public praising his stance toward Washington, according to a weekend poll.
“Mark Carney has the means to achieve his ambitions because the country is behind him,” says Genevieve Tellier, a professor of political science at the University of Ottawa.
After Washington slapped Canada with 50% duties, Canada Tuesday announced counter-tariffs of its own.
Former head of Canada’s central bank, Carney, 61, was not known for his charisma – unlike his flamboyant predecessor Justin Trudeau, from the same Liberal Party – but has nevertheless managed to kindle a patriotic flame among Canadians weary of American attacks.
It was trade tension with the United States that propelled him to power – two months after Trump began his second term – as Canadians saw him as a protector of their economy.
Replacing Trudeau as leader of his party and the government in March 2025, he won a general election a month later, to everyone’s surprise.
“He transformed into a politician quite quickly; it was a surprise,” said Tellier.
The Davos turning point
A blunt speech Carney gave at January’s World Economic Forum marked a turning point for him on the international stage.
Declaring that the world was in the midst of a “rupture in the world order,” he called on middle powers like Canada to unite.
“If we’re not at the table, we’re on the menu,” he said.
The speech sent a message that Carney was positioning himself “as an international leader with a different, credible vision,” Tellier said.
After studying at Harvard and Oxford, Mark Carney made his fortune as an investment banker at Goldman Sachs in New York, London, Tokyo and Toronto.
In 2008, at the height of the global financial crisis, he was appointed governor of the Bank of Canada by a conservative prime minister, Stephen Harper.
Five years later, he was chosen by a conservative British prime minister, David Cameron, to head the Bank of England, becoming the first foreigner to lead the institution.
In this role, he would face the economic turmoil caused by Brexit, after the U.K. decided to leave the European Union.
‘Difficult phase’
Declaring Monday that “America has changed,” the Canadian leader is moving forward with determination: seeking new trading partners, launching major projects and boosting military spending.
Carney has notably forged closer ties with the EU and is set to discuss soon the strengthening of that partnership.
In Armenia in May, he emphasized that the EU and Canada were not “doomed” to submit to a “brutal” international order.
Carney was born in Fort Smith, a remote town in Canada’s Northwest Territories, and was raised in Edmonton, Alberta, a province rich in hydrocarbons.
He wants to construct a new pipeline to the Pacific in order to export Canadian oil to Asia and thus reduce the need to sell to the American market.
But by “putting his foot down” with Trump, Frederic Boily, a political science professor at the University of Alberta, says Carney “will now enter a somewhat more difficult phase” where he will have to manage the impact on Canada’s economy and his popularity.
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