Economy
US economic worries mount amid tariffs, workforce cuts
WASHINGTON
With his flurry of tariffs , government layoffs and spending freezes , there are growing worries President Donald Trump may be doing more to harm the U.S. economy than to fix it.
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The labor market remains healthy with a 4.1 percent unemployment rate and 151,000 jobs added in February.
But employment report on March 7 also found that the number of people stuck working part-time because of economic circumstances jumped by 460,000 last month. In the leisure and hospitality sectors that reflect consumers having extra money to spend, 16,000 jobs were lost.
Since January, the economic policy uncertainty index has spiked 41 percent to a level, 334.5, that in the past signaled a recession.
“I have an increasing fear we will enter into what may become known as the ‘Trump recession,'”said Nicholas Bloom, a Stanford University economist and co-developer of the uncertainty index.
“Ongoing policy turbulence and a tariff war could tip the U.S. economy into its first recession in five years.” That last recession occurred under Trump because of the coronavirus pandemic.
For his part, Trump seems comfortable with the uncertainty that he’s generating, saying that any financial pain from import taxes is a mere “disruption” that will eventually lead to more factories relocating to the United States and stronger growth.
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If Trump’s tariffs backfire, much of the price would be paid by everyday Americans who could suffer from job losses, lower wages, higher inflation and, possibly, an injured sense of national pride.
“Markets anticipate,” said John Silvia, CEO of Dynamic Economic Strategy. “The turn down the dark alley of tariffs signals higher inflation, slower economic growth and a weaker U.S. dollar. It is an economic horror movie in slow motion.”
There were multiple signs of uncertainty and concerns about the tariffs in the Federal Reserve’s beige book.
Published last week, the beige book included 47 references to uncertainty, up from just 17 in the previous edition in January.
“Many businesses noted heightened economic uncertainty and expressed concern about tariffs,” the Fed’s New York branch reported.
“Looking ahead, businesses were notably less optimistic.”
“This is the perfect storm for businesses,” said Brian Bethune, an economist at Boston College. “How can you possibly plan anything in this environment?”
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Treasury Secretary Scott Bessent said on March 7 on CNBC that suggested a core problem is that the U.S. economy has become overly reliant on government deficits and that the Trump administration would be fostering stronger growth in the private sector.
“We’ve become addicted to this government spending, and there’s going to be a detox period,” he said.
This particular form of economic rehab is coming from Trump’s Department of Government Efficiency, which is led by Elon Musk.
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But the initiative has started to downsize the federal workforce in ways that could surface in future jobs reports.
Roughly 75,000 employees took the deferred resignation plan. There are also thousands of probationary federal workers who were fired and tens of thousands of layoffs to come based on the administration’s plans.
The Gulf and the Strait of Hormuz will not be the same after the Middle East conflict ends, Türkiye’s trade chief said on Friday, as countries accelerate efforts to diversify strategic supply chains for energy and other critical goods.
The Iran war, unleashed on Feb. 28 by Israel and the United States against Iran, has caused the biggest energy supply disruption ever after triggering a blockade in the Strait of Hormuz, bottling up a fifth of global oil and gas supply.
“Countries will always consider alternative routes for their strategic supplies, vital energy sources, and other essential procurements, and will look to take action accordingly,” Turkish Trade Minister Ömer Bolat told an event in Istanbul.
He said the “single route” approach in global trade has come to an end, adding that Türkiye’s flexible logistics capacity enables it to adapt to different scenarios and secure flows.
Bolat said the consensus among analysts is that the Strait of Hormuz closure is having more destructive consequences for the global economy than previous crises.
He noted that around 25% of global oil, 20% of natural gas, and roughly one-third of fertilizer and petrochemical trade passed through the waterway before the war.
“As attacks on shipping began and Iran started using the strait as leverage, supply disruption fears suddenly increased and prices rose sharply,” Bolat said.
He said higher prices in oil, gas and fertilizers were feeding into global inflation pressures.
Bolat said global trade growth was already slowing, with world goods trade expected to expand by only 1.9% this year from 4.6% in 2025 under baseline estimates, and potentially as low as 1.4% under a pessimistic scenario, according to the World Trade Organization.
He said Türkiye had managed to avoid supply shortages despite global volatility, citing government measures and pre-emptive procurement strategies.
“There has been no supply shortage in fuel, electricity, natural gas, fertilizers or petrochemical products,” he said, adding that price increases reflected global market conditions rather than domestic shortages.
Disruptions cut exports to Gulf
Bolat said Türkiye’s exports to Gulf countries declined in March due to disruptions, falling by 35% to $1.5 billion, but noted that demand from other markets had increased as countries sought alternative suppliers.
“When those in Europe were unable to obtain products from the Far East or the Gulf, orders from there also began to increase,” he said.
Bolat said regional transport corridors were being reshaped, pointing to alternative routes through Iraq, Saudi Arabia and Jordan, as well as ongoing efforts under the Development Road Project.
“One thing is clear: the Gulf and Hormuz will not be the same as before,” he said.
Bolat recalled that the 10-year transit visa issue, which enabled Turkish truck drivers to pass through Saudi Arabia to the Gulf countries, has been resolved.
Since mid-April, transit routes have been operational both via Jordan and Saudi Arabia, and via Türkiye, Iraq and Saudi Arabia, he added.
He said Türkiye is implementing a multidimensional trade and transportation strategy through routes and projects, including the Zangezur Corridor, connecting Azerbaijan and Nakhchivan, the Development Road, the Middle Corridor, the Baku-Tbilisi-Kars Railway, the Habur and Syria transit lines, and new logistics routes linking the Gulf and Europe.
Bolat also highlighted Türkiye’s role in European trade, noting that annual total trade with the European Union stood at $233 billion, with exports slightly exceeding imports.
The bloc receives more than 40% of Türkiye’s exports. Türkiye is one of the EU’s key partners in sectors such as automotive.
Bolat added that Türkiye was the EU’s fifth-largest trading partner and one of the top three countries in the EU’s free trade agreement network.
“Therefore, Türkiye is just as important for the EU as the EU is for Türkiye,” he said.
Commerzbank will cut up to 3,000 jobs to help it reach more ambitious profit targets as it battles to fend off a hostile takeover bid from Italy’s UniCredit, the German bank said on Friday.
For months, the Italian and German lenders have been in a standoff, pitting UniCredit CEO Andrea Orcel and his expansion plans against a German lender critical for the financing of Europe’s largest economy and its financial hub, Frankfurt.
“The Bank’s continued transformation is accompanied by a group-wide reduction of up to a further 3,000 gross positions,” Commerzbank said in a first-quarter financial report on Friday.
The German government has repeatedly spoken out in favor of Commerzbank’s independence, and Chancellor Friedrich Merz on Thursday accused UniCredit of “aggressive and hostile” moves that “destroyed trust.”
“UniCredit’s communicated plan remains vague and bears considerable execution risks, while using misleading narratives that discredit Commerzbank,” the bank said on Friday.
The staff cuts mark a third round of layoffs in recent years. Commerzbank shed 10,000 people, or a third of its German workforce, earlier this decade and announced plans to cut another 3,900 last year. Orcel has made clear that he would slash the Frankfurt-based headquarters.
Overall, Commerzbank currently employs some 40,000 people, around 25,000 of them in Germany.
Lower costs and higher profits boost a company’s share price, making any takeover more expensive.
‘Burned through any trust’
Milan-based UniCredit formally launched a 35-billion-euro ($41-billion) hostile takeover bid for Commerzbank on Tuesday, about a year and a half after it first revealed in September 2024 that it had built up a stake in the German lender.
That triggered talk that UniCredit’s Orcel was pushing for a European banking merger. UniCredit is now Commerzbank’s largest shareholder, holding almost 27% of the bank.
Last month, Orcel presented his own restructuring plan for Commerzbank, which foresaw cost efficiencies of 1.3 billion euros and staff cuts of 7,000.
Speaking on an earnings call, Commerzbank CEO Bettina Orlopp said management was at odds with the bank’s single largest owner.
“We have fundamentally different views on the business model that are hard to reconcile,” she said, accusing UniCredit of not wanting “to find common ground.”
Known for financing Germany’s prized network of small- and medium-sized industrial champions, Commerzbank is dear to many Germans, and the prospect of an Italian takeover has been far from welcome.
On Thursday, Merz said that Germany rejects hostile and aggressive takeovers in the banking sector.
“This is not how one treats institutions such as a bank in Germany, namely Commerzbank. This is how trust is destroyed, not how new trust is fostered,” he said.
Berlin also still holds a 12.1% stake in Commerzbank, the legacy of a 2008 bailout during the global financial crisis.
Commerzbank staff have also opposed the potential takeover.
Verdi union official Kevin Voss said in a statement on Friday that Orcel had “burned through any trust” and that a takeover would threaten up to 15,000 positions at Commerzbank.
Several rounds of restructuring followed in the years after UniCredit’s 2005 acquisition of German lender HypoVereinsbank, leading to the loss of thousands of jobs.
AI investment
Presenting first-quarter results and new targets, Commerzbank said it planned to invest 600 million euros into AI between 2026 and 2030, expecting annual savings of 500 million euros a year by 2030.
Asked on the call if AI could help Commerzbank to slow down its hiring in the future, Orlopp said the bank would review the situation.
“We’re very socially responsible in doing the headcount reduction,” she said. “It is, however, clear that we have such speed in AI technology and development that we will definitely review the situation year by year, quarter by quarter.”
The nation’s No. 2 bank is hoping that the targets unveiled on Friday will convince investors it can thrive as an independent company.
Commerzbank now expects its cost-income ratio – a measure of underlying profitability where lower is better – to be 46% and 41% in 2028 and 2030, down from the previously promised 48% and 43%.
First-quarter net profit came in at 913 million euros, up 9.5% on the same time last year, boosted by the bank keeping a lid on costs as well as a record quarter for commission income, based on providing services like bond issuance and stock-broking.
“High market volatility” and a buoyant stock market helped boost the segment, Commerzbank said.
The bank raised its guidance for 2026 and now expects a net result of 3.4 billion euros for the year, up from over 3.2 billion euros.
Among the upgraded goals, the bank now projects revenue of 15 billion euros in 2028, up from an earlier target of 14.2 billion euros, and a 2028 profit of 4.6 billion euros, better than its previous goal of 4.2 billion euros.
World food prices climbed in April to their highest in more than three years, with vegetable oils particularly elevated due to the Iran war and the effective closure of the Strait of Hormuz, the United Nations Food and Agriculture Organization (FAO) said on Friday.
FAO Chief Economist Maximo Torero said vegetable oil prices are being driven by elevated energy costs that are in turn raising demand for biofuels made using organic materials, such as oil-rich plants.
He added, however, that despite war-linked disruptions, agri-food systems were showing resilience, with cereal prices having increased only moderately thanks to adequate supplies from previous seasons.
The FAO Food Price Index, which measures changes in a basket of globally traded food commodities, rose for a third consecutive month in April to average 130.7 points, the U.N. agency said, up 1.6% from its revised March level and the highest since February 2023.
The index hit a peak of 160.2 in March 2022 after the start of the Ukraine war.
The FAO’s April vegetable oil price index rose 5.9% month-over-month to its highest since July 2022 as a result of increased soy, sunflower, rapeseed oil and palm oil prices, the latter, notably, underpinned by biofuels policy incentives.
By contrast, April cereal prices rose just 0.8% from March and were up 0.4% from a year ago, reflecting modestly higher prices for the likes of wheat and maize linked to weather concerns, rising fertiliser costs and increased biofuels demand.
There are expectations for reduced 2026 wheat plantings, the U.N. agency said, as farmers shift to less fertilizer-intensive crops, given prices for the inputs have surged.
Elsewhere, April meat prices rose 1.2% month-over-month to a record high amid limited slaughter-ready cattle in Brazil, the FAO said, while sugar dropped 4.7% thanks to forecasts for ample supply in Brazil, China and Thailand.
In a separate report, the FAO slightly raised its 2025 global cereal production estimate to a record 3.040 billion metric tons, 6% above levels seen in the prior year.
One of the top Turkish business associations is ramping up its public diplomacy campaign and on Friday urged German Chancellor Friedrich Merz and other European leaders to revive Türkiye’s stalled European Union membership process.
“A strong Europe is impossible without Türkiye,” the Foreign Economic Relations Board (DEIK) said in a full-page open letter this week in the German newspaper Bild.
That marks the second phase of DEIK’s broader initiative timed around Europe Day. The campaign follows similar appeals published in the Financial Times in January.
DEIK says its diplomatic and commercial initiatives aim to re-energize Türkiye’s relations with the bloc, including efforts to resolve longstanding visa issues and modernize the customs union agreement.
The board called for a “paradigm shift” after years of stalled accession talks, arguing that Türkiye’s integration into the EU’s economic security and defense architecture has become a strategic necessity amid challenges including migration, demographic change, the rapid spread of artificial intelligence and the energy transition.
The letter also described Türkiye’s full integration as essential for the EU to emerge as a global power, citing what it called Merz’s visionary approach at the Munich Security Conference.
It emphasized that the Turkish business community has long been integrated into European value chains and argued that providing a credible path toward EU membership would help restore strategic clarity and mutual trust between Brussels and Ankara.
For decades, Türkiye and the bloc have enjoyed good trade ties and cooperation on migration. However, relations have been strained over multiple issues, including the prolonged process of expansion of the scope of the customs union agreement, maritime issues with Greece and Greek Cyprus, and EU policies on Syrian refugees.
On the other hand, Russia’s invasion of Ukraine has pushed the European Union to seek deeper security ties with Türkiye, a NATO ally and long a candidate to join the 27-nation bloc.
DEIK also called on the urgent modernization of the EU-Türkiye Customs Union, saying it is critical to strengthening Europe’s competitiveness amid increasing geopolitical fragmentation.
A host of disagreements over recent years have stalled the negotiations for updating the trade agreement. The deeper 1990s-era deal would be expanded to services, farm goods and public procurement. The current deal only covers a limited range of industrial products.
First implemented in 1995, the Türkiye-EU Customs Union has helped boost economic ties. But business groups have long argued that the agreement is outdated and ill-suited for today’s trade environment.
Mehmet Ali Yalçındağ, chair of DEIK’s Türkiye-Europe Business Council, said the campaign would expand with similar open letters in major newspapers across France, Italy, Belgium and the Netherlands.
“We deem the future of Türkiye-EU relations as not just an economic partnership but a strategic necessity,” he said.
Yalçındağ added that the group would continue outreach efforts with universities, civil society organizations and think tanks to promote its vision among stakeholders.
Türkiye’s defense industry has transformed into an ecosystem that is sought after, trusted and preferred not only in its region but also globally, President Recep Tayyip Erdoğan said Friday.
Erdoğan called Türkiye “undoubtedly one of the founding actors” of the new era, where he says conventional power elements are being replaced by multilayered and integrated systems.
He was speaking at the SAHA 2026 defense trade show, which serves as a primary platform for showcasing Türkiye’s domestic defense capabilities and has, over the years, seen billions of dollars added to the country’s defense exports.
“Türkiye has proudly inscribed its name among the countries whose stars are shining brightly on a global scale in the fields of defense, aviation and space,” Erdoğan said.
In recent years, NATO member Türkiye significantly ramped up its defense industry production.
It has injected billions of dollars to transform from a nation heavily reliant on equipment from abroad to one that is a major exporter and where homegrown systems now meet almost all of its defense industry needs.
For much of the past two decades, Ankara has expressed frustration over its Western allies’ failure to provide adequate defense systems against missile threats despite Türkiye being a major NATO member.
The country currently exports more than 230 defense systems to 185 countries.
Since it started on Tuesday, the SAHA fair has seen the signing of 182 agreements with a total business volume of $8 billion (TL 362.92 billion), Erdoğan said.
“Agreements directly aimed at exports accounted for $6 billion of this figure,” he added.
Placing Türkiye among top exporters
Türkiye’s defense exports rose about 48% year-over-year in 2025 to a record of more than $10 billion.
Erdoğan said the goal is to lift this figure to $11 billion in the near term, placing Türkiye among the world’s top 10 biggest defense exporters.
The fair, organized by SAHA Istanbul, Türkiye’s and Europe’s largest defense, aviation and space industry cluster, was launched in 2018 when it hosted 180 companies from 12 countries.
The trade show has since expanded to host more than 120 countries and over 100,000 visitors.
More than 1,760 companies attended this year’s edition, including 1,500 Turkish and 263 foreign firms, Erdoğan said.
Over 200 products were showcased for the first time, he added.
“When we look at the big picture, the landscape we encounter is exactly this: the Turkish defense industry has become an ecosystem that is sought after, trusted, closely watched, and preferred not only in its region but on a global scale,” said Erdoğan.
“Behind this portrait of success lies, without a doubt, the labor of decades and the hard work of hundreds of thousands of our people who have worked with a dedicated spirit, giving their all day and night.”
Achieving this “was certainly not easy,” said Erdoğan.
“We faced countless obstacles; they tried to block our path with embargoes. We were even subjected to betrayal and conspiracies from within.”
Turkish companies have signed nearly $8 billion in export contracts during the first three days of a major defense trade show, a senior official said on Friday.
Officials had expected that volume to be reached during the whole SAHA 2026 fair, which started on Tuesday and runs through Saturday.
The expo serves as a primary platform for showcasing Türkiye’s domestic defense capabilities and has, over the years, seen billions of dollars added to the country’s defense exports.
“At SAHA 2026, as a country, we achieved a historic record,” Haluk Bayraktar, chair of the SAHA Istanbul, Europe’s largest defense, aviation, and space industry cluster, said.
“In the first three days of the fair, our companies signed nearly $8 billion in export contracts,” Bayraktar wrote on the social media platform X.
In recent years, NATO member Türkiye significantly ramped up its defense industry production.
It has injected billions of dollars to transform from a nation heavily reliant on equipment from abroad to one that is a major exporter and where homegrown systems now meet almost all of its defense industry needs.
For much of the past two decades, Ankara has expressed frustration over its Western allies’ failure to provide adequate defense systems against missile threats despite Türkiye being a major NATO member.
The country currently exports more than 230 defense systems to 185 countries.
Türkiye’s defense exports rose about 48% year-over-year in 2025 to a record of more than $10 billion. The goal is to lift the full-year figure to $11 billion, placing Türkiye among the world’s top 10 biggest defense exporters, according to officials.
Contracts signed in the first four months of this year approached $7 billion, according to authorities.
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