A new US tariff targeting Brazil took effect Wednesday, while Washington’s other trading partners brace for a fresh volley of duties as President Donald Trump’s temporary global levies expire this week.

The 25-percent Brazil tariff followed a year-long US investigation, with Washington accusing the Latin American giant of unfair trade practices.This has drawn sharp pushback, although Brazil’s Vice President Geraldo Alckmin told a press conference Tuesday that Brazil will seek to resolve the issue through negotiations instead of retaliating.Various products like beef, coffee and aircraft parts will be exempted from the levy, and roughly half of Brazil’s exports to the United States would remain excluded from the duty, estimates Valentina Sader of the Atlantic Council think tank.Nonetheless, the move comes as Trump makes a renewed push to use tariffs as leverage, sparking fears of retaliation and heightened tensions.Officials could be “using Brazil as an example to send a broader message about its priorities and negotiating approach,” Sader told AFP.

While the US Supreme Court struck down many of Trump’s tariffs in February, dealing a blow to his ability to impose new duties at will, Washington has moved to rebuild his trade agenda using other powers. The United States saying the Brazil tariffs were imposed as President Luiz Inacio Lula da Silva failed to negotiate in good faith also “reinforces the perception that the action is directed not only at Brazil’s trade practices, but also politically at Lula himself,” Sader said.

The duty is becoming a major campaign flashpoint ahead of Brazil’s October presidential elections.

The American Chamber of Commerce for Brazil recently warned that Washington’s measure affects more than $11 billion in exports.

Trump on Tuesday also announced a 100-percent tariff on generic drugs from August 2028, a day after ordering a 50-percent duty on many Canadian goods to take effect in 30 days.

A broader sweep is yet to come, with officials in June proposing tariffs of between 10 percent and 12.5 percent targeting 60 trading partners over alleged failures to act against forced labor.

Analysts widely expect the duties over forced labor to replace the temporary 10-percent global tariff -- expiring Friday -- that Trump imposed after his Supreme Court setback. “We expect to see some action soon,” US Trade Representative Jamieson Greer told CNBC.

Greer added Tuesday that new action over labor concerns will cover a majority of US trade, though it could reignite trade tensions.

The lower 10-percent tariff rate would hit US imports from partners including Canada, the European Union, Mexico, Taiwan and the United Kingdom. They were found to have taken some steps against forced labor.

Goods from over 40 other economies like China, India and Japan face a 12.5 percent levy.

The EU has said that it considers tariffs imposed on these grounds “unjustified.”

A separate tranche of US investigations targeting 16 economies over excess industrial capacity is ongoing, and could lead to further duties.

Washington’s planned 50-percent tariff on Canadian goods comes amid ongoing talks over a North American free trade pact.

Washington recently declined to extend the accord as-is, and Greer is set to travel to Mexico from Wednesday to Friday for discussions linked to a joint review of the US-Mexico-Canada Agreement (USMCA).

US negotiations with Canada have proceeded more slowly.
Google News LinkFor all latest news, follow The Daily Star's Google News channel.

Some lawyers see Trump’s use of an untested legal provision -- Section 338 of the Tariff Act of 1930 -- as a means to gain leverage over Canada in USMCA negotiations.

Canadian Prime Minister Mark Carney said Tuesday that he was looking at “all options,” adding that he and Trump had agreed to “intensify discussions” in upcoming weeks.

Trade lawyer Dave Townsend of Dorsey & Whitney said higher tariffs could be “aimed at encouraging an agreement between Canada and the United States, or in retaliation for the failure to reach such agreement, or both.”

The question, he added, is whether both sides will start a “cycle of escalation and retaliation.”

Oil prices rose to a near six-week high on Wednesday, with Brent crude surpassing $95 a barrel, on mounting concerns about disruptions to Middle Eastern supply routes because of escalating hostilities between the US and Iran and threats to shipping by the Iran-backed Houthi militia in Yemen.

Brent crude futures were up $3.82, or 4.2 percent, at $94.83 a barrel at 0938 GMT after hitting a session high of $95.24.

US West Texas Intermediate crude climbed $3.65, or 4.33 percent, to $87.99. Both benchmarks touched their highest levels since June 11.

The US military said it carried out an 11th consecutive night of attacks on Iran. The US attacks came a short while after the Kuwaiti army said its air defences were intercepting Iranian drones.

As well as the renewed conflict over control of the Strait of Hormuz, the Iran-aligned Houthis have opened a new front in the war by threatening to target vessels carrying Saudi oil in the Bab el-Mandeb strait and announced a naval blockade of Saudi Arabia.

“The energy market now has the dual-strait worry, with the Bab el-Mandeb Strait looking like it could join the Strait of Hormuz as a hot spot, as traders closely watch shipping numbers in the Red Sea,” said Tim Waterer, chief market analyst at KCM Trade.

Bab el-Mandeb at the southern entrance to the Red Sea has become an increasingly important route for Saudi Arabian crude exports as traffic through the Strait of Hormuz has fallen sharply again since a ceasefire between the United States and Iran collapsed earlier this month.

Three oil tankers loaded with Saudi crude for China and India made U-turns in the Red Sea on Tuesday, heading towards the Suez Canal rather than braving the Yemeni coast.

“The (Houthi) threat has led tankers to divert which could further pressure the physical market and Saudi exports, contributing to push prices to the upside,” said Frank Walbaum, market analyst at trading platform Naga.com.

In response to the Houthi warnings, Asian refiners are seeking to ship crude oil from Saudi Arabia’s Red Sea port of Yanbu through the Suez Canal and around Africa.

While global oil stockpiles have drawn amid the conflict, the latest US data is showing some building of inventories.

Data from the American Petroleum Institute showed that US crude and distillate inventories rose last week, while gasoline stockpiles fell, market sources said.

The inventory data comes ahead of official figures from the US Energy Information Administration on Wednesday.

Pakistan has asked the United States for a $10 billion exchange stabilisation facility, according to a source briefed on the matter, which, if approved, could provide a lifeline for the cash-strapped South ​Asian economy.

The request, which is being reported for the first time, follows Pakistan's role in brokering talks over the Iran war, which raised its diplomatic profile and ‌stirred hopes that it could seek economic gains from Washington and other partners.

In the request to US Treasury Secretary Scott Bessent, Islamabad is seeking a Bilateral Exchange Stabilization Support Facility between the US and the Pakistani government worth $10 billion with maturity of up to five years.

The facility, if agreed to, would bolster Pakistan's reserves, ease pressure on the rupee and reduce its reliance on multilateral financing, even as Islamabad undertakes tighter fiscal and monetary policies ​in line with its International Monetary Fund program.

The US Treasury declined to comment on the reported request.

Pakistan's finance ministry did not immediately respond to Reuters' request for comment outside ​of Asia business hours

Pakistani Finance Minister Muhammad Aurangzeb met with Bessent in Washington on Tuesday and said he had raised the vulnerability of the ⁠country's economy to regional geopolitical developments, the ministry said in a statement that did not mention the request.

"Senator Aurangzeb sought greater U.S. support for Pakistan’s road to market, underpinned by improved access ​to international capital markets, higher foreign exchange reserves, and enhanced sovereign credit ratings," it said, adding that both sides reaffirmed their commitment to deepening bilateral economic cooperation, promoting greater US investment, and advancing ​strategic projects.

Pakistan remains under $7 billion IMF discipline that has required politically unpopular tax increases, spending restraint and reforms.

Exchange stabilisation facilities are rare US Treasury backstops, usually routed via the Exchange Stabilization Fund, that provide dollars, swaps or guarantees to support reserves and steady currencies.

These facilities are different from the permanent standing dollar swap lines that the US Federal Reserve has with some major central banks and act as an international supply line of US ​dollars to underpin financial stability.

A 2025 Argentina package was the first new foreign-government exchange stabilisation facility operation since Uruguay in 2002, aside from Mexico's long-standing swap line, dating to the 1940s and ​now sized at $9 billion.

Pakistan narrowly avoided default in 2023 with a $3 billion IMF standby deal and later secured a $7 billion Extended Fund Facility, along with a separate $1.3 billion loan to build up its resilience to ‌climate change and ⁠natural disasters. But its reserves still depend on official financing, rollovers and deposits from China and Saudi Arabia.

That leaves Islamabad exposed to shifts in bilateral support and IMF disbursement delays. That vulnerability was exposed in April when Pakistan repaid about $3.5 billion, one-fifth of its reserves, to the United Arab Emirates with Saudi Arabia providing $3 billion in fresh support.

Pakistan’s central bank said in January that reserves could return to near their 2021 record, reaching $20 billion by the end of 2026.

RECASTING TIES WITH WASHINGTON

A US exchange stabilisation facility would carry weight as both a liquidity backstop and political signal, easing pressure ​on reserves and the Pakistani rupee, while reducing ​the South Asian country's dependence on IMF ⁠tranches and ad hoc rescues.

IMF-backed reforms have stabilised the economy at a political cost, including higher taxes, spending restraint and limited room for development or welfare spending.

Ratings agency Fitch said in April that Pakistan's adherence to its IMF program has supported the country's funding capacity, while rebuilt foreign exchange ​buffers provide a cushion against economic shocks from the Middle East conflict.

But deeper constraints remain. Fitch cautioned that rising energy costs and potential ​supply disruptions could sharply ⁠erode the country's foreign exchange reserves.

Foreign investment in Pakistan has remained thin, deterred by recurring external crises, policy uncertainty, security risks, past profit-repatriation curbs and a narrow export base, while the country's credit rating remains deep in speculative-grade territory, keeping borrowing costs high and market access limited.

Pakistan has sought to use its ties to the Trump administration to address some of these issues, with economic cooperation that has so ⁠far spanned crypto, real estate and mining.

Pakistan has signed a stablecoin agreement for cross-border payments with an affiliate of World Liberty Financial, ​the main crypto business of President Donald Trump's family. It has also pursued a memorandum of understanding to redevelop the closed Pakistan International Airlines-owned Roosevelt Hotel in New York with the US government, and courted US mining investment, including in ​Reko Diq, where the US Export-Import Bank has announced $1.25 billion in financing.
(1 Pakistani rupee = $0.0036)

The upbeat remarks came after official General Administration of Customs figures showed a sharp turnaround in bilateral trade in goods. After slumping 18.7 percent year-on-year in the first quarter, China-US goods trade rebounded to post a 13.7 percent year-on-year gain in the second quarter.

This trade recovery aligns with fresh bilateral moves to stabilize economic relations. The Ministry of Commerce confirmed that during the latest round of China-US economic and trade consultations held in May, the two sides reached an agreement to negotiate a reciprocal tariff cut framework via a newly established trade council. The deal would cover goods valued at $30 billion or more from each country.

Although neither side has released a final product list, trade analysts expect the tariff cuts to cover textiles, footwear, consumer goods, electronic components, industrial machinery parts, chemicals, plastics and agricultural products, while excluding sectors such as advanced semiconductors and strategic resources.

Diao Daming, a professor of international relations at the Beijing-based Renmin University of China, said recent progress in the China-US economic and trade talks has helped bolster business confidence across the world and is creating conditions for more predictable trade and investment.

Yu Xinding, a professor of international trade at the University of International Business and Economics in Beijing, said that once implemented, the new tariff framework will support further growth in China-US trade while setting a positive example for resolving trade disputes through dialogue.

“Faced with multifaceted costs triggered by tariffs, this move offers a practical solution to help reverse trade distortions created by previous tariffs,” said Yu. “The initiative goes far beyond lowering tariffs on selected goods. Equal consultations will improve market access, ease corporate burdens and restore bilateral trade to market-oriented, mutually beneficial dynamics.”

Though modest relative to overall China-US trade, the planned tariff relief targets products with clear market demand and practical benefits, delivering early, verifiable results that can strengthen confidence in two-way economic ties, she added.

While the recent rebound in bilateral trade points to improving momentum, analysts cautioned that the relationship remains subject to structural challenges and external uncertainties, despite the progress made through dialogue.

Ma Xue, a researcher at the Institute of American Studies at the China Institutes of Contemporary International Relations, said that strategic competition between China and the US in high-tech sectors will continue to intensify, while tighter controls on semiconductors, artificial intelligence and critical minerals, alongside geopolitical tensions, could weigh on the bilateral trade climate.

“Overall, institutionalized consultations and differentiated management of disputes could help offset short-term political disruptions,” Ma said. “Although disagreements and periodic bargaining will persist, structured cooperation, accompanied by occasional friction in specific sectors, is likely to become the new normal in bilateral economic ties.”

Data from the General Administration of Customs also showed that China-US goods trade reached 2 trillion yuan ($295 billion) in the first half of the year, accounting for 7.9 percent of China’s total foreign trade.

James Zimmerman, chairman of the American Chamber of Commerce in China, said he hopes this year will be a productive one for China-US relations, noting that current China-US trade policy is increasingly characterized by a “managed trade” approach centered on reciprocity.

Saying that engagement is in the best interest of the US, Zimmerman reiterated that China brings real value to US consumers and benefits Washington’s long-term economic interests.

Similar views were expressed by Jim Sutter, CEO of the US Soybean Export Council. “The recent announcement on tariff reductions is a positive signal. We hope the commitments made during the talks will soon be translated into concrete policy measures,” he said.

Such optimism also resonates with US industrial companies stepping up long-term investment and innovation in China. Lin Chunmei, president and general manager of Corning China, said that as AI reshapes the global industrial landscape and drives demand for advanced materials and computing infrastructure, the US industrial materials manufacturer has evolved from technology introduction to collaborative innovation in China.

Corning will deepen local innovation, support next-generation computing infrastructure and contribute to the upgrading of China’s industrial ecosystem, she said.

The company’s confidence also comes as China continues to strengthen its position in advanced manufacturing and high-tech exports. In the first half of 2026, the country’s exports of integrated circuits surged 88.7 percent year-on-year, while exports of electronic components rose 62.6 percent, statistics from the Ministry of Industry and Information Technology showed on Monday.

US President Donald Trump unveiled 50 per cent tariffs on a wide range of imports from Canada on Monday in response to ​what the US administration called its discriminatory treatment of American-made cars, alcohol and dairy goods, threatening a new front in a global trade war.
Advertisement

In slapping import taxes on goods ranging from ‌wine to cement and ice hockey gear, Trump invoked Section 338 of the Tariff Act of 1930, which permits a president to impose punitive tariffs of up to 50 per cent against trading partners deemed to have discriminated against US goods. That marked the law's first known usage in nearly a century of existence.

The new tariffs, set to take effect in 30 days, would also apply to dairy products, swimming pools, furniture, fishing rods, seeds, clothing and wigs, among other items.

The US Trade Representative's office said that the tariffs would ​apply to nearly $20 billion of imports from Canada. That's about 5.2 per cent of the $382 billion worth of goods that the US imported from Canada in 2025, according to US Census Bureau data.

"While the Administration continues ​to secure fair and reciprocal trade deals with our trading partners, Canada, unlike other partners and allies, continues to retaliate against the United States for its efforts to ⁠rebalance trade and protect U.S. industry in national-security sensitive sectors," US Trade Representative Jamieson Greer said in a statement.

Canadian Prime Minister Mark Carney said in a statement that his government has made comprehensive proposals to resolve trade ​disputes with Washington, asserting that Trump's past tariffs violated the North American trade pact.

"This trade dispute has raised costs for families, particularly in the U.S.," he said. "Canada stands ready to engage intensively to address outstanding issues with the U.S. ​to the mutual benefit of our citizens."

The Trump administration has long complained that Canada and China implemented retaliatory measures in response to the barrage of tariffs Trump has tried to impose since returning to the White House last year.

Greer has pointedly left Canada out of negotiations under way with Mexico on changes the US wants in the US-Mexico-Canada Agreement on trade. He holds bilateral talks on USMCA in Mexico City this week.

When Trump and Carney met at the FIFA World Cup Final in New Jersey on Sunday, ​Trump demanded that Carney take action to contain wildfires that have sent smoke billowing across swaths of the US. The US president last week threatened to add the "incalculable cost" of dealing with the pollution to existing tariffs on ​Canadian goods.

FIRST USAGE

The Tariff Act of 1930 and its Section 338 are better known for massive US tariff increases and subsequent retaliation that economic historians say worsened the Great Depression of the 1930s.

Section 338 was intended to ensure countries apply tariffs ‌equally and don't ⁠give preferential rates to some countries at the expense of US exports, said John Veroneau, a US trade official in President George W. Bush's administration who has extensively researched the statute.

He said that some presidents, including Franklin D. Roosevelt, considered imposing tariffs under Section 338, but no record could be found of any president taking such action until Trump's proclamations on Monday.

"It is ironic, to say the least, to use this authority to impose tariffs to retaliate against tariffs that were imposed in response to actions taken by the U.S.," said Veroneau, senior counsel with the Covington and Burling law firm.

"These tariffs may be lawful under Section 338, but they at a minimum violate the spirit ​of Section 338, which was to create a world ​where countries apply the same tariffs on the ⁠same goods to all countries," he said, adding Trump has moved away from this principle "in a maximalist way."

After World War Two, major countries created the "most-favored-nation" tariff system through the General Agreement on Tariffs and Trade to try to prevent a return to the pre-war "beggar-thy-neighbor" economic policies marked by competitive trade restrictions and currency devaluations.

Trump's new levies are ​set to take effect on August 19 and apply regardless of whether goods qualify for tariff exemptions under USMCA, although Trump exempted a range of key goods ​including energy, potash, fish, critical ⁠minerals and products already covered by Section 232 tariffs.

Among grounds for the tariffs, the White House cited Canada's "protectionist" dairy supply management system as well as tariffs and quotas on cars imported to Canada from the U.S. but not from other countries. Carney said that Canada "as is its right, merely matched" US tariffs on the auto sector that were in violation of the USMCA.

Washington also highlighted that most Canadian provinces have halted the sale of US alcohol, which they did in response ⁠to prior US ​tariffs.

The White House said Canadian imports of US motor vehicles dropped by 22 per cent and of US alcoholic beverages by 81 per cent over the ​past year.

Diamond Isinger, a former senior adviser to ex-Prime Minister Justin Trudeau on US-Canada relations, said Carney would have limited ability to compel provinces to start selling American alcohol again.

“Unless there are some sort of extraordinary measures invoked here, the premiers of those provinces are the ones ​who decide whether to restock alcohol,” Isinger said.

The United States is set to impose new tariffs that could hit dozens of countries soon, trade envoy Jamieson Greer signaled Tuesday, with President Donald Trump's temporary global levies due to expire this week.

The Trump administration has prepared fresh tariffs targeting 60 trading partners over their alleged failures to act against forced labor, as officials push to rebuild the US leader's trade agenda after legal setbacks.

"We expect to see some action soon," Greer told CNBC when asked if new duties were incoming. He did not specify a timeline.

Trump imposed a 10-percent global duty this year after a swath of his tariffs were struck down by the Supreme Court in February, but this levy expires on Friday.

US proposes new tariffs on Bangladesh, 59 others over forced labour concerns

Analysts expect that new tariffs over forced labor concerns -- set between 10 percent and 12.5 percent -- would replace these temporary duties.

They come as Trump makes a renewed push to use tariffs as leverage against US trading partners, sparking fears of retaliation and diplomatic tensions.

Washington announced a fresh 25-percent duty on certain Brazilian goods last week, and on Monday unveiled a 50-percent levy on many Canadian products to take effect in 30 days.

Canadian Prime Minister Mark Carney said Tuesday that he was looking at "all options," adding that he and Trump had agreed to "intensify discussions" in the coming weeks on a possible deal.

On Tuesday, Trump announced a new 100 percent sector-specific tariff on imported generic drugs to take effect from August 2028, with that level rising to 200 percent in 2029.

For now, the US leader said the tariff on generic drugs would be cut to zero from August 2026, in an effort to build a window for the onshoring of such pharmaceutical production to the United States.

Forced labor concerns

Greer said Tuesday that new action on forced labor will cover the majority of US trade, with the moves likely to reignite trade tensions.

A 10-percent tariff rate would hit US imports from partners including Canada, the European Union, Mexico, Taiwan and the United Kingdom. They were found to have taken steps against forced labor.

Goods from over 40 other major economies like China, India and Japan face a 12.5 percent levy.

The EU previously said that it considers tariffs imposed on these grounds "unjustified."

Canada pressure

Washington's planned 50-percent tariff on Canada also comes as US-Mexico talks over a North American free trade pact intensify.

Washington recently declined to extend the accord in its current form.

Greer is set to travel to Mexico from Wednesday to Friday for discussions linked to a joint review of the US-Mexico-Canada Agreement (USMCA).

But negotiations with Canada have proceeded at a slower pace. Carney on Tuesday did not suggest that he would head to Washington for talks.

Some lawyers see Trump's use of an untested legal provision -- Section 338 of the Tariff Act of 1930 -- as a means to gain leverage over Canada in USMCA negotiations.

Trade lawyer Dave Townsend of Dorsey & Whitney added that higher tariffs "appear to be aimed at encouraging an agreement between Canada and the United States, or in retaliation for the failure to reach such agreement, or both."

The question, he said, is whether both sides will start a "cycle of escalation and retaliation."

Crucially, Trump's latest salvo will not exempt affected Canadian products entering his country under the USMCA.

Trump told reporters Tuesday that the Canada tariffs were unrelated to his earlier threats over wildfire smoke that descended into the United States.

Brazil tensions

US plans for a 25-percent tariff on Brazilian goods over accusations of unfair trade practices have separately drawn a sharp rebuke from the Latin American giant.

The levy is due to take effect Wednesday, while shaping up as a major campaign flashpoint just months before Brazil's presidential election.

A range of products like beef, coffee and certain aircraft parts will be exempted, as will some goods that the United States does not produce.

Still, the American Chamber of Commerce for Brazil recently warned that Washington's measure places Brazil among countries "facing the most restrictive conditions for access to the US market," affecting more than $11 billion in exports.

The EU on Monday slapped a 550-million-euro ($630 million) fine on online retailer AliExpress for allowing the sale of illegal products, including unsafe toys and cosmetics.

The European Union said AliExpress also did not do enough to stop the sale of counterfeit products and that when the platform detected illegal goods were on sale, many remained online for several weeks.

The EU found some of the products sold on the platform did not meet the bloc’s strict environmental and safety standards during its investigation into AliExpress launched in March 2024.

“Risks must be identified and addressed systematically to ensure consumers can safely shop online. Today, we are holding AliExpress to this standard and request it to take action,” EU tech chief Henna Virkkunen said in a statement.

EU said AliExpress failed to adequately stop counterfeit sales and many detected illegal products remained online for several weeks after being identified there
It is the largest fine ever imposed under the EU’s powerful Digital Services Act (DSA), part of the bloc’s legal armoury to police big tech that entered into force in 2022.

Elon Musk’s X social media platform received a 120-million-euro fine in December last year, while the EU slapped e-commerce giant Temu with a 200-million-euro fine in May.

AliExpress criticised the “disproportionate” fine, saying in an updated statement that the EU’s decision “ignores our sound risk management framework and the significant, proactive enhancements we have made”.

The company added it would appeal the fine.

The EU said the amount took into consideration the nature of the violations, the impact on Europeans and the duration of the infringements.

AliExpress is the biggest Chinese e-commerce platform in the EU with 193 million users, while Asian fashion giant Shein and retailer Temu respectively have 156 million and 130 million users.

The EU is AliExpress’ biggest market, a senior European official said.

Under the DSA, the world’s most popular digital platforms including social media networks and online retailers must evaluate what risks they pose and take measures to tackle the dangers.

The EU said AliExpress’ “overestimated the effectiveness of its system in detecting and removing illegal products”.

Millions of products would also reappear, the EU official said. And many illegal products would be recommended to users before they were removed.

Those selling illegal goods were still able to remain active on AliExpress.

The platform also did not “adequately” stop the sale of counterfeit products because its mandatory “brand authorisation” system “proved ineffective and understaffed. Therefore, traders easily bypassed this”, the EU found.

The DSA is part of a strengthened legal weaponry to rein in what the EU views as Big Tech’s excesses, and fines can go as high as six percent of a company’s total worldwide annual turnover.

The EU official said the global turnover of Alibaba, AliExpress’ parent company, was 122 billion euros last year, but the fine was well below six percent of that.

AliExpress has to now pay the fine and present a plan to the EU by October 20 that includes what action it will take to tackle the breaches.

If it does not comply, AliExpress risks periodic penalty payments.

Virkkunen told reporters AliExpress was “cooperating very actively” with the European Commission, the EU’s digital watchdog.

The EU has stepped up its efforts in recent years to combat what it says is unfair competition from Chinese retailers, including slapping a levy of three euros this month on cheap parcels entering the 27-nation bloc.

But Virkkunen insisted the EU did not target platforms based on their origin.

“We are investigating several online platforms. So a big part of them are from the USA, many of them are from China and also from Europe,” she said.

Brent crude hit its highest price since June on Monday due to renewed fighting between the United States and Iran, while Asian equities were mixed as investors weighed the fallout of a prolonged Middle East war.

Crude has surged over the past week as Washington and Tehran traded fire, raising fears of a sustained disruption in the Strait of Hormuz, which normally carries around a fifth of the world’s seaborne oil.

Both Brent crude and US benchmark West Texas Intermediate extended their gains after climbing more than four percent at the end of last week. Brent rose above $91 a barrel, its highest price since June 11.

The latest moves came after another weekend of escalating fighting, with the United States carrying out fresh strikes on Iranian targets and Tehran responding with attacks on regional military assets in the Gulf.

Higher crude prices have revived concerns that inflation could remain elevated and complicate the path to lower interest rates, but some analysts argue the broader economic backdrop is becoming more supportive.

“Markets are once again being forced to trade two seemingly contradictory stories on the same screen,” said Stephen Innes of SPI Asset Management.

While the renewed rise in oil prices has injected a fresh geopolitical risk premium into markets, he said cooling underlying US inflation and a softer labour market suggested the energy shock would not necessarily trigger a new cycle of broad-based inflation.

Instead, the biggest risk would come if elevated oil prices persist long enough to erode household spending and weigh on economic growth.

In Asia, the market was mixed.

Chinese markets outperformed as investors extended a recent rally on expectations Beijing will unveil further measures to support the economy after last week’s economic data.

Hong Kong added more than two percent, while Shanghai ended the day’s trade in the green. Manila and Jakarta edged higher.

Caution prevailed elsewhere.

Seoul closed 4.46 percent down. Taipei was down, as was Sydney, Mumbai, Bangkok, Singapore and Kuala Lumpur.

London, Paris and Frankfurt also opened in the red.

The mellow performance followed another weak session on Wall Street, where all three major indexes finished lower on Friday as investors continued to rotate out of technology shares while keeping a close watch on developments in the Gulf.

Adding to worries about tech, Chinese startup Moonshot AI released on Friday a model that experts said could rival some of the more advanced offerings from US labs.

“Having had the weekend to digest the launch of Moonshot’s Kimi K3 model and its potential implications for the pricing power of the major US AI labs... markets appear to be taking a more measured view,” said Chris Weston, head of research at Pepperstone.

Gold eased despite the geopolitical uncertainty, falling 0.25 percent, while silver advanced a little over one percent.

The global oil refining industry is flashing warning signs. The supply chain for the products that fuel the global economy is under growing stress as conflicts in the Middle East and Russia ripple through energy markets.

Benchmark crude prices have retreated sharply from the highs of $118 a barrel reached during the height of the Iran war and are now hovering around $85, suggesting many investors believe the threat of an energy crisis has faded.

While crude supplies have partially recovered, the system that converts crude into fuels is still struggling after months of disruption from conflicts in Russia and the Middle East.

Gasoline and diesel inventories sit near multi-year lows, refining margins have surged to record levels, and refinery throughput remains severely curtailed across key producing regions. Households and industry consume refined products, not crude, so this is the stress they should be monitoring.

WARTIME CASUALTIES

Refineries have proven to be tempting targets. In the Middle East, major refineries in Saudi Arabia, Bahrain, Kuwait and the United Arab Emirates remain either partially or entirely offline after the outbreak of the Iran conflict on February 28 triggered the closure of the Strait of Hormuz.

China, meanwhile, has sharply reduced refinery runs to compensate for the massive decline in imports during the Iran conflict. Across Asia, refiners have also been forced to reduce operations because of constrained crude supplies.

And Russia’s refining sector has been battered by sustained Ukrainian drone attacks, triggering domestic fuel shortages that have forced Moscow to curb diesel exports in a bid to contain soaring local prices.

Taken together, those disruptions removed roughly 5 million barrels per day of global refining output in the second quarter compared with a year earlier, with refinery runs averaging around 78 million bpd, according to the International Energy Agency.

The temporary reopening of Hormuz following the US-Iran ceasefire on June 17 briefly eased some of the pressure. But even though Gulf producers rushed crude exports through the waterway, refined product flows remained far weaker.

According to Kpler data, the region exported around 4 million bpd of crude in June, but only 1 million bpd of oil products, totalling a quarter of pre-war levels.

Now, the renewed disruption to traffic through Hormuz — due to escalating hostilities between the US and Iran — has once again choked off regional exports, threatening hopes for a recovery in Asian or Middle Eastern refinery activity.

Buffers and time are both running short.

US RUNNING OUT OF STEAM

The US emerged as the world’s refinery of last resort in the first half of this year, ramping up exports of crude, gasoline, diesel and aviation fuel to compensate for disruptions elsewhere. But it is now running out of steam.

US crude inventories, including commercial stocks and those in the government’s emergency reserve, have fallen since the start of the Iran war to their lowest level since 1984.

Gasoline stocks are at their thinnest seasonal level since 2012, while diesel inventories only recently recovered from their lowest levels in more than two decades.

At the same time, total US crude and product exports have started to retreat as refiners meet rising domestic demand.

Weekly exports fell to 10.7 million bpd last week, the weakest since March, after reaching a record 14.2 million bpd in April.

With domestic stockpiles under pressure and summer fuel demand at its seasonal peak, Washington’s ability to keep supplying the rest of the world looks increasingly constrained.

CRACKING CRACKS

Perhaps the clearest signal of distress comes from refining profits. The benchmark US 3-2-1 refining margin, or crack spread, recently surged to nearly $70 a barrel, an all-time high. In Northwest Europe, refining margins climbed to seasonal records near $30 a barrel. Diesel markets appear particularly tight.

European diesel margins have jumped to a record of around $65 a barrel, while US gasoline margins are hovering near the record levels reached during the energy shock of 2022 after Russia’s full-scale invasion of Ukraine. Markets do not pay refiners such extraordinary premiums unless consumers are competing for scarce fuel supplies.

TRUMP CARD MIGHT NOT WORK

As the Iran crisis enters its fifth month, traders have become increasingly convinced that US President Donald Trump will do almost anything to avoid a politically damaging spike in US fuel prices.

But the bright flashing warning signs coming out of the refining system suggest the US president may struggle to prevent one. A rapid recovery in global refinery output remains unlikely.

Several major refining hubs remain impaired, due to conflict, supply disruptions or export restrictions, just as summer demand for road fuels and jet fuel is reaching its peak. Diesel stocks typically build during summer ahead of winter.

Refining output in Russia will likely take months, if not years, to recover, assuming no further Ukrainian strikes — an assumption few are willing to make.

Middle East refineries will also require months to ramp up operations once flows through Hormuz are normalised — whenever that is. As inventories run dry, the only remaining market lever would be demand destruction, which could curtail economic activity around the world.

Energy markets have handled the chaotic first half of 2026 remarkably well, but with global fuel stocks now running worryingly thin, the global economy finds itself dangerously exposed.

Gold prices were little changed on Monday as investors assessed an escalation in the Middle East war that pushed oil prices higher.

Another US Federal Reserve policymaker signalled that interest rate hikes may be needed to curb inflation.Spot gold was steady at $4,018.19 per ounce, as of 0756 GMT. US gold futures for August delivery gained 0.1 percent to $4,023.Oil prices jumped more than 3 percent after US forces struck Iran for a ninth consecutive day on Monday.

This came as the number of confirmed American military deaths in the renewed fighting rose to three.Concals also grew over shipping through the Strait of Hormuz. The war is still ongoing, with a focus on rising oil prices that could lead to higher inflation, which is keeping gold pressured, said GoldSilver Central Managing Director Brian Lan.

However, $4,000 has been an important level, and shows that there is support for the metal when it falls below that mark.

Elevated oil prices stoke inflation fears and bets of higher-for-longer interest rates.

While gold is typically seen as an inflation hedge, high interest rates increase the opportunity cost of holding the non-yielding asset.

Cleveland Fed President Beth Hammack added her voice to a growing chorus of policymakers arguing interest rates may need to rise.

This is to beat back persistent inflation, setting up a charged debate at the Fed’s next meeting on July 29.

Traders are now pricing an 82 percent chance of a December interest-rate hike, versus 73 percent last week, according to the CME FedWatch tool.

In the longer term, I’m more cautious on gold and looking at the key $3,886 level, said Kelvin Wong, a senior market analyst at OANDA.

If that level is taken out on the downside, it could potentially unleash further weakness towards $3,500, Wong added.

President Donald Trump unveiled 50% tariffs on a wide range of imports from Canada on Monday in response to what the US administration called its discriminatory treatment of American-made cars, alcohol and dairy goods, threatening a new front in a global trade war.

In slapping import taxes on goods ranging from wine to cement and ice hockey gear, Trump invoked Section 338 of the Tariff Act of 1930, which permits a president to impose punitive tariffs of up to 50% against trading partners deemed to have discriminated against US goods. That marked the law's first known usage in nearly a century of existence.

The new tariffs, set to take effect in 30 days, would also apply to dairy products, swimming pools, furniture, fishing rods, seeds, clothing and wigs, among other items.

"While the Administration continues to secure fair and reciprocal trade deals with our trading partners, Canada, unlike other partners and allies, continues to retaliate against the United States for its efforts to rebalance trade and protect US industry in national-security sensitive sectors," US Trade Representative Jamieson Greer said in a statement.

Canadian Prime Minister Mark Carney said in a statement that his government has made comprehensive proposals to resolve trade disputes with Washington, asserting that Trump's past tariffs violated the North American trade pact.

"This trade dispute has raised costs for families, particularly in the US," he said. "Canada stands ready to engage intensively to address outstanding issues with the US to the mutual benefit of our citizens."

The Trump administration has long complained that Canada and China implemented retaliatory measures in response to the barrage of tariffs Trump has tried to impose since returning to the White House last year.

Greer has pointedly left Canada out of negotiations under way with Mexico on changes the US wants in the US-Mexico-Canada Agreement on trade. He holds bilateral talks on USMCA in Mexico City this week.

When Trump and Carney met at the Fifa World Cup Final in New Jersey on Sunday, Trump demanded that Carney take action to contain wildfires that have sent smoke billowing across swathes of the US. The US president last week threatened to add the "incalculable cost" of dealing with the pollution to existing tariffs on Canadian goods.

First usage

The Tariff Act of 1930 and its Section 338 are better known for massive US tariff increases and subsequent retaliation that economic historians say worsened the Great Depression of the 1930s.

Section 338 was intended to ensure countries apply tariffs equally and don't give preferential rates to some countries at the expense of US exports, said John Veroneau, a US trade official in the President George W. Bush administration who has extensively researched the statute.

He said that some presidents, including Franklin D. Roosevelt, considered imposing tariffs under Section 338, but no record could be found of any president taking such action until Trump's proclamations on Monday.

"It is ironic, to say the least, to use this authority to impose tariffs to retaliate against tariffs that were imposed in response to actions taken by the US," said Veroneau, senior counsel with the Covington and Burling law firm.

"These tariffs may be lawful under Section 338, but they at a minimum violate the spirit of Section 338, which was to create a world where countries apply the same tariffs on the same goods to all countries," he said, adding Trump has moved away from this principle "in a maximalist way."

After World War Two, major countries created the "most-favoured-nation" tariff system through the General Agreement on Tariffs and Trade to try to prevent a return to the pre-war "beggar-thy-neighbour" economic policies marked by competitive trade restrictions and currency devaluations.

Trump's new levies are set to take effect on 19 August and apply regardless of whether goods qualify for tariff exemptions under USMCA, although Trump exempted a range of key goods including energy, potash, fish, critical minerals and products already covered by Section 232 tariffs.

Among grounds for the tariffs, the White House cited Canada's "protectionist" dairy supply management system as well as tariffs and quotas on cars imported to Canada from the US but not from other countries. Carney said that Canada "as is its right, merely matched" US tariffs on the auto sector that were in violation of the USMCA.

Washington also highlighted that most Canadian provinces have halted the sale of US alcohol, which they did in response to prior US tariffs.

The White House said Canadian imports of US motor vehicles dropped by 22% and of US alcoholic beverages by 81% over the past year.

Diamond Isinger, a former senior adviser to ex-Prime Minister Justin Trudeau on US-Canada relations, said Carney would have limited ability to compel provinces to start selling American alcohol again.

"Unless there are some sort of extraordinary measures invoked here, the premiers of those provinces are the ones who decide whether to restock alcohol," Isinger said.

TSMC is seeing strong, multi-year demand for its AI chips as it invests a further $100 billion to expand its Arizona facilities,

but it needs to address several challenges, such as a shortage of construction workers there, a top executive said.
Speaking after blockbuster second-quarter results on Thursday, Chief Financial Officer Wendell Huang said the company is “very happy” with progress in Arizona,which is why it decided to ramp up investment to $265 billion.“We will continue to invest,” he said in an interview, adding that the company was very grateful for US government support.“We continue to see customers’ strong demand — multi-year structural demand.”The world’s main producer of advanced AI chips and a major Nvidia supplier, TSMC’s aggressive capital spending and soaring profit marginshave made it a barometer of demand in the global semiconductor industry.

The pledge to expand in Arizona is a win for US President Donald Trump, who has pushed for more chipmaking at home.

Trump has repeatedly accused Taiwan of stealing American semiconductor business.

He has said that by the time he leaves office, the US will have 50 percent of the world’s semiconductor manufacturing capacity.

ARIZONA FABS

TSMC’s first Arizona fabrication plant — or fab — is operational and achieving yields “as good as” the flagship fab in Taiwan, Huang said.

The second fab will shortly begin moving in equipment, while construction of a third fab is under way

and preparatory work has started on a fourth fab and the site’s first advanced packaging facility, Huang said.

In total, current and planned projects will bring TSMC’s Arizona footprint to 12 fabrication and advanced packaging facilities plus an R&D centre.

He did not provide a timeline for the latest investment.

However, “there are physical constraints — the number of construction workers available, the infrastructures available,” Huang said.

“We’ll work closely with the government to solve these issues.”

At the same time, TSMC continues to invest at home, where it is building 13 leading-edge and advanced packaging fabs over the next several years.
Google News LinkFor all latest news, follow The Daily Star's Google News channel.

“Land is a scarce resource in Taiwan,” Huang said.

“Therefore, whenever there are available lands, we will use them for the most leading-edge technologies.”

“When you ramp the most leading-edge technologies, you need very close collaboration between the R&D and operation functions,” he added.

“It has to be in Taiwan. And after it stabilizes, then we can consider transferring overseas.”

BOND ISSUANCE

Asked if the company would consider raising money by selling new shares in the US, Huang said it would “not rule out issuing new bonds”

if market conditions are favourable.

Despite its aggressive expansion plans, TSMC faces headwinds from geopolitical tensions between Washington and Beijing,

with the US seeking to control advanced chip exports to China.

Reuters reported last year that TSMC could face a penalty of $1 billion or more to settle a US export control investigation

over a chip it made that ended up inside a Huawei AI processor.

Huang referred questions about the status of the case and any potential penalty to the US government,

but said TSMC’s internal export control system was constantly being reviewed.

“I have to say there is (only) so much we can do in terms of complying with all the rules and regulations,

but when the customers sell to customers, they sell to customers,” he said.

“At some point in time, you lose the visibility. That’s the reality.”

Investors worries about the sustainability of the AI boom amid massive infrastructure spending has re-emerged recently.

TSMC’s Taipei-listed shares fell 7.3 percent on Friday despite the company’s record results.

Even so, its shares remain up nearly 50 percent this year.

While TSMC has long been by far the market leader in making the world’s most advanced chips, competitors are seeking to narrow the gap, including Samsung Electronics, which has benefited from a recovery in the memory chip market,and Intel, which enjoys backing by the US government.

Huang said the company remains confident in its business model.

“We do not intend to leave anything on the table,” he said.

“Our competitors are good, but we are even better.”

Reporting by Wen-Yee Lee and Ben Blanchard; Editing by Kevin Buckland

US import prices unexpectedly rose in June as declines in the costs of food and energy products were more than offset by higher prices for capital and consumer goods.

This led to the largest annual increase in imported inflation in nearly four years. Import prices increased 0.3 percent last month after a downwardly revised 1.7 percent advance in May, according to the Labor Department.
Economists polled by Reuters had forecast import prices, which exclude tariffs, decreasing 0.7 percent after a previously reported 1.9 percent rise in May.

In the 12 months through June, import prices surged 7.1 percent. That was the biggest advance since August 2022 and followed a 6.6 percent increase in May.

The monthly increase in import prices bucked declines in producer and consumer prices in June, which were attributed to the retreat in oil prices as a fragile ceasefire between the US and Iran took hold.

That truce collapsed last week, pushing oil prices to a one-month high. Prices of imported fuel fell 0.4 percent last month after rising 12.6 percent in May. They jumped 44.1 percent year-on-year in June.

Imported food prices eased 0.2 percent. Excluding food and fuels, import prices increased 0.4 percent after advancing 0.8 percent. The so-called core imported inflation increased 4.6 percent in the 12 months through June.

Core imported inflation was boosted by a 0.4 percent increase in imported capital goods prices, reflecting strong demand for technology products as businesses ramp up investment in artificial intelligence.

Prices for imported consumer goods, excluding automotives, rose 0.3 percent. The cost of imported automotive vehicles, parts and engines eased 0.1 percent.

The World Cup left stadiums packed and millions of fans euphoric in Mexico, but failed to lift a sluggish economy weighed down by weak investment.

Uncertainty also looms over the upcoming review of the North American trade agreement (USMCA). The tournament ends Sunday after more than a month of matches across Canada, the United States, and Mexico.

Mexico hosted 13 of 104 games. However, it fell short of ambitious official tourism targets aimed at boosting gross domestic product (GDP), which contracted in the first quarter.

Humberto Calzada, chief economist at Rankia, commented on the situation. He said the World Cup will not structurally change the trajectory of the Mexican economy.

Calzada noted the tournament offers only a short-term stimulus for an economy the government expects to grow between 1.8 percent and 2.8 percent this year, compared to analysts’ forecasts of 1.1 percent.

The economic impact was highly localised. Banorte lowered its estimate of the World Cup’s GDP contribution to 0.4 percent-0.5 percent, down from a previous forecast of up to 0.62 percent.

Banamex calculated the total economic impact at 2 billion dollars. This represents about 0.1 percent of GDP and less than half of the 5.6 billion dollars Mexico received in remittances in May alone.

Deloitte projected the competition created 100,000 temporary jobs, 10 percent fewer than its previous estimate.

Meanwhile, BBVA reported its household consumption indicator fell 0.2 percent month-on-month in June. Spending on hotels was down 10.5 percent and restaurants down 4.9 percent, despite a 16.5 percent spike in entertainment.

The benefits were uneven across the host cities of Mexico City, Guadalajara, and Monterrey. The Mexican Restaurant Association reported that half of its establishments performed worse than in a typical week.

This was due to low hotel occupancy and local protests in the capital. Air travel data was also mixed.

Passenger traffic rose slightly in June in Guadalajara and Monterrey but fell at Mexico City’s main airport.

Analysts say the main driver of the Mexican economy remains outside the stadiums: trade certainty under the USMCA.

With companies holding back investment ahead of the trade pact’s review, and the economy contracting 0.6 percent in the first quarter, the IMF recently trimmed Mexico’s growth forecast to 1.2 percent from 1.6 percent.

US consumer sentiment this month jumped to its highest since February on a temporary drop in oil prices, University of Michigan data showed Friday -- but renewed hostilities in the Middle East could reverse this progress.Preliminary data showed the university’s consumer sentiment index came in at 54.4 points in July, up nearly 10 percent from June’s reading.
The bullish outlook came after energy prices fell in June on hopes of a longer term ceasefire between the United States and Iran, after both sides struck an initial deal.But fighting has since resumed, with US President Donald Trump declaring the ceasefire over and oil prices rising again.“Upward momentum may prove difficult to sustain if recent declines in gas prices continue to reverse course,” said Joanne Hsu, director of the University of Michigan survey.She noted that interviews for the July release were conducted between June 23 and July 13, with over 70 percent completed before the United States resumed strikes against Iran on July 7.

“With prices remaining frustratingly high, consumers are hardly ebullient about the economy,” Hsu added.

Sentiment is down 12 percent from a year ago, she said.

US-Israel strikes targeting Iran since late February have plunged the Middle East into war.

This has sent global energy prices rocketing as Tehran retaliated by virtually closing off the Strait of Hormuz, a key waterway for energy transit.

Higher costs have been flowing through the world’s biggest economy, as gasoline prices rose in turn.

While the current average price of regular gasoline is $3.98 per gallon, it remains notably higher than the $3.16 per gallon average seen a year ago.

Year-ahead inflation expectations edged down to 4.2 percent in July from 4.6 percent in June, but this is still elevated as well, Hsu said.

Samsung Electronics has cut jobs at its US display, phone and other consumer electronics operations — affecting workers mainly in New Jersey and Texas, according to documents and two people familiar with the matter.

The South Korean tech giant said on Sunday in a statement to Reuters that 739 roles in Englewood Cliffs, New Jersey, have been affected by plans by Samsung Electronics America (SEA) — which is focused on consumer electronics and does not include chips — to move its headquarters to Texas.

A majority of people affected have received relocation offers, but others were let go, it added without elaborating.

At SEA's Plano, Texas office, some 100 workers, including staff in its mobile division, have been let go, according to one person who said they were among the employees laid off. Sources declined to be identified because of the sensitivity of the issue.

The cuts — though related to the shift in headquarters — underscore diverging fortunes within the South Korean tech giant, with its chip division skyrocketing to record profit but its consumer electronics units languishing as chip costs surge.

Samsung's decision to shift SEA's headquarters is striking because SEA employees in New Jersey only moved to new offices with much fanfare less than a year ago. SEA employs about 1,200 workers in New Jersey, according to a press release by US Representative Josh Gottheimer, who attended an event to mark the opening of the new offices in September.

While the precise extent of the layoffs at SEA could not be learned, documents seen by Reuters show that the unit notified some employees on 30 June of an "enterprise-wide reduction-in-force", adding that there were a "significant number of impacts".

LinkedIn posts reviewed by Reuters also show more than 30 workers, including senior sales and marketing officials in both Texas and New Jersey as well as a few in other US locations, said they have been let go or left the company over the past couple of weeks.

Details about the job losses at SEA have not previously been reported.

Samsung said in its statement that the shift of SEA's headquarters "may lead to changes in our workforce structure, such as employees who are unable to relocate, or certain functions that are optimised to ensure our roles align to key business priorities."

Chip division soars, but mobile may post loss

Samsung has flagged it will likely post a 19-fold jump in second-quarter profit on strong AI-driven chip demand. It also announced plans last month to invest hundreds of billions of dollars in new chip plants.

Its mobile division, however, is expected to post its first-ever loss, as it grapples with intense competition from Apple. Chinese rivals like TCL and Hisense are also challenging Samsung in televisions and home appliances. Higher chip costs due to the AI boom have weighed on earnings for all of its consumer electronics products.

Samsung's job cuts mirror moves by other global firms including Microsoft, Amazon and Meta, which have shed jobs while redirecting spending towards AI infrastructure.

It has also joined Tesla, Oracle and other tech companies in moving headquarters or major operations to Texas, known for lower taxes and business-friendly regulations. The state is already home to Samsung's chip factories and a mobile hub in Plano.

Samsung workers are concerned the recent job cuts could be followed by additional layoffs and a consolidation of the company's appliance, home entertainment and mobile divisions, as it focuses resources on chips, a current SEA employee said.

Samsung said in its statement there was currently no broad, global restructuring underway within its consumer product business.

The relocation of the unit's headquarters is intended to foster "stronger collaboration and optimise the organisation by bringing more teams together within a growing technology and AI ecosystem," it said.

Samsung Electronics had 11,770 employees in the United States as of the end of 2025, which includes workers in its chip division.

Samsung's IT services affiliate Samsung SDS America has flagged that 179 roles could be cut at Ridgefield Park, New Jersey, according to a June notice required under the state's laws.

Those personnel changes are due to the relocation of Samsung SDS' North American headquarters and had nothing to do with layoffs or restructuring, Samsung said.

Oil prices climbed more than 4 percent to their highest in more than a month on Friday. This came after the US and Iran stepped up attacks across the Gulf. Shipping was also threatened by a potential Red Sea closure.

This was on top of the restricted traffic through the Strait of Hormuz. Brent crude futures settled 3.87 dollars, or 4.59 percent, higher to 88.10 dollars a barrel. US West Texas Intermediate futures rose 3.54 dollars, or 4.48 percent, at 82.49 dollars.Both benchmarks were at their highest since mid-June. For the week, both benchmarks gained about 16 percent. Brent was on track for a third consecutive weekly gain. WTI was set for its second weekly gain.

The two foes expanded fighting on Friday. The US struck bridges and an airport in Iran. Tehran hit a power and desalination plant in Kuwait. Iran said it launched more strikes on US facilities in the Middle East.

This included the first direct attack in Syria. This followed a sixth straight night of US strikes on Iranian military facilities. Andrew Lipow, president of Lipow Oil Associates, commented on the situation.

He said the market is reacting to increasing hostilities between Iran and the United States. These culminated this week with nightly attacks on Iranian infrastructure and retaliation by Iran on its neighbours’ infrastructure.

He added that if more tankers come under fire and become damaged, oil prices will continue to move up. This is because shipowners will simply refuse to enter the Persian Gulf.

The collapsed truce between the US and Iran has resulted in a sharp decline in oil flows in the strait. This happened as Iran targets vessels transiting through it.

Before the Iran war, about 20 percent of global oil supplies flowed through the waterway. Iran has pressed the Houthis to close the Red Sea route if the US attacks Iran’s power infrastructure.

Tamas Varga, analyst at PVM Oil Associates, wrote in a note that any such development is a threat indeed. This is given that so much of Saudi Arabia’s exports have been redirected to the port of Yanbu.

These exports go via the East-West Pipeline to avoid Hormuz. Saudi Arabia has diverted more than 70 percent of its normal daily crude exports to the Red Sea port of Yanbu since the beginning of the war.

Shipments from Yanbu averaged 4 million barrels per day in recent weeks. This is up from around 973,000 bpd in the same period last year. Qatar’s defence ministry said its armed forces thwarted an Iranian missile attack early on Friday.

The interior ministry said a child was wounded by shrapnel resulting from interception operations. In a different conflict zone, Ukraine’s military said it struck a Russian oil refinery in the Yaroslavl region on Thursday.

The dollar was flat on Friday, but ended the week lower. This came as tame US inflation data led traders to cut bets on imminent rate hikes from the Federal Reserve.

Iran and the US exchanged intensifying fire in a week-long escalation. This has largely unravelled last month’s truce. The conflict spurred safe-haven bids for the dollar. It also pushed oil prices to near one-month highs.

Elias Haddad, global head of markets strategy at Brown Brothers Harriman, commented on the situation. He said the tech-led global equity market plunge has triggered a flight to safety.

He added that ongoing disruption to Strait of Hormuz traffic also drove this shift. The US dollar recovered some of this week’s losses, and global bond yields edged a bit lower.

The dollar index, which measures the US currency against six other units, was at 100.76. It was set for a weekly drop of 0.2 percent. The index hit a one-month low earlier this week.

This decline followed easing chances of a near-term rate hike. However, safe-haven flows have helped support the greenback. The euro remained flat at 1.1436 dollars, putting it at a 0.2 percent rise in the week.

Sterling fell 0.2 percent to 1.3455 dollars. It posted its third straight week of gains. This followed UK economic growth figures and expectations for greater political certainty.

Incoming Prime Minister Andy Burnham is reportedly set to pick a centrist finance minister. The Australian dollar ended with a third week of gains. It was 0.23 percent softer on the day at 0.6980 dollars.

This happened as risk-off sentiment prevailed. Global stocks fell on Friday. US consumer sentiment climbed to a five-month high in July.

Traders said the respite may prove temporary. This is due to renewed conflict in the Middle East driving up gasoline prices.

The Japanese yen was flat, fetching 162.44 per US dollar. It remained rooted near the 40-year low of 162.84 it touched at the start of the month.

Apple overtook Nvidia on Friday to become the world’s most valuable company. This reshuffled the top ranks of tech heavyweights as investors reassess the outlook for artificial intelligence.

Apple was last valued at 4.88 trillion dollars as its shares held steady. Meanwhile, Nvidia was roughly at 4.86 trillion dollars, following a 3.5 percent decline.
The shift in the pecking order illustrates that investors are broadening their focus. They are looking beyond the most obvious beneficiaries of the AI boom, such as Nvidia, which had been at the helm for nearly a year.

Apple is reclaiming the top spot for the first time since April last year. Toni Meadows, head of investment at BRI Wealth Management, commented on the changing sentiment.

“Apple was seen as a laggard in the AI race because it wasn’t spending to develop models, but now sentiment has changed,” Meadows said.

“Apple is less exposed to capex intensity and better positioned to monetize AI via services, ecosystem lock-in, and hardware upgrades. The re-rating reflects confidence in earnings durability rather than speculative AI upside.”

For a company that was often seen trailing in the AI race, the milestone reflects Apple’s efforts to establish itself more firmly among the sector’s leading players.

It could shape how CEO Tim Cook’s final months at the helm are viewed.

Cook is preparing to cede his role to hardware veteran John Ternus in September.

Last month, the company rolled out a long-delayed overhaul of Siri. It bet the upgraded assistant would help close the gap with Big Tech rivals and new-age startups in the crucial AI race.

Some analysts say Apple is sitting on an AI gold mine in the form of the personal data that lives on every iPhone.

The data could make Siri’s answers more useful and the assistant more capable.

The challenge is that such data is locked away in operating systems in the name of privacy. The company would have to find a way to unlock its value.

Nvidia became the first company in the world to surpass a 5 trillion dollar market valuation in October. This landmark propelled it into a rarefied territory that was far beyond the reach of its rivals.

Being superseded by Apple does not necessarily signal a lasting change in the companies’ relative standing. The chipmaker remains a major beneficiary of AI-related spending.

Its graphics processors are powering much of the generative AI frenzy. Nvidia could also reclaim the top spot if sentiment shifts.

Besides, Apple is in a delicate position itself. It has raised prices to offset rising costs, a strategy that could hurt demand.

“I don’t see any meaningful distinction. Nvidia likely to be a significant participant in whatever happens going forward,” said Benjamin Hall, vice president, alpha research at Segal Marco Advisors.

However, the AI enthusiasm has spread to other corners of the semiconductor industry.

The bigger winners this year have been memory chipmakers such as Micron. It crossed 1 trillion dollars in market value in May as investors embraced the significance of memory chips in AI infrastructure.
Google News LinkFor all latest news, follow The Daily Star's Google News channel.

South Korea’s SK Hynix also listed on the Nasdaq earlier this month. This added another player to the race for investor attention.

“The new entrants to the market could spread out the focus away from the pure Magnificent Seven names into a wider number of names,” Hall said.

The eye-watering chips rally ran into turbulence in July. This happened as investors reassessed the sustainability of the artificial intelligence trade.

The shift knocked the Philadelphia SE Semiconductor index down almost 19 percent from its all-time highs. Despite the steep fall, the index has performed better than Nvidia so far this year.

The European Union must have bigger banks if the 27-nation bloc wants to catch up with rivals in the United States, Brussels said Friday.

The EU published a report looking at the banking sector as part of its efforts to boost the European economy by unlocking more money for different industries.
Brussels said it wanted to ease rules for the European banking sector including lower capital requirements.In the aftermath of the financial crisis of 2007-2008, a top international banking supervisory authority -- known as the Basel Committee -- set new global standards to ensure banking system stability.But European banks have long criticised the EU’s overzealous application of the rules, which they say put them at a disadvantage compared to foreign banks since they had the rules on top of national regulations.The banks argued this hindered their ability to finance the European economy. US regulators also proposed loosening some capital rules earlier this year.

A senior European official said the EU did not want to weaken the rules, but wanted to apply them “in a way that optimises the benefits for the EU economy”.

“European banks need the opportunity to scale up in their domestic market like the US have,” the official said.

NGO Finance Watch said the EU had the “right diagnosis, wrong remedy”. “Cutting capital requirements would give banks one-time room on their balance sheets. But this does not mean more productive investment in the economy, it means undermining banks’ lending capacity in the future,” Julia Symon of Finance Watch said in a statement.

EU financial services commissioner Maria Luis Albuquerque told journalists the European banking sector was “still too fragmented across national lines”, which “prevents banks from reaching the scale needed to compete globally”.

The report appeared to criticise German objections this year to Italian lender UniCredit’s hostile takeover of Commerzbank.

“Unjustified interventions at the national level too often hinder the ability of EU banks to consolidate,” the EU said without naming any country.

“As a result, those banks are prevented from scaling up at the EU level.”

The EU executive will propose new banking rules in the first half of 2027.