Flagship

Tariff fallout widens

Investors and businesses worried about the impact of US tariffs as American trade policy whipsaws. The duties went into effect Tuesday — but only after weeks in which their implementation was in doubt, and with a last-minute, temporary, exemption for US automakers tagged on. US bond yields went up, a Federal Reserve official warned that levies could increase inflation, and the chief economist of the asset manager Apollo said that “if policy uncertainty persists, consumers and firms may begin to hold back spending decisions.” Some businesses are rerouting around the US to avoid the charges: Chocolate-maker Lindt plans to import chocolate to Canada from the European Union, rather than from the US, Fox News reported.

ECB rate path in question

The European Central Bank will likely cut its benchmark interest rate today, but analysts are divided over the direction of borrowing costs. Most traders expected a quarter-percentage-point reduction, thanks to a slowdown in inflation. But the implications of fast-changing US tariff policy on European growth are raising concerns while a hefty government spending boost by fiscally conservative Germany triggered a selloff in global bonds, complicating the ECB’s longer-term decisions. Goldman Sachs yesterday raised its forecast for the “terminal rate,” the point at which interest rates balance growth and inflation, while a senior economist at Dutch lender ABN Amro told Bloomberg: “The outlook could change significantly in the coming months.”

Europe mulls defense shift

Lawmakers from Britain’s ruling left-wing party urged banks to reclassify some defense investment as “ethical.” The open letter said corporate environmental, social, and governance requirements “often wrongly exclude all defence investment as ‘unethical’,” raising barriers for the industry and slowing military spending. Europe is scrambling to boost defense spending as the US changes its stance on Ukraine, with Germany rewriting its debt rules and France discussing expanding its nuclear deterrent. Ultimately, though, the Financial Times’ international politics commentator wrote, Europe must accept that its social security needs to be trimmed to make way for more military spending: “The mission now is to defend Europe’s lives. How, if not through a smaller welfare state, is a better-armed continent to be funded?”

Russia in talks over Syria bases

Russia is in talks with Syria’s new government over a deal that could see Moscow retain control of its military bases in the country. “It is a surprising rapprochement,” The Wall Street Journal reported: The bases were used by Moscow for more than a decade to prop up Bashar al-Assad’s regime and strike rebel targets during Syria’s civil war, including positions held by the country’s new rulers. The negotiations reveal interim President Ahmed al-Sharaa’s apparent pragmatism as he seeks to rebuild his country. Syria’s new ruler gained power by being a “chameleon, shifting from one identity to another,” The Economist reported. However his overtures to Moscow risk Damascus being ostracized by the West, whose sanctions could cripple Syria’s rebirth.

Trump’s foreign aid pullback blocked

The US Supreme Court blocked President Donald Trump’s freeze on foreign aid, a reprieve for countries dependent on the world’s single biggest donor. The ruling indicates that the court, despite its conservative bent, will not uniformly support Trump’s program while in office. The full international fallout from the US pullback on aid remains unclear, however: Two Nobel Prize-winners wrote in the Financial Times that other rich countries and individuals could, and should, plug the gap — and indeed, one group said it would continue funding anti-HIV efforts regardless of what Washington did — but another expert argued one major withdrawal like that of the US could lead to the entire aid system being threatened.

Criticism trained on US chip efforts

US President Donald Trump’s criticism of a bipartisan law aimed at bringing semiconductor manufacturing back to American soil raised the likelihood that the Biden-era legislation may be scrapped. The remarks, in his speech to Congress, came as the recent success of Chinese artificial intelligence startup DeepSeek raised questions over whether Biden administration efforts to curb Beijing’s access to cutting-edge semiconductors have had sufficient impact. “The CHIPS Act has turned into a gigantic industrial policy mess,” Semafor’s Reed Albergotti wrote, while a Financial Times columnist argued that “the very sanctions meant to shut down China’s chipmaking sector have instead fuelled it.”

Panama-US ties plummet

Panama’s leader accused US President Donald Trump of “lying” over his vow to take back the Panama Canal. Trump has repeatedly pledged to take control of the canal over what he says is the unfair treatment of US-flagged vessels. José Raúl Murillo’s comments came hours after a Hong Kong-listed firm sold two ports to US asset manager BlackRock, following pressure from Washington, which is concerned about China’s influence over the waterway. However, analysts said Latin America’s ties to Beijing, which is the biggest trading partner for several regional countries, won’t be so easily severed. “Once again, the region finds itself at the heart of a great power rivalry,” an expert wrote in Americas Quarterly.

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Novo to slash Wegovy prices

Novo Nordisk said it would slash the price of its blockbuster weight-loss drug Wegovy in the US and sell it directly to patients, part of efforts to beat back growing competition in the sector. Millions worldwide have turned to Wegovy and other GLP-1 injections, which help patients lose weight while reducing the risk of heart attacks and strokes. But Novo faces the patent on the drug expiring as early as next year in some parts of the world, and Washington is aiming to slash the price it pays for weight-loss drugs more broadly. Demand is unlikely to wane anytime soon: A recent study published in The Lancet forecast more than half of the world’s adults will be obese by 2050.

New antibiotics discovery

A discovery about the workings of the immune system could drive the development of antibiotics that combat bacterial resistance to the drugs. Israeli scientists noted that the proteasome, a structure inside cells, can unexpectedly produce bacteria-killing chemicals which were able to eliminate bacteria in infected mice, and which researchers hoped could be turned into new antibiotics. One immunologist told the BBC that the discovery was “profoundly important and surprising” — antibiotic-resistant bacteria cause an estimated million deaths a year, and scientists fear the problem is growing — though the latest research is at an early stage, and the prospect of new antibiotics is far off.

Bone tools used earlier than thought

Ancient humans used bone tools more than a million years earlier than previously believed. Bone is harder to work than stone, which was used by human ancestors at least 2.6 million years ago, but is more versatile and lighter. The earliest bone tools were until recently thought to have been used 400,000 years ago, but discoveries in Tanzania and Ethiopia push that back to 1.6 million years, when Homo erectus was the dominant human species. The tools were likely used for butchering big animals such as elephants and hippopotami and for digging tubers, and suggest that H. erectus had “the ability to do things that no other species was able to do,” one paleontologist told Nature.

• European leaders meet for a summit in Brussels on defense spending and Ukraine.
• Former Brazilian President Jair Bolsonaro submits his defense against allegations of a coup attempt following his 2022 election defeat.
• Crufts, the international dog show, opens in Birmingham, England.

The top speed achieved by an autonomously driven Maserati MC20 Coupe, making it the fastest self-driving car in the world. The robot car, piloted by Italian-designed software, set the record at the Kennedy Space Center, Florida: The idea is “stress-testing the reliability of the algorithms that undergird the autonomous driving system,” The Verge reported, to improve safety for autonomous vehicles traveling at more road-friendly speeds.

The croquetas at Rocablanca, Madrid. This “refreshingly unpretentious” café-bar serves six varieties of fritters, which “straddle the gap between innovation and tradition,” according to the Financial Times, from the classic jamón to “a parmesan and aubergine number that injects a hint of Italy into the traditional Spanish dish.” The bar has been a staple of the Spanish capital’s once rough, now trendy Malasaña neighborhood, and its croquetas “are now famed throughout Madrid.” Follow Rocablanca on Instagram here.

Palantir is targeting the global financial services industry as the next big market for its AI tools, reported Semafor’s Andrew Edgecliffe-Johnson.

“We’re at the very beginning of what will be a pretty seismic shift when artificial intelligence truly runs a lot of systems,” one executive heading up the push told Semafor. From fraud prevention to the processing of legal documentation, Palantir told analysts on its earnings call last month it viewed AI as a means to “the self-driving company.”