“The Little Excursion”

With Close Calls on U.S. Warships, Iran Shows New Appetite for Escalation Tehran’s forces are taking aim at the U.S. Navy in a way they haven’t done since the start of the war

• Trump’s Top Advisers Confront Possibility That Iran War Lasts Through End of Term The president still says he expects the war will end ‘immediately’ after midterm elections this fall

(…) “because they can’t hold out any longer.”  (…)

The Pentagon has planned to extend the deployment of some air-defense units in the Middle East with no firm end date, according to people familiar with the matter. The units, part of some 50,000 troops deployed to the region, are spread across the Gulf to shoot down missiles and drones.

A third Marine Expeditionary Unit is preparing to deploy to the region this fall, a U.S. official said, signaling a continuing rotation of the amphibious units that operate from a group of warships. (…)

Analysts say it makes sense that the Trump administration might be settling in for a lengthy fight.

“The U.S. naval blockade is unlikely to produce a decisive outcome in the near or even medium term, so the only realistic use of this tool would have to be predicated on plans for a long-term siege,” said Suzanne Maloney, an Iran expert and vice president for foreign policy at the Brookings Institution think tank in Washington.

“Even then its prospects for success are dubious, mainly because of the unintended consequences,” she added, such as attacks on energy and economic targets in the Gulf states. (…)

“Everyone pays, but neither leadership is yet paying enough to accept the other side’s terms.”

David’s analysis:

A protracted war enters a wider, less controlled phase. The current phase of instability is marked by geographic expansion of the theater around the two key maritime chokepoints — Hormuz and Bab el-Mandeb — the employment of improved technology on both sides, and a more chaotic exchange of blows. The Houthi offensive on the Red Sea side is fundamentally about control of their own strait and the standing threat it poses to the Saudi Red Sea route.

Real power in Iran has shifted to the IRGC, a drift of years that became an abrupt lurch with the death of Khamenei. Mojtaba Khamenei, elected Supreme Leader days after his father’s killing, has not appeared in public in six months; his decrees reorder the military command while the war is run from elsewhere.

In Samuel Finer’s terms, the Islamic Republic is moving from a palace-church polity toward a praetorian state: the institutional forms remain, but the Guard is now the decisive power, and the evidence is written into domestic policy. Implementation of the harsher 2024 veiling law was suspended by the SNSC itself, and the state tolerated open defiance of religious norms throughout the war — the security organ overriding the clerical-moral one.

The main counterweight is not theocratic but republican: the forum represented by Ghalibaf, Araghchi and Pezeshkian, who speak for the public and the war’s economic toll. Ghalibaf is himself ex-IRGC, but as negotiator he has called the memorandum a “true victory” and pressed de-escalation in Baghdad and Doha — the forum speaking, not the barracks.

Iran’s strongest legal case — temporary, reversible restrictions on transit through its own territorial waters under a self-defense justification — was overshot long ago, when Tehran declared the entire strait closed except to traffic using its designated channel, citing war. The new exclusion zone, extending from the line of the American blockade toward the strait and into the Gulf of Oman, pushes the claim well beyond any defensible limit and does not bode well for the adapted traffic pattern that had emerged.

Iran gave diplomacy a chance, and diplomacy, like war, has its risks: Tehran scored real victories, but the Oman deal remains on the table. The expanded zone is best read as an attempt to dislodge the holding, staging and transfer activity that has dominated the Gulf of Oman since April and anchored the limited success of the southern corridor.

It also places American warships directly in the crosshairs. The exclusion zone is offensive in character — an assertion of control rather than a reprisal — and together with the strikes on Al-Azraq (Jordan), it marks a break from the exchange-cycle pattern of the earlier war.

The American decision to sink rather than board or disable tankers on the Iran–China route is a significant escalation in its own right, and Washington is fielding more unmanned surface vessels while Iran deploys new missile technology.

The other war:

Bessent Dares Bond Traders to Burn Down the House

It’s not the best idea to goad markets into betting against you. (…)

After that buildup, Wednesday’s announcement that buybacks were being tripled wasn’t enough. The market responded with disappointment that he hadn’t used even more shock and awe, and pushed up the 10-year Treasury yield to 4.84%, its highest in three years. Bessent has revealed that he’s prepared to intervene, and it was predictable that the market would respond by testing just how far he’d go.

It will be interesting to see what Bessent does next, but the day’s hectic events also highlight another conundrum. Bond yields have been rising steadily without tipping over the stock market. Even Wednesday, the S&P 500 clawed back much of its fall. Could there be a tipping point ahead at which higher yields finally bring down stocks, and could yields hit 5% for the 10-year Treasury? (…)

The key reason investors feel able to look through rising bond yields is, inevitably, the AI buildout. That is seen as an external factor that counteracts the strong macroeconomic headwinds. To quote Freya Beamish and Davide Oneglia of TS Lombard:

When tech companies are chasing the notion of infinite demand, it is quite hard to slow them down with a few basis points, particularly as the process of leveraging up has only just begun in big tech, though there are some clear front-runners. While the financing loop works, it is self-reinforcing.

Spectacular earnings growth has so far more than counterbalanced the tighter multiples that have come with the shift in the bond market. And investors seem convinced that it can continue. The latest survey of global asset allocators by Absolute Strategy Research finds comfortable majorities believing both that yields will continue to rise and that the stock market will be higher a year from now.

Earnings growth is seen as making stocks immune to a rising cost of money, although Absolute Strategy’s David Bowers cautions that “some investors are viewing this corporate earnings/margins story in isolation” and underestimating the effects that AI investment could have in raising interest rates and inflation.

If any stock market is particularly at risk from rising bond yields, it is the US. That’s because a huge chunk of American companies’ value is tied up in future earnings. These will be automatically rendered cheaper by higher bond yields, as they would have to be discounted at a higher rate. (…)

Nobody care of these wars, as John Authers shows!

(…) the stock market now believes it can live with higher oil. For the first month of the Iran conflict, Brent and the S&P 500 acted as mirror images, with stocks gaining only when Brent fell. That relationship is over. Global stocks are now 14% above their level when oil first hit $100::

As this simple model from Absolute Strategy Research illustrates, if gasoline stays where it is for the next six months, US headline inflation should rise to 4.9% — a level that would more or less force the Federal Reserve to raise rates:

This seems truly horrendous news. Higher oil prices act like a tax hike to brake growth, and also require rate increases that weigh on growth. But somehow markets aren’t seeing it that way. One-year inflation breakevens are barely half their level when the $100 mark was first breached back in March:

Prediction markets reflect that hopes of a reopening any time this year are draining away, and oil futures disprove the positive assumptions of traders closest to the action.

“K” is the key. Consumers were first but the corporate world and the stock market are also about to turn K-shaped, as rising input and financial costs inevitably seep into non-AI sensitive P&Ls and P/E multiples.

Credit markets are already in K-shape mode:

More from John Authers’ column:

Almost a year after JPMorgan’s Jamie Dimon famously complained of cockroach infestation, there are signs of financial distress in rising defaults. Fitch’s broad measure of defaults has shot up to 6% from 5% in 2024 as publicly traded business development companies’ also lost value.
It remains unclear how the credit cycle might evolve as more debt comes to market. Credit investors are set to be offered more than $138 billion of buyout debt in the coming months, with US issuance at its highest level since 2007 and European issuance at its highest since 2021. New supply is already visible in real time. At least seven companies began loan repricing marketing this week.

Private credit has funded 82% of buyout deals so far in 2026, up from 61% in 2019. The question now is whether it can keep absorbing such a large share of the LBO market as debt supply swells. (…)

Another risk is that the portion of the $138 billion pipeline for debt where banks and private-credit firms share exposure could come under pressure as more companies struggle to repay their debts. Steve Caprio at Deutsche Bank points out that over 80% of B-rated debt sits in floating-rate leveraged loans or private credit, which leaves those borrowers in a rough spot with a big wall of maturities coming due.

Direct lending loans rarely trade, and their prices are hard to pin down, so weakening credits can go unnoticed for a while. If the markdowns arrive all at once, lenders will finally have to put a number on the damage. It’s still too soon to declare that the storm — or the cockroach infestation — is over.

Seems like a good time to go fishing…

Can Trump Really Pay Every Adult American a $5,000 ‘Dividend’?

During his keynote speech at the first Republican midterm convention, US President Donald Trump made an extraordinary announcement: He said he would pay every American adult a $5,000 “Trump dividend” if the Republicans retain control of both chambers of Congress after the November elections.

Trump said the dividend would have to be spent in the US: “We don’t want you going to Canada to spend the money, we don’t want you going to China, to Germany. You gotta spend the money in the United States of America.” (…)

If Trump paid $5,000 to every US adult citizen, the plan would cost around $1.2 trillion in total. (…)

Trump provided no information on how he would pay for the initiative. Unless the government raised taxes, cut spending elsewhere or found enough new revenue to cover the payments, the government would likely have to fund it with borrowing.

Last year, Trump floated the idea of mailing $2,000 “dividend” payments to low- and middle-income earning Americans funded by revenue from his sweeping tariffs on US goods imports, but the proposal never got off the ground. (…)

A cash payment program would require approval from Congress. Fellow Republicans previously rejected Trump’s tariff “dividend” proposal, and any legislation offering direct payments to voters would face a steep path to becoming law. (…)

Even if Republicans retain control of Congress, Mondschein said, the government’s already significant debt load and other competing spending priorities meant it would be hard to get support for direct payments to citizens. (…)

Mondschein said he would expect the inflationary impact of giving $5,000 to every adult to be “pretty significant”. (…)

Axios has this other one today:

Trump plans $500 Obamacare rebates

The Trump administration plans to send $500 rebate checks to as many as 1 million people who it says were overcharged for coverage under Obamacare, Axios’ Marc Caputo has learned.

The direct-deposit payment would be sent to people in 30 states before the Nov. 3 midterm election, as President Trump touts savings from his tax-cut legislation and prescription drug plan.

Trump’s ways of tackling the affordability issue, oblivious to any collateral issues.

Like how rising bond yields can push mortgage rates up 75bps since the war with Iran began.

Redfin’s data show that the median sale price is up 4.7% since the war started. Unsurprisingly, active listings are up 7%. But sales are down 5.9% YoY at the end of August.

“Small Potatoes” burning!

Iran hits ships near Hormuz in retaliation for U.S. attacks on tankers

Iran said on Wednesday it had attacked 10 ships near the Strait of Hormuz after the U.S. sank five Iranian oil tankers, in the biggest declared wave of tit-for-tat attacks on shipping by both sides since the start of the six-month-old war.

The attacks in and around the vital waterway sent the price of oil surging, with the international Brent crude benchmark breaching US$100 a barrel for the first time since July. The politically sensitive average retail price of diesel fuel in the United States hit a fresh all-time high above US$5.94 a gallon.

Iran also said it had fired ballistic missiles at a base used by U.S. forces in Jordan. Attacks by both sides since the end of August have shattered a month of relative calm, with the U.S. and Iran hitting military, shipping and energy assets.

Recent days have also seen an escalation in fighting between Saudi Arabia and the Houthis in Yemen, a second theatre of war that threatens global energy supplies from the Middle East.

The Americans said they destroyed five Iranian oil tankers overnight, releasing video of ships ablaze before they sank. The U.S. military’s Central Command called its attacks a response to Iran’s Islamic Revolutionary Guard Corps targeting a U.S. Navy warship twice with ballistic missiles over the previous two days. No Americans were harmed, the U.S. said.

Washington has announced a new policy of attacking Iranian tankers in retaliation for fire that threatens its warships. Iran says it is imposing a wider off-limits zone around the strait and using new, more capable missiles to attack U.S. ships. (…)

Escalating combat between Saudi Arabia and the Iran-aligned Houthis that control most populated parts of Yemen has created additional uncertainty for energy markets. On Tuesday, the Houthis launched an attack on four cities in Saudi Arabia, causing huge fires at oil installations that were visible from space. Saudi authorities said 73 people were wounded. (…)

The group has extended the disruption of shipping from the Gulf to the other side of the Arabian Peninsula, at the entrance to the Red Sea.

From the FT:

Jorge León, head of geopolitical analysis at Rystad Energy, said traffic through the strait had “come down massively” during the recent escalation of hostilities, from about 8mn barrels a day during the last week of August to about 1mn b/d this week.

Oil markets were in a worse position to weather supply disruptions than earlier in the conflict because of eroded inventories and an increase in Chinese purchases of crude, he said.

“We’re at $100 again but this time around it’s more serious because the buffers are getting thinner and thinner,” said León. “Crude stocks are getting lower and product stocks — particularly diesel — are a big problem.” (…)

Mohsen Rezaei, Iran’s top security official, said on Tuesday that Washington had “received a clear warning from Iran’s new missiles”.

“Economic warfare will be met by a maritime exclusion zone across the Persian Gulf to the blockade perimeter,” he said on X. “The operational posture toward U.S. warships and bases has been fundamentally recalibrated.”

Chinese Inflation Revives as Oil Spike, AI Boom Feed Into Prices

The consumer-price index rose 0.8% in August from a year earlier, in line with forecasts and up from 0.5% in the previous month, according to data released by the National Bureau of Statistics on Wednesday.

Producer inflation rebounded to 3.8% from 3.5% in July, exceeding the median forecast of 3.6%. The core CPI, which strips out volatile food and energy prices, rose for the first time in four months to 1%.

Energy prices contributed 0.28 percentage point to the headline year-on-year gain for consumer inflation, NBS statistician Dong Lijuan said in a statement. Some food costs are also starting to pick up because of seasonal factors and weather conditions, with prices for fresh vegetables, eggs and pork rising in monthly terms. (…)

Frail consumer spending has also limited the extent to which factories are able to pass on their growing production expenses from higher global prices for oil, chips and metals. (…)

Booming demand stemming from AI is also starting to feed into prices. The cost of tablets, computers and phones all climbed at double-digit rates from a year ago, reflecting a global investment supercycle in artificial intelligence. (…)

Increases in the PPI index are still mostly driven by commodities and products benefiting from higher oil and chip prices. Industries related to coal, metals, energy, chemicals and electronics reported a surge in output prices.

Prices of consumer durables at the factory gate rose 1.2% in August, the fastest pace in data going back to 1996. The huge upswing was probably a result of higher chip costs pushing up prices of home appliances.

Diesel Crunch Threatens Lasting Price Pain, Consumption Cutbacks

The global refining sector’s diesel crunch is likely to result in tight supply for the coming months, keeping prices high and weighing on demand, according to analysts and traders. (…)

Fuel exports lost from the major processing hubs in the Middle East and Russia now amount to 2 million barrels a day each, Vitol Group’s Chief Executive Officer Russell Hardy told the Asia Pacific Petroleum Conference run by S&P Global Energy in Singapore. With refiners elsewhere already at their limit, consumers have turned to distillate fuel stockpiles, and will keep drawing.

The price of diesel — known as the workhorse fuel of the global economy — has run ahead of crude since the start of the war, with the jump in the ICE gasoil benchmark more than twice that seen for Brent, creating inflationary pressures even while oil has remain relatively stable. (…)

US exports have helped alleviate tightness particularly in import-dependent Europe. But that may not hold as diesel consumption there begins to increase as temperatures drop, given the US is not producing more, even as shipments have climbed. (…)

The vast majority of goods move with diesel.

The High-Stakes Gamble Playing Out in the Natural-Gas Market Europe has stockpiled only enough natural gas to get through a mild winter

(…) Currently, Europe’s natural gas tanks are 67% full, which is 13 percentage points lower than a year ago. One reason storage is so low is that European buyers were hoping the Strait of Hormuz would be open by now, and that Qatari LNG would be back on the market. This would push down prices and allow Europe to inject more gas into storage at the last minute. (…)

Under Wood Mackenzie’s most optimistic scenario, the region’s storage levels could fall to 21% by April 1, 2027, which is the end of the heating season. This assumes that LNG shipments from Qatar and the United Arab Emirates start flowing again soon and reach customers some time in November.

If the Strait of Hormuz stays shut for the rest of the year, Europe’s storage levels could sink as low as 14% by next April. 

Look closely at Europe’s gas stockpiles and it is clear that some countries are gambling more than others. Portugal and Poland are leaving nothing to chance. Their gas inventories are more than 90% full. Germany and the Netherlands are languishing around 50%. (…)

But, if Europe has miscalculated and needs to turn to the spot market for more supplies later this year, U.S. exporters of liquefied natural gas will profit from higher prices.

Spot prices for natural gas in Europe have already risen 75% since the end of June. A last-minute rush to stockpile for winter would send prices even higher. (…)

However, a strong El Niño weather system is expected to keep winter temperatures in the region higher than normal. This could depress demand, buying the EU a little more time to wait for LNG flows to return to normal.  (…)

Bessent Dares Traders to Bet Against Yen: ‘I Am the House Now’

Treasury Secretary Scott Bessent challenged traders to test his resolve on boosting Japan’s currency, saying when he wades into markets these days he’s effectively doing so with inside information.

“I am the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do,” Bessent said at a Southern Methodist University event in Texas on Tuesday. “And you can bet against me if you want.” (…)

Bessent’s remarks also underscore his unusual level of engagement on economic policymaking in Japan, which is among the world’s largest holders of US debt. Bessent has coordinated with Japan Finance Minister Satsuki Katayama on currency interventions and put increasingly public pressure on the central bank to raise interest rates, a move that would support the yen and reduce Japan’s need to sell Treasuries for market intervention.

“Whenever people say, ‘Oh, well, Treasury Secretary is taking a risk,’ — well, it’s my dream, I have asymmetric information,” Bessent said. (…)

The BOJ is leaning toward raising its benchmark interest rate by a quarter point on Sept. 18, while leaving open the possibility of accelerating the pace of hikes thereafter, according to people familiar with the matter. Bessent has repeatedly hinted over the past year that he’d prefer the BOJ to raise interest rates to help the yen rather than see repeated intervention in the market.

“Bessent’s remarks carry immense weight. The message is clear: do not defy the Treasury Secretary,” said Tadashi Matsukawa, head of bond investments at PineBridge Investments Japan Co. in Tokyo. “The old way of thinking — that interest rates would be raised once every few months — no longer applies.” (…)

“Bessent’s remarks suggest that he expects a correction in the yen’s strength even at current levels,” said Takumi Naya, head of the FX trading group at Sumitomo Mitsui Banking Corp.’s global markets operations department. “In addition to the unwinding of short yen positions, there is also a possibility that investors will shift to long yen positions. Dollar-yen could fall below 150 yen even within this month.” (…)

“Bessent’s ‘I am the house’ remark reflects the mindset of a former trader who truly understands market dynamics, which is likely why the market shows him a certain level of respect,” said Kazushige Kaida, head of FX sales at State Street Bank & Trust Co.’s Tokyo branch. “Whether it’s US Treasuries or the yen, his series of verbal warnings are probably aimed at correcting what he sees as moves that have gone too far.” (…)

“It’s possible that Bessent’s remarks on ‘asymmetric information’ may just be bluff and that he has no information beyond what the market has already priced in,” said Yujiro Goto, chief FX strategist at Nomura Securities. “The reduced risk of political interference by Prime Minister Sanae Takaichi may also be helping build momentum for further yen gains.”

Japan likely sold a portion of its holdings of foreign securities, including US Treasuries, to finance its record currency intervention, despite concern in Washington over the impact of Treasury sales on long-term yields. Katayama said on Tuesday that Japan’s stance on currencies hasn’t shifted since it conducted joint intervention with its US counterparts, and that authorities will aim to maintain an orderly FX market. (…)

Elsewhere on Bloomberg:

Osamu Takashima, Daniel Tobon and Brian Levine, strategists at Citigroup Inc.

The yen’s direction hinges on what the Federal Reserve does next week, the strategists wrote in a note.

“The present downward momentum could depress the USD/JPY to around 152.”

“Even so, if the Fed does hike, it will be difficult for the pair to become entrenched below 155.”

Maybe Bessent knows what Warsh will do…

John Authers:

(…) And indeed, the yen started at an absurdly cheap level, and it remains ridiculously weak. This is how it has performed on a real (taking into account that Japanese inflation has been the lowest in the world, which would normally mean the currency should strengthen) effective basis against a broad basket of currencies:

But why exactly is this happening now, and without desperate prodding from the US or Japanese authorities? This looks like a genuine and important market signal, but it’s come with no spending of governmental firepower a month after a massive US-Japan intervention. We now know that involved the biggest monthly decline in Japanese foreign exchange reserves on record, but it had a relatively muted effect.

The key lies in the movement of huge sums of money. The yen was not only very cheap when this episode started; it was also being bet against to a reckless degree. Once some volatility returned, plenty of traders were exposed and had an incentive to reduce their shorts — which meant that the currency would recover. (…)

In such conditions, it was not difficult to start a move. Last week’s news that Norway’s Norges Fund, one of the biggest sovereign wealth pools, was reallocating its fixed income portfolio in a way that likely shifts from Treasuries to Japanese bonds prompted speculation that more international money would move back to Tokyo and its newly competitive yields.

Jesper Koll, who publishes the Japan Optimist newsletter, points out that the rise in bond yields has left the country’s biggest quasi-national asset managers (known as the whales) nursing losses that might force them to make sales — even though they’re still sitting on big profits from overseas investments. This would be the first forced selling since 2011 (which was triggered by FX losses). He said:

This “implosion risk” is what the Treasury secretary is worried about when he says Japan is a key provider of global capital and weakness there will have spillover effects that we must guard against.

(…) Instead of hoping for a global slowdown, the strategy under Japan’s control would be to speed up repatriation of assets from overseas. If that happens, the rest of the world will need to learn how to do without Japanese funding.

Bessent Warns ‘Nothing Else Would Matter’ If China Wins AI Race

Treasury Secretary Scott Bessent warned the US faces dire consequences if it loses out in the AI race with China, highlighting the angst in Washington about its rival’s tech advances.

“There is no day after tomorrow if China wins at this,” Bessent said at a Breitbart News event in Washington on Tuesday, indicating also that the US’s large defense budget would fail to protect the nation. “If they were to pull away from us on AI, then nothing else would matter.” (…)

Bessent’s remarks also highlight worries in the US about open-weight Chinese models that are nearly as powerful as American versions at a fraction of the cost for the user. That’s happening even though the US has tried to deny China access to its most advanced tech. (…)

Opposition to Local Data Centers Rises Sharply, Annenberg Survey Finds

• Opposition to local data centers rose 12 points over four months: Three in five Americans (61%) now somewhat or strongly oppose the construction of new data centers in their area, up from 49% in the survey ending in March.
• Opposition crosses party lines and is highest among younger adults: Majorities of Democrats (69%), Republicans (54%) and independents (53%) oppose new local data centers. Opposition is highest among young adults under 30 (70%) and declines to 57% among those 65 and older, the inverse of what one might expect for a new technology.
• Views of AI overall, and demand for regulation, have held steady: 39% expect AI’s impact on the United States to be negative over the next decade, against 18% who expect it to be positive, unchanged from the spring. Two-thirds (68%) say the government has done “too little” to regulate AI.
• Medical research remains the one area where Americans expect AI to help: Across 13 areas, only medical research and discoveries draws a net-positive assessment (+41 points) in which the anticipated benefits of AI outweigh the expected negatives. The most negative areas are personal privacy and data security (-63 points), children’s safety online (-50 points), and employment and jobs (-46 points).

“What stands out is the contrast,” said Shawn Patterson Jr., an APPC research analyst. “Americans’ expectations for how AI will affect the country, and their views toward regulation, are essentially unchanged since March. Over the same period, however, opposition to a data center in their area rose 12 points. That’s a dramatic move over a relatively short period of time.”

What stands out to me is that only 18% expect AI to positively impact the US economy and that opposition is highest among young adults (70%)!

In China?

An August 18, 2026 report by NBC News revealed that Chinese data centers face virtually no organic grassroots opposition.

The Chinese government actively mitigates local urban friction through its massive “East Data, West Computing” (东数西算) state strategy.

• Instead of building facilities near heavily populated, water-stressed metro areas, China mandates the construction of massive data center clusters in sparsely populated, resource-rich western provinces.
• Beijing heavily subsidizes domestic AI data center operators, covering up to half of their total energy costs to ensure local consumer utility rates remain unaffected.
• Sentiment among young Chinese tech workers and citizens heavily aligns with national technology initiatives. The Chinese government explicitly frames AI and robotics as the crown jewels of its industrial future. Consequently, infrastructure growth is widely viewed by the public as a point of national pride and economic competitiveness rather than a localized environmental threat.

Google to Invest €13 Billion in AI Infrastructure in Finland

Alphabet Inc.’s Google is planning its biggest investment in Europe, an artificial intelligence infrastructure build out worth at least €13 billion ($15.1 billion) in Finland.

The investments over the next two years will include the construction of at least three new data centers as well as the expansion of its existing data center in the southeastern city of Hamina, the company said in a statement on Wednesday.

Google’s move is part of a large-scale build-out of computing capacity in the Nordic country, coming on top of an estimated €43 billion worth of projects being planned or executed.

Those projects are taking advantage of Finland’s relatively cold climate, which requires little cooling and where heat generated by the servers can be captured to warm up homes. In addition, 96% of electricity in the Nordic country is based on carbon-free production, mostly a mix of nuclear and renewable power. There’s also plenty of available fresh water, and most data centers in Finland are built with a closed loop system reducing water waste. (…)

The projects in Finland haven’t inspired as intense a public backlash as some of the proposed sites in the US or other parts of Europe, where concerns over land and resource use and power costs have delayed or derailed projects. (…)

Other companies building, operating or planning data centers in Finland include Microsoft Corp., Nscale, AtNorth Holding AB, Pure Data Centres Group, Nebius Group NV, DayOne Data Centers and Polarnode. There are so many projects that the government is planning a law that would require operators to register data centers to ensure officials can keep track of them all.

Trump’s next trade weapon

From Axios:

Trump is reaching for a more drastic trade war weapon, with new threats to shut foreign goods out of the U.S. altogether.

It would mark a significant evolution of the administration’s trade agenda, with potentially bigger economic fallout than the tariffs that have defined it so far.

• Trump may also have firmer legal footing for some import bans than emergency tariffs. Federal trade laws explicitly give presidents the power to prohibit imports under certain conditions, even where courts have rejected their authority to impose tariffs.
• Businesses can absorb the cost of a tariff, pass it on to customers, or some combination of both. But losing access to a key part or product altogether can result in shortages, stalled production and a chaotic scramble to find new suppliers.

Trump threatened to ban Canadian aircraft manufacturer Bombardier from selling jets in the U.S., just hours before Canada’s retaliatory tariffs on $20 billion worth of U.S. goods took effect this morning.

• “NO MORE SELLING BOMBARDIER IN THE UNITED STATES!” Trump wrote on Truth Social. “If they want our Market, they must build here, and stop treating America like a ‘piggybank.'”
• The Bombardier threat came days after Trump responded to the strong jobs report with a social media post demanding that the Federal Reserve lower interest rates, tying the demand to a sweeping threat to cut off trade with nations that would in theory include countries like Canada, Japan and China.
• “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT,” Trump wrote. Notably, he added: “IT’S BETTER THAN TARIFFS!”

Top Trump trade official Jamieson Greer has also floated outright bans, saying last month that it could be an option to hit back at Canada’s retaliatory tariffs.

• “We’ve never done these bans; it’s quite extreme. But maybe we need to,” Greer said in an interview with the CBC late last month.
• Greer also said in July that Trump “for sure can” use emergency powers to restrict trade, after the president threatened to cut off trade with Spain.
• At the time, Greer pointed to the Supreme Court’s ruling that blocked Trump’s emergency tariffs, noting that law “clearly says you can prohibit trade.”

The U.S. has banned imports before, though usually as part of sanctions against adversaries rather than as leverage in a trade dispute with a close economic partner like Canada.

• The Supreme Court ruling that blocked Trump’s emergency tariffs highlighted that a more potent option was available to him.
• The Court ruled that IEEPA doesn’t authorize tariffs, but the law explicitly allows presidents to prohibit imports. Trump seized on that distinction the day the ruling came down. “I can embargo, but I can’t charge one dollar,” he told reporters.
• Justice Brett Kavanaugh called that an “odd donut hole” in oral arguments, noting that a president could shut down trade entirely, but couldn’t impose even a 1% tariff.
• Section 338 of the Tariff Act of 1930, which Trump has already invoked against Canada, also allows the president to exclude a country’s goods under certain conditions.

Trump’s Bombardier threat is already showing the political realities that can complicate such drastic trade moves.

• The company — and the firms that supply it — are deeply embedded in the U.S. economy, particularly in Kansas. It employs over 1,000 people in Wichita and buys from roughly 2,800 U.S. suppliers across 47 states.
• Kansas Republicans were quick to hint at the potential for economic fallout of an outright import ban.
• “I reached out to the Trump administration to make certain the President is aware of the significant contributions of Bombardier to Kansas,” Sen. Jerry Moran posted on X.

US Escalates Canada Trade War With Product Bans, New Tariffs