Evening Briefing: Europe

President Donald Trump suggested the US is nearing an agreement to curb Iran’s nuclear activities, telling business leaders during the final leg of his Gulf trip, “I think we’re getting close to maybe doing a deal.”

His comments prompted a sell-off in oil with prices falling sharply. But while Tehran has spare capacity that it could bring back, any deal isn’t likely to impact global supply much.

As Iran considers a US proposal presented during the fourth round of negotiations last week, Washington is ramping up the heat — announcing new oil sanctions and repeating threats of military strikes if Tehran walks away.

The Islamic Republic can reluctantly agree to terms or resist and risk the diplomatic efforts falling apart. Alternatively, an interim agreement would give Trump a quick win and relieve some of the pressure on Iran. — Caroline Alexander

What You Need to Know Today

The EU is said to be revising its proposals for a potential trade deal with the US as a step toward opening serious negotiations. The new EU proposal would provide more details on ways to lower trade and non-tariff barriers, as well as boost European investments within the US and purchases of US goods. Despite the slow progress in direct talks, European trade ministers said they see reasons for optimism.

An improved trade deal with the EU would hand UK Chancellor Rachel Reeves £10 billion ($13.3 billion) in the Autumn Budget and limit the need for further tax increases, according to economists. A summit next week between the two sides is expected to clear the way for closer harmonization of food standards and an agreement for the UK to rejoin the European emissions trading scheme. The bigger, longer-term goal is a deal that would require closer regulatory alignment on goods.

Rachel Reeves. Photographer: Tolga Akmen/EPA

The Kremlin sent a low-level delegation to take part in planned peace talks in Turkey today, angering top European diplomats as well as Ukrainian President Volodymyr Zelenskiy. But Trump told reporters it shouldn’t have come as a surprise that Vladimir Putin didn’t show up, saying there’ll be no resolution of Russia’s war until the two of them meet.

Recession remains a possibility as tariff fallout continues to buffet global economies, according to JPMorgan Chase Chief Executive Officer Jamie Dimon. “Hopefully we’ll avoid it, but I wouldn’t take it off the table at this point,” Dimon said in a Bloomberg Television interview. The Trump administration’s tariff policies have been jolting markets for more than a month, and Dimon said some clients are holding back on investments because of all the volatility.

Trump’s flurry of artificial intelligence deals during his tour of the Middle East is opening a rift within his own administration. China hawks are growing increasingly concerned the projects are putting US national security and economic interests at risk. Some senior administration officials are seeking to slow down the deals over concerns the US hasn’t imposed sufficient guardrails to prevent American chips shipped to the Gulf from ultimately benefiting China, which has deep ties in the region.

Growth in US retail sales decelerated notably in April, reflecting consumers pulled back spending on cars, sporting goods and other categories of imported goods amid concerns about rising prices from tariffs. After loading up on purchases to front-run Trump’s tariffs, figures suggest consumers are tempering their spending and will fuel concerns of weaker economic growth. Companies, investors and economists are cautious on the outlook as consumer sentiment sours.

With Europe embroiled in war and capitals from London to Warsaw stunned by Washington’s undermining of transatlantic ties, Serbia is positioning itself at the nexus of the Trump family’s outreach. For President Aleksandar Vucic, it’s a chance to consolidate his role as the key powerbroker in the volatile Balkan region just as anti-government protests at home pose the greatest challenge to his 12-year rule.