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Li Chenggang is expected to come to Washington this week in a sign that both the U.S. and China seek to establish regular dialogue

A senior Chinese trade negotiator is heading to Washington this week for what is expected to be the first dialogue in the U.S. capital, according to people familiar with the matter, as both sides seek to establish regular communication during an extended tariff truce.

Li Chenggang, the top aide to Beijing’s lead negotiator, He Lifeng, will meet with deputies of U.S. Trade Representative Jamieson Greer and officials at the Treasury Department later this week, the people said. Li will also meet with representatives of the U.S. business community.

The discussions come as the U.S. and China have extended their pause on higher tariffs through early November. The truce was secured after the two sides agreed to roll back tit-for-tat tariff hikes and ease export restrictions on key goods, including rare earth magnets from China, which are critical for many industrial products, and certain technology products from the U.S.

The Trump administration has recently moderated its confrontational tone toward Beijing as President Trump is increasingly focused on trying to strike an economic bargain with China, one that aims to open the Asian giant to more American business and technology. Senior officials from both nations in recent months have also been in talks over a potential summit between Trump and Chinese leader Xi Jinping.

Speaking to reporters Monday as he met South Korean President Lee Jae Myung in Washington, Trump said he is considering a trip to China as the two countries continue trade negotiations. “At some point, probably during this year or shortly thereafter, we’ll go to China,” the U.S. president said. “We’re going to have a great relationship with China.”

Still, trade tensions are simmering between the world’s two economic powers.

Earlier this month, Trump called on China to significantly increase its purchases of American soybeans—a demand that has so far gone unanswered, with Beijing yet to buy a single cargo from the harvest that begins in September. Meanwhile, the administration is preparing to intensify scrutiny of Chinese imports of steel, copper, and lithium, in a move intended to enforce a U.S. ban on goods allegedly made with forced labor in the Xinjiang region and to align with Trump’s broader goals of lowering the trade deficit the U.S. runs with China.

In this week’s talks, the negotiator, Li, is expected to discuss soybean purchases. Li, currently a vice commerce minister and former Chinese envoy to the World Trade Organization, has years of experience using global trading rules to push back against the U.S. Some Americans who have sat opposite him in negotiations call him a tough yet effective negotiator.

Before making any commitment to buy items such as soybeans or Boeing planes, Beijing will continue to demand the Trump administration remove 20% tariffs linked to the fentanyl trade, according to the people familiar with the matter.

So far, however, the people said, China has yet to offer a proposal for curbing the trafficking of fentanyl ingredients that the Trump administration considers sufficient.

Li is also expected to continue to push the Trump administration to loosen restrictions on tech sales to China, the people said, though so far, he hasn’t had any meetings scheduled with the Commerce Department, which oversees export controls.

The administration’s decision in July to lift a ban on sales of Nvidia’s H20 chips to China has stirred up debate in Washington over how to balance U.S. companies’ commercial interests against national-security concerns. Some analysts have questioned the decision, arguing it sets a dangerous precedent by allowing export controls to be used as a bargaining chip.

Many U.S. business executives believe it remains crucial for Washington and Beijing to engage in meaningful discussions about China’s economic and industrial policies that they say have long distorted global markets and hampered fair competition.

“We’re very encouraged to see the two sides engage in direct negotiations,” said Sean Stein, president of the U.S.-China Business Council, which represents over 270 American companies doing business in China. “There are opportunities for the two sides to make progress on critical issues that extend beyond tariffs and export controls to broader trade matters.”

Retreat is a blow for chief executive Oliver Blume who oversaw establishment of sports-car maker’s Cellforce unit

Porsche has said it would ditch plans to produce its own batteries due to weak demand for electric vehicles, a setback that also highlights the difficulty faced by carmakers in scaling up battery production.

The German sports-car maker said on Monday the decision to pull the plug on its independent battery project Cellforce was made after sales of EVs in China and the US fell “short of expectations”, despite a stronger performance in Europe.

The retreat from battery production is a blow for chief executive Oliver Blume, who oversaw the establishment of Cellforce in 2021, when he said it would put Porsche at the “forefront” of battery technology and “shape the future of the sports car”.

But on Monday Blume cited “challenging conditions” in the US, where the company has been hit hard by President Donald Trump’s tariffs, and China, where the market for luxury EVs had “not yet developed”. Porsche does not have a manufacturing presence in North America.

In the first half of the year, 57 per cent of the vehicles delivered by Porsche in Europe were electrified — either full EVs or hybrids — compared with 36 per cent globally, highlighting weakness in the US and China.

Blume, who has led Porsche since 2015, is also the chief executive of its parent company Volkswagen, where he took the reins in 2022 and has been driving a big restructuring plan.

Porsche indicated that it would cut about 200 jobs at Cellforce, though employees would be offered opportunities at VW’s larger battery division, PowerCo.

Porsche’s decision to abandon its own battery production project will sharpen focus on Blume’s broader plans for the group, and the industry’s attempts to build a European supply chain and reduce dependence on Asia.

He said that while electromobility remained “essential” to Porsche’s strategy, a “lack of economies of scale” meant it no longer made sense to pursue its own battery production.

Porsche had initially intended to increase production at Cellforce’s factory in Kirchentellinsfurt and then expand to a second location. Instead, Cellforce would shrink its activities and focus exclusively on the research and development of battery cells, the company said.

Plans for battery production were no longer “economically viable”, Michael Steiner, Porsche’s board member for research and development, said in the statement.

“Due to a global lack of volumes, it is not possible to scale its [Cellforce’s] own production to the planned cost position,” he said.

From Greenland to Ørsted, US pressure unsettles Denmark

Danish officials grapple with a Trump administration oscillating between friend and foe

Twenty-four hours can be a long time in Danish-US relations.

Hours after Denmark’s foreign minister stood alongside Californian governor Gavin Newsom — the self-anointed Democratic leader of the “resistance” to Donald Trump — the US halted work on a $1.5bn offshore wind farm owned by Danish renewables developer Ørsted.

Were the two events on Friday a coincidence? Or a warning? Markets did not wait to find out: Ørsted shares plunged to a record low yesterday.

What might once have seemed like a minor commercial scuffle now feels like a geopolitical shot across the bow.

For Danish officials, it adds weight to a question that has quietly troubled the kingdom since the US president first floated the idea of taking over Greenland: how do you navigate an alliance with a superpower that starts acting like a threat?

Other countries, including Canada and Panama, have borne the brunt of Trump’s expansionist ambitions too. But Danish officials, past and present, say that his focus on Greenland — a semi-autonomous part of the kingdom of Denmark — is particularly dangerous.

“The scary thing about Trump’s rhetoric is that it’s very similar to the rhetoric of [Vladimir] Putin and Xi Jinping,” said Anders Fogh Rasmussen, a former Danish prime minister and ex-head of Nato, speaking before the Ørsted move.

It could embolden the Russian and Chinese presidents on Ukraine and Taiwan respectively, he argued.

“We should treat Trump the same way as we treat Putin and Xi Jinping,” Rasmussen posited. “Autocrats only respect one thing: power, a firm stance. You have to stand up for your own values, your own interests.”

Officials in both Copenhagen and Nuuk —Greenland’s capital — are still struggling to calibrate their response to Trump. Initially, they tried a softly, softly approach, insisting that they too were interested in discussing America’s interest in increased Arctic security.

But in recent months they have become more assertive. Denmark announced before the summer that two of its Merlin helicopters had landed in Greenland, the frigate Niels Juel was patrolling its waters, and fighter jets would also arrive soon.

Shortly afterwards came another show of strength: a visit by French President Emmanuel Macron to Greenland where he stated of Trump’s overtures: “I don’t think that’s what allies do.”

The question now is whether Ørsted — which is 50 per cent owned by the Danish state — has become part of the shadow war on Greenland.

Newsom and Lars Løkke Rasmussen, Denmark’s foreign minister and a former prime minister, were all smiles on Friday in California but others raised doubts on the wisdom of such a visit given the tensions between Copenhagen and Washington.

“It doesn’t seem so wise,” said one former Danish official, although others doubted that there was a direct link between the Newsom meeting and the order to halt Ørsted’s project off Rhode Island.

Greenland is equally befuddled by Washington acting more as foe than friend. Naaja Nathanielsen, Greenland’s minister for business, minerals and energy, says the Arctic island’s 57,000 people have been baffled by the ideology of expansionism espoused by what is after all its main security guarantor.

“The idea of taking other countries seemed to be a thing of the past . . . Right now, we’re trying to adjust. We’ve been a bit naive, all of us,” she said.

The difficulty for both Denmark and Greenland will be finding a way of appeasing the US. Danish officials say that Trump’s two publicly stated reasons for wanting Greenland — national security and deposits of rare minerals — are both achievable without a takeover.

The US already has a military base on Greenland. Both Copenhagen and Nuuk have repeatedly said they are open to a bigger American presence, even if Washington itself has slashed the number of troops present in recent decades.

Likewise, Greenland is desperate to attract international investors to its mining sector, but most have been deterred by high costs, an inhospitable climate and long payback times.

That leaves some in Copenhagen believing that Trump’s biggest motivation is the optics of acquiring new territory. “He’s a real estate man, and this would be a big real estate deal,” says one Danish official.

Denmark’s currently strategy is to play for time. Trump expressed his desire for Greenland once before in 2019, but the story fizzled out within months as he entered re-election mode. This time, he has a full four-year term but has said less about it in recent months.

For Ørsted, time is not a luxury given its balance sheet was already under pressure. The Trump administration issued a similar stop order on a wind farm owned by Equinor, the Norwegian energy group. But it had Jens Stoltenberg, Norway’s finance minister, former head of Nato and close Trump ally, to fight its corner.

Unfortunately for Ørsted, Denmark’s ties to the White House are not as strong.

Why are luxury shoes so uncomfortable?

Many designers are wedded to traditional forms and materials, whatever the wearability — but some are breaking the mould

Designer footwear often looks great but doesn’t feel it. Don’t get me wrong, I deeply appreciate luxury goods. I go nuts for Dries Van Noten and the Belgian brand’s beautiful, quirky shoes, but the insoles feel like plyboard. Marni’s chunky Fussbett sandals are likewise superb, but dig into every tender part of my sole, bringing to mind the time I stepped on an upturned plug in bare feet.

Why splash out on Birkenstock 1774s (which may as well have been made in 1774) when their delicious colours and luxe materials sit atop a sole that feels like carved stone? That sleek leather coating over the cork just renders them less wearable and more expensive. The basic Arizona, at £85, wins hands down.

Are the two things mutually exclusive? Why can a beautiful shoe not also be comfortable? Ulrich Grimm, a shoe designer and product developer who teaches at Parsons school of design in New York, suggests that while “the rest of the industry and the consumer have moved on, designer shoes have simply stayed the same”.

Specifically, makers are still using traditional leather soles. “We have become accustomed to the cushioning of moulded soles footwear [like those found in trainers], even in a professional or formal setting,” he says. “This has created a new standard for comfort that many luxury brands have yet to meet, particularly in non-sneaker styles like ballerinas and loafers. Traditional leather soles do not provide the shock absorption consumers have come to expect.”

Other design elements are also adding to the discomfort. Friends and clients complain of designer shoes with stiff leather, non-existent padding, digging straps and stress-inducing heels. What gives?

British footwear designer Rupert Sanderson suggests that designers too often prioritise form over function. “Comfort is relative,” he says. “There is a trade-off between elegance, heel height and foot coverage”, which can be “mitigated with linings and reinforcements”. Balance matters too, “created through the last [the block that shoes are moulded from] and the heel structure — it’s engineering [and] often gets overlooked in the pursuit of fashion”, Sanderson says. When the balance is off, that’s when you can experience extreme discomfort, even in a low heel.

Deborah Carré, co-founder of London-based bespoke shoemakers and training school Carréducker, recommends looking for shoes with rubber soles and breathable linings. Shoes should also be designed to allow for feet swelling throughout the day — “which is why it’s best to try on new pairs in the evening”, she says.

My own discomfort in designer shoes has been exacerbated by the menopause. According to Helen Branthwaite, chief clinical adviser at the UK’s Royal School of Podiatry, “our feet change as we age — the stiffness of connective tissue can alter the shape. Depletion of the padding in the ball of the foot and shifts in joint positioning mean a loss of natural cushioning. This is especially true for post-menopausal women where loss of collagen affects soft tissue, foot width and collapsing arches.”

Beyond choosing the right shoe (I like those with integral arch support, as offered by Ancient Greek Sandals’ Eleftheria sandal, £129 on sale, ancient-greek-sandals.com), gel insoles from Scholl really help me.

At the recent Liberty sale in London, I spotted a pair of silver pointed-toe Jil Sander heels marked down from £790. I lunged at them, but the joy evaporated the moment I tried them on. Gorgeous? Yes. Wearable? Absolutely not. Even on carpet, they were torture. I considered stretching them, breaking them in, but decided to just leave them behind.

Fast-forward a few months: I am in Massimo Dutti, having a browse. And I see them: heels with the same elegant shape as the rejected Jil Sander, now in oxblood crackled leather and all for £119. The high street is renowned for copying designers and while more palatable cost-wise, its offerings are often lacking aesthetically. Not this pair.

I slipped my foot in and sighed. They were padded all though the insole, not just at the ball of the foot (where I have lost fat in the only place on my body I would rather not) and leather-lined, with a slightly flexible rubber sole. Finally, luxury that feels as good as it looks. 

Anna Berkeley is a London-based personal stylist

Battle for the seabed: defence groups take aim at underwater security

Disruption to gas pipelines and telecoms cables have focused policymakers’ minds on protecting submarine assets

Defence companies, marine contractors and technology start-ups are gearing up for a looming multibillion-dollar surge in government spending in a new battlefield: the defence and attack of national maritime assets as well as critical infrastructure.

Recent disruption to seabed gas pipelines and telecoms cables have focused military planners’ minds on finding ways to protect underwater assets that are crucial to modern economies.

The US recently strengthened the defence of its underwater infrastructure with the Federal Communications Commission tightening subsea cable regulations.

Protecting the underwater domain was also one of the main messages in the UK’s latest strategic review of its military capabilities.

The “effort to maintain situational awareness underwater and track relatively elusive targets is not something navies are strangers to”, said Sid Kaushal, a naval warfare expert at the Royal United Services Institute. 

But new threats, from attacks on infrastructure such as cables and pipelines to assaults on cargo ships, mean the traditional approach to underwater warfare — where a maritime patrol aircraft and a few frigates are called upon to track one hostile submarine — is becoming unsustainable and costly.

The task has been made even harder as critical national infrastructure has been targeted. 

The challenge was one of “scale and how to scale [your] capabilities”, said Kaushal. 

Some of the world’s best-known defence companies, including BAE Systems and Thales, as well as smaller players from Ultra Maritime to start-ups such as Helsing, are investing heavily in cutting-edge technologies for navies around the world, including in the UK, Australia and the US.

Companies are also eyeing Nato’s Digital Ocean Vision initiative, which aims to enhance the alliance’s ability to understand and assess events under, on and above the sea using everything from satellites to autonomous systems.

The challenges of operating underwater are numerous. It is an “environment of extremes”, said Dave Quick, head of underwater weapons at BAE Systems. Quick cites the “depths, the [water] pressures, the acoustic environment that all the systems are dependent upon and the unimaginable vastness of it all”. 

Europe’s largest shipbuilder, Fincantieri, expects the global defence and commercial underwater market to grow €50bn a year. The Italian state-controlled company expects its underwater division to double in size over the next two years, reaching €820mn in revenue in 2027.

Executives said advances in microelectronics and autonomy, as well as the increasing adoption of artificial intelligence in civil and military spheres, were helping to drive a revolution in what is possible.

The “proliferation and the cost reduction of really sophisticated high-performance computing systems and micro electronics . . .[have] made things possible that had not been possible for decades in terms of miniaturisation, power utilisation and processing capability”, said Brett Phaneuf, chief executive of MSubs, which specialises in underwater vehicles. 

The Plymouth-based company, which is owned by Phaneuf’s Submergence Group, recently developed an extra-large, uncrewed submarine for the Royal Navy.

Dubbed Excalibur, the 12m-long experimental vessel, 2.2m in diameter and displacing 19 tonnes, is the largest uncrewed underwater vessel trialled by the navy to date. It will spend the next two years carrying out sea trials to help accelerate the navy’s use of advanced technologies. 

“We’ve reached a tipping point on several fronts,” said Ian McFarlane, sales director for underwater systems at Thales UK. Not only have there been advances in the miniaturisation of some of the capabilities required, such as sensors, but also in the development of the uncrewed platforms to carry them. 

The result was that “you can put mass at sea with smaller sensors to hopefully do the same job”, he said. 

The company, which has provided sonar systems for the Royal Navy for decades, is among several interested in the navy’s upcoming Project Cabot — to deploy a fleet of crewed and uncrewed vehicles to provide an anti-submarine warfare capability.

The navy will work with defence contractors to use underwater drones to collect acoustic data, which can then be processed using AI to detect potential threats.

McFarlane said Thales was in talks with strategic partners on Cabot. The aim, he said, was as much about handling the data that was collected through sensors and other means as well as transferring it into usable information and presenting it in such a way that people understand what they are looking at.

Ensuring you can deliver critical data securely and as close as possible in real time is critical, according to executives. 

“You can’t have a bad day,” said BAE’s Quick. The systems that companies offer have to be “resilient” and to work when needed. It was also important to have the “military understanding to know when something looks wrong”. 

The company, which builds all of the nuclear submarines for the Royal Navy, has developed an extra-large autonomous underwater vehicle developed specifically for military use.

Dubbed Herne, Quick said the modular vessel offered users a huge amount of flexibility, allowing them to add extra length for additional payloads, as well as “incredible range and endurance”. 

The increased threat has also prompted interest from defence technology start-ups, including Europe’s Helsing as well as Anduril UK, the British subsidiary of the US group. The companies are hoping to leverage their faster development times to secure positions on important programmes. 

Helsing said in July it had chosen Plymouth in Britain’s south-west as the site for a factory to build a fleet of AI-powered autonomous gliders, called SG-1 Fathom.

The company said a single operator would be able to monitor hundreds of SG-1 Fathoms, receiving intelligence at just 10 per cent of the cost of crewed anti-submarine warfare patrols.

Helsing plans to deploy the system — which it is developing in partnership with underwater drone group Blue Ocean Marine Tech Systems, maritime robotics specialist Ocean Infinity and FTSE 250 defence group Qinetiq — within the next 12 months.

US rival Anduril, meanwhile, has teamed up with British companies Sonardyne and Ultra Maritime to offer a real-time, autonomous submarine sensing system named Seabed Sentry.

Dropped from a ship or submarine, Seabed Sentry forms a network of low-cost yet sophisticated “sensor nodes” on the seabed. Coupled with Ultra’s Sea Spear, a lightweight sonar system, the system acts as a “trip wire” to warn of any suspicious underwater activity in real time.

Richard Drake, general manager of Anduril UK and the broader European region, said the company had managed to go from “concept to testing in the water” for Seabed Sentry in about a year. 

“We’re all about getting something in the water . . . It’s a software approach to hardware.”

Home advantage

Is the state-owned French energy giant EDF misusing EU rules to boot out foreign competition? South Korea’s nuclear industry thinks so, write Alice Hancock and Ian Johnston.

Context: The Korean state nuclear company KHNP won an $18bn contract to build a nuclear plant in the Czech Republic, but construction was temporarily halted in May after an eleventh-hour intervention by EDF that led to a challenge in the courts.

While construction at the Dukovany plant is now going ahead, EDF’s intervention led the European Commission to open a foreign subsidies investigation into the Korean company. EDF stated that KHNP would not have been able to guarantee such a low price for the project without “illegal state aid given the prices in the nuclear industry”.

The Korean nuclear trade association KAIF has now hit back at the accusations.

“We are concerned that foreign-subsidy regulation rules are being misused by EDF, especially in light of its own history of receiving generous subsidies and state aid in multiple jurisdictions,” KAIF told the Financial Times.

“Not only does this have serious negative implications for the EU’s ambition to advance its energy security, but it also risks the credibility of the FSR instrument as a whole,” KAIF added.

The statements come as the commission reviews how it uses rules on foreign subsidies, which allow the EU executive to investigate subsidies that could give an unfair market advantage to foreign companies.

KHNP has indicated that, should the commission launch a full probe into the company with a provisional ban on construction at Dukovany, it would challenge Brussels in the EU courts.

EDF declined to comment.

As a French state-owned company, EDF is not subject to the EU’s foreign subsidies regulation. It has received multibillion loans and grants from the British and French governments, although officials argue that these have been allowed under EU state-aid rules. It also receives significant subsidies in countries such as Brazil, the US, Vietnam and Chile.

In March this year, the French government committed to cover half the construction costs of six new EDF reactors via a subsidised loan expected to exceed €30bn, and which still needs to be approved by the European Commission.

Disrupting the delicate sovereign debt equilibrium

Default leads to lawsuit; lawsuit leads to precedent; precedent leads to suffering.

Every restructuring of sovereign debt over the last half century has been conducted in the shadow of a delicate equilibrium. Once again, this fragile balance is being rattled by the idiosyncratic interpretation of a US judge.

In the absence of any form of bankruptcy code or other insolvency process for sovereign debtors — and bereft of the legal immunities that sovereign governments enjoyed until the last quarter of the 20th century — it has been relatively easy for creditors to obtain court judgments against payment-challenged sovereign borrowers. 

Countervailing this advantage, however, has been the practical difficulty facing creditors when they attempt to collect on those judgments. Most governments typically hold few assets abroad that can be seized by creditors to satisfy court awards. 

The US government has even implied that this equilibrium produces the optimal outcome. Countries are dissuaded from casually defaulting on their debts by the fear of creditors hounding them in foreign courts. And investors are discouraged from “holding out” of consensual debt restructurings by the prospect of an exasperating and expensive effort to collect on their court judgments.

A great disturbance in the Force

This equilibrium suffered a major shock on June 30, 2025 when Judge Loretta Preska of the federal District Court in New York issued two orders directing Argentina to bring into the US assets held by Argentina outside of the US to satisfy two federal court judgments (specifically, shares of the Argentina’s mostly state-owned energy company, YPF).

For obvious reasons, the principal restraint on holdout creditor behaviour in sovereign debt workouts — that is, the paucity of government assets that can be seized to satisfy court judgments — would be seriously eroded were holdouts able to force sovereign defendants to bring fresh assets into the jurisdiction for them to seize.

The implications are worrisome enough that the rationale behind Judge Preska’s so-called “turnover orders” is worth exploring in some depth. The logic unfolds in two steps. 

The first focuses on the New York statute governing the procedure for enforcement of a money judgment against property of a defendant. 

In a 2009 case the New York Court of Appeals held that this statute authorised courts to order the turnover of a private sector debtor’s property held outside of New York. However, countries that issued bonds under New York law and submitted themselves to the jurisdiction of US courts took considerable comfort from the fact that the only US statute governing the immunity of foreign sovereign property — the Foreign Sovereign Immunities Act of 1976 — limited creditor attachment rights only to property in the US “used for a commercial purpose”.

The second step in Judge Preska’s reasoning derives from a case that reached the US Supreme Court in 2014 — the infamous Republic of Argentina vs NML Capital legal saga.

The question at the time was whether a creditor of Argentina was entitled to discovery concerning Argentina’s worldwide assets in order to assist in recovery efforts. Argentina argued that because the Foreign Sovereign Immunities Act limited creditor attachments to property used for a commercial purpose in the US, the plaintiff’s discovery request was overly broad. The Supreme Court disagreed. 

In a decision written by Antonin Scalia, the court held that because the FSIA is silent on the question of the scope of post-judgment discovery in aid of execution, there is no basis in the text of the statute to restrict such discovery to US-based assets. In the two sentences that would later form the basis for Judge Preska’s finding, Scalia wrote: “Thus, any sort of immunity defence made by a foreign sovereign in an American court must stand on the [FSIA’s] text. Or it must fall.”

‘Unprecedented’: Donald Trump moves on the Federal Reserve

President’s attempt to fire governor Lisa Cook risks undermining central bank’s independence

Donald Trump has throughout his presidential career fought the Federal Reserve and its chair Jay Powell with public bluster and verbal threats to try to get his way on interest rates.

But on Monday night the US president took his assault on the world’s most important central bank to the next level, saying he would remove governor Lisa Cook from office with “immediate effect”. 

Trump’s late-night putsch represents one of the gravest challenges to the Fed since it became independent 74 years ago, and marks a stunning escalation in the president’s attack on the US economic establishment. 

Cook, the first Black woman to join the Fed’s board of governors, has vowed to fight Trump and remain in office, saying the president had “no authority” to fire her.

But the president’s move showed a ruthless determination to seize decision-making at the central bank, even at the cost of the independence that for decades has helped sustain faith in US economic policymaking and the dollar’s status as a reserve currency.

“This is unprecedented,” said Lev Menand, a professor at Columbia Law School. “If this removal sticks . . .  it spells something close to the end of central bank independence in the US.”

David Wessel, director of the Hutchins Center for Fiscal and Monetary Policy at the Brookings Institution, had an even starker warning. “President Trump seems determined to control the Fed — and will use any lever he has to get a majority on the Federal Reserve Board of Governors,” he said. “This is one more way in which the president is undermining the foundations of our democracy.”

Trump’s attack on Cook, who the president’s federal housing director has accused of lying on her mortgage paperwork, comes just weeks after he fired the head of the Bureau of Labor Statistics following a monthly jobs report that pointed to a sharp slowdown in hiring in recent months.

The president has also challenged the independence of the country’s judges and used his executive authority to attack the academic establishment, media groups and law firms.

But his moves against economic agencies have unnerved investors, who have grown increasingly worried about institutions that have long been at the forefront of data analysis and policymaking.

Investors sold long-term US Treasury bonds following Trump’s intervention, pushing the 30-year yield up 0.05 percentage points to 4.94 per cent. The dollar also slipped against its peers, but the moves were more subtle than those during other recent bouts of market tumult.

“Unless and until the bond market responds poorly to the attacks on Fed independence, there is no reason for the administration to change their tune: they are slowly gaining control over the institution and there appears to be little that will stand in their way,” said Eric Winograd, senior economist for fixed income at AllianceBernstein.

Trump’s imprint is already present at the Fed. Two of its seven board members, Christopher Waller and Michelle Bowman, were selected by him during his first term in office.

This month, Adriana Kugler, who was tapped to be governor by former president Joe Biden, announced she was stepping down before the end of her term next year, prompting Trump to pick Stephen Miran, one of his closest economic advisers, to succeed her.

If Trump succeeds in ousting Cook, whose term runs to 2038, it would give his nominees control of the seven-member board of governors. Moreover, the presidents of the 12 regional Feds, all of whom serve five-year terms, will need to be renewed at the end of February 2026. The decision to renew their terms lies with the Fed’s board.

“If the president were successful [in ousting Cook], the outcome would be momentous,” said Michael Feroli, chief US economist at JPMorgan.

In his letter to Cook, Trump cited allegations brought by Bill Pulte, head of the Federal Housing Finance Agency, of mortgage fraud prior to her time at the Fed as his justification for removing her. The justice department last week called for Powell to remove Cook, but she has not been charged with wrongdoing by prosecutors.

Cook’s attorney, Abbe David Lowell, said on Monday evening that “we will take whatever actions are needed”.

Cook’s first step in fighting back is likely to be an application for a preliminary injunction from a federal-district court. This path was set by Gwynne Wilcox of the National Labor Relations Board and Cathy Harris, the Merit Systems Protection Board chair, both of whom were dismissed by Trump earlier this year.

If an injunction were granted, the Trump administration would almost certainly appeal against the decision to a higher court, with the case ultimately reaching the Supreme Court.

Trump’s push to sack Cook comes even as the Fed is moving in the monetary policy direction he has been advocating for — an interest rate cut as early as September.

“From a bond investor standpoint, it just adds a little more uncertainty and too much emphasis on the Fed, as opposed to the underlying economy and what the data is telling us,” said Jack McIntyre, portfolio manager for Brandywine Global Investment Management.

Steven Englander, head North America strategist at Standard Chartered, said Trump’s move could be read as a warning to Fed officials that they will “face a lot of legal, financial and political pressure if they drift too far from the administration line”. That could bring lower rates and a cheaper dollar, he added.

Still, the attack by Trump will leave a mark, drawing more comparisons with authoritarian leaders in emerging markets — such as Turkish strongman Recep Tayyip Erdoğan — who have tried to bend monetary policy to their will, crushing confidence in their economic management.

“The US situation and what we have seen in Turkey are eerily familiar,” said Lars Christensen, who heads Paice, a consultancy. “It takes a while to erode an institution’s credibility. But once trust is broken, the cost is immense.”