Good morning. European governments had been pressuring President Trump to impose stronger sanctions on Russia. Then Trump flipped the script, challenging them to halt purchases of Russian oil and put tariffs on India and China. Now, European leaders are struggling to come up with a response.

This week, they delayed a proposed package of sanctions against Russia to figure out how to toughen it up, according to diplomats. Heeding Trump’s call for stringent sanctions on China and India and ending purchases of Russian oil outright is a tough ask for Europe.

• New measures: After speaking to the president on Tuesday, the leader of the European Commission, Ursula von der Leyen, said the new sanctions proposal would hit Russia’s banking sector with extra restrictions, and punish its crypto markets and energy sector.
   
• Supporting Kyiv: Separately, Trump has called on Europe to make use of frozen Russian assets held in Belgium since the start of Moscow’s invasion of Ukraine, according to people familiar with the president’s calls with the bloc’s leaders. The White House didn’t immediately respond to a request for comment. Europeans have been considering ways to leverage the assets to support Kyiv after being reluctant to tap them for fear of damaging the bloc’s reputation as a destination for global capital.
   
• The context: Europe’s scramble for answers to Trump’s challenge illustrates the problems the 27-member bloc has in coordinating a response to a bellicose Russia after the U.S. stopped direct military aid to Ukraine. It also exposes how few tools the countries have, or are willing to use, to inflict pain on Moscow. Rounds of EU sanctions haven’t crippled the Russian war machine, and a European pledge to purchase U.S. weapons to help Kyiv in its defense has faced implementation delays. Some in the bloc still depend on Russian oil and gas.

KPMG ignored flaws at regional banks before 2023 crisis, Senate report finds.

KPMG ignored several flaws at Silicon Valley Bank and two other banks before their collapse in 2023, signs of shortcomings in their auditing oversight, according to a report from Senate Democrats.

The Big Four accounting firm had yearslong awareness of problems at SVB, Signature Bank and First Republic Bank before they failed, but it provided clean audit reports for the regional banks, Democrats on a Senate Homeland Security and Governmental Affairs subcommittee said Wednesday. The banks were unprepared for higher interest rates, which weakened the value of their securities and loans and led depositors to seek higher rates.

Ben & Jerry’s co-founder quits after 47 years, cites loss of independence under Unilever.

Ben & Jerry’s co-founder Jerry Greenfield said he is quitting the brand after 47 years, accusing parent company Unilever of undermining the ice-cream brand’s independence.

In a message posted on social media, Greenfield said he decided to leave Ben & Jerry’s because it was no longer allowed to stand behind social issues that were core to its business.

• Nvidia was dragged further into the U.S.-China trade war after Beijing’s top cybersecurity regulator urged big tech companies not to buy one of its newest chips.
   
• The Kremlin has long insisted that President Vladimir Putin’s main political opponent, Alexei Navalny, died of natural causes. Now, Navalny’s widow says she has fresh evidence he was killed.
   
• The U.S. Treasury Department sanctioned two Iranian financial facilitators and 16 entities based in Hong Kong and the United Arab Emirates for allegedly coordinating over $100 million in cryptocurrency purchases to fund Iran’s Revolutionary Guard and military operations, Risk Journal reports. 

Fed lowers rates by quarter-point, signals more cuts are likely.

The Federal Reserve approved a quarter-point interest rate cut Wednesday, the first in nine months, with officials judging that recent labor-market softness outweighed setbacks on inflation.

A narrow majority of officials penciled in at least two additional cuts this year, implying consecutive moves at the Fed’s two remaining meetings in October and December. The projections hint at a broader shift toward concern about cracks forming in the job market in an environment complicated by major policy shifts that have made the economy harder to read.

• Powell’s Last Stand: Balancing a Tricky Economy and Intense Political Pressure
• The Fed Rolls Back Recession Risk
• Bank of England Leaves Key Rate on Hold, Slows Quantitative Tightening
• U.K. Inflation Holds at High Level

• The European Union wants to suspend preferential tariff treatment on more than one-third of Israeli goods exported to the bloc and expand its sanctioning of officials in response to the crisis in Gaza.
   
• Home-building slumped last month, as mortgage rates remained high and amid an uncertain environment for building-materials prices.

• The U.S. military operations launched against Latin American drug smugglers in the past month have repeatedly echoed the tactics and jargon of the two-decade-long global war against terrorist groups, casting traffickers not as criminals but as enemy combatants to be neutralized with deadly force.
   
• Heightened fears of politically motivated attacks have prompted Republican leaders to throw their support behind tens of millions of dollars in new spending for lawmaker security, a move rattled rank-and-file members say is long overdue.
   
• Ocean shipping companies say importers and exporters won’t have to pay surcharges when new fees are imposed next month on Chinese ships at U.S. seaports. Some businesses fear price increases are coming anyway.

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