Newcastle United have rejected a bid from Tottenham worth around £80m for Tonali, with the offer turned down earlier this week.
Spurs manager Roberto De Zerbi has long been an admirer of the Italian, and the London club had been exploring the financial details of a potential deal for the 26-year-old.
Newcastle, however, declined the opening proposal and are in a strong position to hold out for a higher fee closer to £100m, with both Manchester City and Arsenal also monitoring the situation.
The Magpies have already sold Anthony Gordon to Barcelona this summer, but chief executive David Hopkinson has made clear the club will only do business "on our terms".
Tonali is effectively contracted to Newcastle until 2030, having signed a new deal during his 10-month betting ban to repay the faith the club showed in him throughout that period.
The wider market may also work in Newcastle's favour. Manchester City have already had a second bid worth around £120m rejected by Nottingham Forest for Elliot Anderson, while relegated West Ham want up to £80m for Mateus Fernandes, underlining the scale of valuations attached to top central midfielders this summer.
Should a bidding war develop for Tonali, Newcastle's negotiating position would only strengthen further, with the club showing no urgency to accept an offer below their valuation for a player they consider central to their plans.
Tonali has become one of Newcastle's most important players since his £55m move from Milan in 2023, recovering from his betting suspension to establish himself as a key figure in midfield under Eddie Howe. His willingness to commit his long-term future to the club during a difficult period in his career has only strengthened the bond between player and supporters, making any potential departure a sensitive subject regardless of the fee on offer.
For Tottenham, the rejection represents an early setback in their pursuit, though De Zerbi's reported admiration for the player suggests the club may return with an improved offer rather than abandoning their interest entirely.