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Good morning, I’m back to Firstft Asia. In today’s newsletter:
US-UK Trade Contract Disrupts China
Trump announces AI and defense deals in Saudi Arabia
How India and Pakistan pulled back from the brink of war
China has criticised the trade contract between the UK and the US, which can be used to narrow Chinese products from the UK supply chain, complicating London’s efforts to restructure ties with Beijing.
Why is China upset? The trade agreement agreed last week by US President Donald Trump and British Prime Minister Kiel Starmer includes strict security requirements that are considered targeting China. The agreement included a punitive reduction in US taxation on UK automobile and steel exports, but these are only granted to the condition that the UK “works quickly to meet US requirements” regarding supply chain security and “ownership of related production facilities.”
View from Beijing: Asked about the contract, China’s foreign ministry said that agreements between nations are “basic principles” that should not target other countries. According to a government advisor focused on trade, London’s acceptance of Washington’s security clauses sparked surprises and concerns in Beijing, particularly as the eugenic patients government worked to improve relations with China. One Chinese government advisor who asked not to name him told FT:
Why does it matter: Comments could put London in a difficult position between two economic superpowers, making it even more difficult for the UK government to reset its ties with China. Beijing warns countries that have signed trade deals with the US that threaten China’s interests, and fears that Trump will use bilateral negotiations with American commercial partners to pressure China to cut off its supply chain. Please read the entire story.
Here is the other thing we keep tabs today:
Syria: Trump is expected to meet Syrian new president, Ahmed Alshara, in Riyadh. The day after the US president announced that he would lift sanctions on countries abolishing war.
Results: Sony and Tencent Report.
Donald Trump’s return to the White House has sparked a surge in tension with China, bringing major questions to global businesses, markets and other worlds. Join us on May 28th for insights into the most consequential geopolitical competition of our time. Sign up now and ask the panel questions.
Five more top stories
1. Trump welcomed US-Saudi Arabia relations yesterday as a “bedrock” of safety and prosperity, when he began his first leg of a triple oil-rich Gulf tour of the three-country country. Before Trump’s speech, to an audience including US business leaders and Saudi Arabia’s Crown Prince Mohammed bin Salman – the White House announced it had said it was $600 million worth of defense, artificial intelligence and other kingdoms.
2. Nissan plans to impose 15% of the global workforce and cut the number of plants by nearly half, but Honda warned that Japanese automakers will be hit by 650 billion yen from US tariffs as they struggle with restructuring and fallout from the trade war. “The impact of tariff policy is huge,” said Toshihiro Mibe, Honda CEO, adding that the modelling represents the worst-case scenario.
“Buy Japan”: Foreign investors bought record amounts of Japanese stocks and bonds in April amid the chaotic aftermath of Trump’s “liberation day” tariffs.
SoftBank Results: Masayoshi’s son’s technical conglomerate recorded a profit of $3.5 billion in the most recent quarter.
3. Australia’s liberals have elected their first female leader after an overwhelming defeat in this month’s national election. Sassan Ray, the deputy leader of Australia’s 80-year-old Central Right Party, won a slim majority yesterday in the vote for a closed MP in Canberra. One liberal lawmaker said Ray needs to be “blooded” to revive the opposition.
4. Microsoft cuts 3% of the global workforce, the latest job cut at major technology companies. Microsoft has joined Amazon and Meta in recalibrating its workforce amid a significant investment in AI and increased competition with startups, including Openai.
5. Singapore-based Start-Up Abaxx Exchange is looking to challenge the global bullion market to control London and New York with the launch of a new physical gold deal following this year’s ferocious price rallies. Abaxx CEO Josh Crumb described the gold market structure as “difficult” because the infrastructure didn’t respond to the way it traded.
Detailed news
India and Pakistan claim victory in a brief, sharp conflict that brought their nuclear-armed neighbors to the brink of war last week. However, analysts said that both countries were hit hard, but US intervention that led to a ceasefire gave Islamabad a diplomatic advantage.
We’re reading too. . .
Oversaving: It seems we can’t turn the surplus of some countries into productive investments elsewhere, writes Martin Wolf.
Trump’s Middle Eastern Doctrine: Israel is being separated from Iran and Saudi Arabia as the US pursues its own purpose in the region, Kim Gattas wrote.
European capital markets: Strictly hampered by a lack of competitiveness, the EU is making new pushes to deepen integration of fragmented financial landscapes.
The chart of the day
US stocks have wiped out losses so far this year. This is because lower inflation numbers than expected yesterday added fuel to rallys that sparked by Trump’s deals to cut Trump’s tariffs.
Take a break from the news
HTSI Drinks columnist Alice Lascelles shares the airlines serving the best champagne.
