Donald Trump says Xi Jinping ‘extremely hard to make a deal with’

Good morning and welcome to FirstFT, your daily morning briefing from the Financial Times. Today we’re covering:

• US-China trade tensions

• The espionage case gripping Silicon Valley

• South Korea’s new president sworn in

• And who owns our neurodata?

---

Donald Trump described Xi Jinping as “extremely hard to make a deal with” on his Truth Social platform overnight as the two countries clashed over claims from the US that China was reneging on a trade truce signed in Geneva last month.

Why it matters: Tensions have been rising in recent days between China and the US. Washington has accused Beijing of failing to live up to promises to approve licences for exports of rare earths. China responded by accusing the US of “seriously violating” a trade truce agreed in Geneva last month. The White House has insisted a call between Trump and Xi is needed to resolve the dispute but Beijing has so far rejected Washington’s overtures.

The background: After the Geneva talks in May, the US and China slashed tariffs on each other’s goods for at least 90 days, with the extra levies the US imposed on China this year falling to 30 per cent and China’s declining to 10 per cent. As part of the deal, China also agreed to “suspend or cancel” non-tariff measures against the US but did not provide any details. US officials believed that Beijing would unwind export restrictions on rare earths but China has made clear that officials did not think the deal covered global export controls on rare earths. China controls nearly all of the world’s rare earth processing used by many industries around the world. Companies in the US, India and Europe have begun to issue increasingly urgent appeals for faster shipments. Yesterday, China’s foreign minister Wang Yi spoke to the US ambassador to China David Perdue. Read more on the talks.

For more analysis on tariffs, sign up for Alan Beattie’s Trade Secrets newsletter if you’re a premium subscriber or upgrade your subscription. And here’s what else we’re keeping tabs on:

• Economic data: The US and Canada have services purchasing managers’ indices, while the Federal Reserve publishes its Beige Book on economic conditions.

• Congress: The non-partisan Congressional Budget Office releases a revised estimate of how much Donald Trump’s “big, beautiful” tax bill will add to the federal government’s $36.2tn debt. The announcement comes a day after Elon Musk derided the bill as “a disgusting abomination”.

Five more top stories

1. South Korea’s new leftwing president said his country faced a “tangled web of overlapping crises” as he was sworn into office after an emphatic election win. Lee Jae-myung vowed to overhaul what he said was an outdated and over-centralised model of development in Asia’s fourth-largest economy. Investors reacted very positively to his comments.

2. Quant group AQR Capital Management is embracing artificial intelligence and machine learning techniques for trading decisions, ending years of reticence from one of the sector’s historic holdouts. Founder Cliff Asness told the FT “when you turn yourself over to the machine you obviously let data speak more.” Read the full interview.

• More financial services news: Citi has revoked a policy curbing its dealings with companies that sell firearms.

• JPMorgan: The world’s biggest bank has expanded the responsibilities given to Marianne Lake, a favourite to succeed Jamie Dimon as chief executive.

3. New York’s public pension scheme was considering whether to boost its allocations to overseas markets, its chief investment officer has told the FT. The scheme, which manages close to $300bn of assets for the city’s municipal workers, has 10-15 per cent invested in Europe and just 5 per cent in Asia. Steven Meier said international diversification was a “benefit to a portfolio”.

4. A bitter fight over alleged corporate espionage involving two of Silicon Valley’s hottest start-ups took a new twist yesterday. The $12bn HR software company Deel claimed arch-rival Rippling had directed one of its employees to “pilfer” the company’s assets by posing as a customer, new legal filings seen by the FT show.

5. Aid distribution centres in Gaza will be closed today, the Gaza Humanitarian Foundation has said, hours after the local health ministry said Israeli soldiers killed more than two dozen Palestinians. The US-backed group said it would resume operations tomorrow. More details here.

• Related: Boston Consulting Group has put a partner on leave and launched an internal probe over work linked to the contentious US-backed aid overhaul in Gaza.

• Middle East: Israel has threatened to retaliate against Syria after missiles were launched towards the country for the first time since the fall of the Assad regime.

• Iran: Supreme leader Ayatollah Ali Khamenei has hit back at a US proposal on Tehran’s nuclear programme.

The Big Read

European governments are braced for high-stakes negotiations with US President Donald Trump that will put the continent’s defence, economy and security on the line. Europe’s negotiators are increasingly concerned that Trump will demand concessions in one area in exchange for support in another. Here’s how European officials are preparing for the series of meetings.

We’re also reading . . .

• Interest rates: Interest rates may have normalised in recent years, but the world does not look very “normal”, writes Martin Wolf.

• UBS: Switzerland’s government will lay out long-awaited reforms to bank capital rules on Friday, and the centrepiece proposal will affect just one company: UBS.

• Venezuela: Bond markets signal expectations of an eventual deal between Washington and Caracas, but US officials seem divided, writes Latin America Editor Michael Stott.

• 🎥 Petrobras: The Brazilian oil company is once again at the centre of government plans for economic growth and job creation. In this new film the FT looks at the company’s chequered past.

Graphic of the day

The audacity of Ukraine’s weekend strike on a Russian bomber fleet — plotting for 18 months to hide drones in trucks to hit military airfields thousands of kilometres from Kyiv — has largely been matched by the material damage done. Here’s more on the daring operation that left Moscow reeling.

Take a break from the news

Researchers have developed a wireless, wearable “electronic tattoo” that estimates, in real time, how hard our brains are working, writes Anjana Ahuja. The transparent plaster is stuck on to the forehead and tracks brainwaves and eye movements. The development raises questions about who owns our neurodata?