Economy

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Western companies say China is demanding sensitive business information to secure rare earths and magnets, raising concerns about potential misuse of data and exposure of trade secrets.Beijing’s commerce ministry is asking for production details and confidential lists of customers as part of its export approval process for critical minerals and magnets, according to multiple companies and official guidelines.China dominates the processing of rare earths and manufacturing of the magnets in which they are used.These magnets are widely used in electronics, electric vehicle motors, wind turbines and defence applications such as fighter jets, giving Beijing a significant point of leverage with its trading partners.Frank Eckard, chief executive of German magnet maker Magnosphere, said Chinese authorities were asking companies to reveal “confidential information” about their products and businesses to obtain export approvals.“It’s a matter of [China] getting information . . . officially” rather than “trying to steal it”, he said.In early April, Chinese authorities introduced stricter export controls on seven rare earth metals and related magnet materials as part of its tit-for-tat trade war with the US. The move sent companies around the world rushing to secure supplies to maintain production.The US and China this week struck a framework deal under which President Donald Trump said Beijing would ease constraints on the flow of rare earths, a priority for the White House. China has not said it would abandon its export controls and it was unclear if the latest deal would affect the approval process for shipments of the critical materials.Under the current rare earths licensing regime, China requires foreign companies to submit comprehensive data about their operations, workforce, end-use applications and production information.Companies can be also asked to provide images of products, facilities and details of past business relationships, according to the commerce ministry guidelines for dual-use exports.“They ask for a lot of things, really a lot of things,” said Andrea Pratesi, supply chain director at Italy’s B&C Speakers, which makes speakers for concerts at a plant near Florence. He said the company had submitted pictures and a video of its production line as well as information about its market, the names of its customers and some customer orders with names blurred out.“We had to, otherwise they put aside all your papers and wait for what they requested,” he said, adding that B&C had received approval for two orders and were waiting on a third. “We have nothing to hide — we produce loudspeakers.”Some content could not load. Check your internet connection or browser settings.Experts agreed that the commerce ministry’s demands sometimes went further than its published guidelines. A Chinese export control lawyer, who asked not to be named, said the ministry had frequently requested information covering end users’ “production and operations, process flow”.Matthew Swallow, a product manager at UK-based Magnet Applications, said his company had received several rejections in April “for lack of end-user evidence”.“We now provide photographs of the magnets in production, details of the ultimate application [and] the customers of the end users,” among other details, he said, which has helped them obtain several export approvals.Swallow said there was “certainly concern” about unmasking their customers. He said he was advising clients to not include trade or IP secrets in their applications.The applications are typically submitted to local commerce bureaus by Chinese suppliers on behalf of their clients, underscoring concerns about possible theft of trade secrets and business partners.China’s commerce ministry did not immediately respond to a request for comment.Jens Eskelund, chair of the EU Chamber of Commerce in China, said the level of detail made it difficult for companies in sensitive industries to comply with or even apply for the export licences.“For some of the applications, you need to stipulate the uses to such detail that it creates an IP concern,” he said.But another European executive, who asked not to be named, said that, for now, most companies were prioritising their need for rare earth magnets over longer-term security concerns.“Companies are willing to do whatever China wants to get the supplies,” they said.Data visualisation by Haohsiang Ko in Hong Kong More

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If a handshake agreement holds, it will merely undo some of the damage from the trade war that President Trump started.After two days of tense negotiations, the United States and China appear to have walked back from the brink of a devastating economic conflict — maybe.Officials from the two countries reached a handshake agreement in the early hours of Wednesday in London to remove some of the harmful measures they had used to target each other’s economies as part of a clash that rapidly intensified in recent months.It remains unclear whether the truce will hold — or crumble like one struck in May did. Even if the agreement does prove durable, its big accomplishment appears to be merely returning the countries to a status quo from several months ago, before President Trump provoked tensions with China in early April by ramping up tariffs on goods it produces.“It seems like we’re negotiating in circles,” said Myron Brilliant, a senior counselor at DGA-Albright Stonebridge Group and former executive vice president of the U.S. Chamber of Commerce.“You escalate, you de-escalate,” he added. “At the end of the day we’re not really further along.”As a result of this week’s negotiations, tariffs will stay where they are. Further details are scant, other than the likely rollback of aggressive policies the two countries adopted since May.China is expected to loosen restrictions on exports of minerals that had threatened to cripple an array of American manufacturers. The United States will in return relax new limits that it placed on its own exports of technology and products, as well as walk back threats to cancel visas for Chinese students in the United States.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome to FirstFT Asia. In today’s newsletter:We start in the US, where the Pentagon has launched a review of the 2021 Aukus nuclear submarine deal with the UK and Australia. The US will determine whether it should scrap the project, throwing the security pact into doubt at a time of heightened tension with China.What to know about Aukus: Australia and Britain are due to co-produce an attack submarine class known as the SSN-Aukus that will come into service in the early 2040s. While Aukus has received strong support from US lawmakers and experts, some critics say it could undermine the country’s security because the navy is struggling to produce more American submarines.What happens now? The reassessment will be led by Elbridge Colby, a top US defence department official who previously expressed scepticism about Aukus. Last year, Colby wrote on X that it “would be crazy” for the US to have fewer nuclear-powered attack submarines in the case of a conflict over Taiwan. Ending the pact would be a blow to a security alliance the US has with UK and Australia. Here’s what else we’re keeping tabs on today:Israel: The UN General Assembly will hold an emergency special session on Israel.Economic data: India reports its May inflation figures. The UK publishes GDP figures for April.China-Africa relations: The fourth annual China-Africa Economic and Trade Expo begins. Chinese FM Wang Yi is expected to attend.Five more top stories1. Donald Trump said the US and China’s deal to restore their trade war truce is “done” after two days of negotiations in London. The deal revived a truce agreed in Geneva last month that faltered because of differences over Chinese rare earth exports and US export controls. Here’s the full readout from the talks.2. The EU is preparing sanctions against two Chinese banks that allegedly enabled banned trade with Russia as part of the European Commission’s latest package of measures, people with knowledge of the plans told the Financial Times. The move would be the first time Brussels has targeted a third-country lender for supporting Moscow.3. Elon Musk posted on X that he “regrets some” of his recent comments about Donald Trump after the two traded insults last week. White House press secretary Karoline Leavitt told reporters on Wednesday that the US president “acknowledged” and is “appreciative” of the billionaire’s remorse. Since last week, allies have continued to urge Musk and Trump to repair their relationship.4. One of the world’s largest auto parts suppliers has filed for bankruptcy as it seeks breathing space from its debts. KKR-owned Marelli’s decision to seek court protection brings to a close the latest chapter in one of the most contentious, costly and publicly sensitive private equity deals in Japanese corporate history. 5. The World Bank will lift a decades-long ban and “re-enter” the nuclear space, the lender’s president said in an email to staff on Wednesday. The shift follows advocacy from the pro-nuclear Trump administration and a change of government in Germany that previously opposed financing atomic energy. Visual investigationIn March, Mexican authorities seized a 46,000-tonne vessel suspected of illegally importing fuel from the US. A subsequent raid on nearby storage facilities uncovered weapons, tanker trucks and 10mn litres of diesel. But this was no isolated case. The FT has uncovered dozens of suspicious shipments, with millions of barrels of fuel falsely declared as industrial lubricant. Our latest visual investigation explores how the sophisticated smuggling operations fund Mexico’s cartels.We’re also reading . . . Declining population: As birth rates continue to plunge, Japan must stop being overly optimistic about how quickly its population is going to shrink, economists have warned.Junior banker stand-off: Apollo Global Management is the latest group to delay hiring junior bankers after recent pressure from Jamie Dimon.CEO pay and perks: Executives may find the idea of disclosing less about their packages attractive, but this carries its own risks, writes Brooke Masters.Chart of the day Central banks are accumulating gold at a “record pace” and have now overtaken the euro as the world’s second most important reserve asset, according to the European Central Bank. Bullion accounted for 20 per cent of global official reserves last year, with its largest buyers being India, China, Turkey and Poland, per the World Gold Council. Take a break from the newsThe Tour de France in Scotland, rugby in Las Vegas and the Saudi Arabian Grand Prix? Tourist boards are discovering the benefits of luring big-name sporting events from their traditional homes. Sports tourism is now one of the fastest-growing segments in travel. Will it last?A rugby league supporter in Las Vegas during the warm-up for the matches earlier this year More

Unions have backed immigrant rights in California and have been on the forefront of resisting the Trump administration’s deportations.Los Angeles is a city of immigrants. It is also a city of unions. And in California, those two constituencies have essentially melded into one.So it should come as no surprise that federal immigration raids on workplaces around Los Angeles County this week set off the largest protests to date against President Trump’s immigration crackdown.On the first day of the protests, David Huerta, the president of the California chapter of the Service Employees International Union and the grandson of Mexican farmworkers, was arrested and hospitalized for a head injury after being pushed by a federal agent. Officials said he was blocking law enforcement carrying out an immigration raid, and his detention touched off a series of mobilizations nationwide.At a hastily convened rally in front of the Justice Department in Washington on Monday, some of the labor movement’s top brass passed around a microphone to decry immigration enforcement operations and demand his release.“Our country suffers when these military raids tear families apart,” said Liz Shuler, the president of the A.F.L.-C.I.O., standing in a cluster of signs reading, “Free David.” “One thing the administration should know about this community is that we do not leave anybody behind!” Mr. Huerta was released on bail later in the day and still faces charges.It wasn’t always this way in American unions. Historically, they often viewed immigrants with suspicion, likely to undercut wages and to be unwilling to stand up to employers. While those attitudes still exist, union leadership has aligned itself with immigrants’ rights — and placed itself squarely in opposition to the Trump administration’s agenda of mass deportation.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

After running a short-lived surplus in April thanks to tax season receipts, the deficit totaled just more than $316 billion for the month, taking the year-to-date total to $1.365 trillion.
Surging financing costs were again a major contributor to fiscal issues, with interest on the $36.2 trillion debt topping $92 billion.

The U.S. Department of the Treasury building is seen in Washington, D.C., on Jan. 19, 2023.
Saul Loeb | Afp | Getty Images

The U.S. government drifted further into red ink in May, with a burgeoning debt and deficit issue getting worse, the Treasury Department reported Wednesday.
After running a short-lived surplus in April thanks to tax season receipts, the deficit totaled just more than $316 billion for the month, taking the year-to-date total to $1.36 trillion.

The annual tally was 14% higher than a year ago, though the May 2025 total was 9% less than the May 2024 shortfall.
Surging financing costs were again a major contributor to fiscal issues, with interest on the $36.2 trillion debt topping $92 billion. Interest expenses on net exceeded all other outlays except for Medicare and Social Security. Debt financing is expected to run above $1.2 trillion for this fiscal year, totaling $776 billion through the first eight months of the fiscal year.
Tax revenue has not been the problem. Receipts rose 15% in May and are up 6% from a year ago. Expenditures increased 2% monthly and are up 8% from a year ago.
Tariff collections also helped offset some of the shortfall. Gross customs duties for the month totaled $23 billion, up from $6 from the same month a year ago. For the year, gross tariff collections have totaled $86 billion, up 59% from the same period in 2024.
However, yields have held higher. After dipping last summer into September, they turned up in direct opposition to Federal Reserve rate cuts, eased in the early part of the year, then moved higher again following President Donald Trump’s April 2 “liberation day” tariff announcement. The 10-year Treasury yield is virtually unchanged from a year ago around 4.4%.
In recent weeks, Wall Street leaders including JPMorgan Chase CEO Jamie Dimon, BlackRock CEO Larry Fink and Bridgewater Associates’ Ray Dalio have warned of turmoil that could come from the onerous debt burden. The deficit is currently running more than 6% of gross domestic product, virtually unheard of in peacetime U.S. economies.

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In a social media post Wednesday morning on X, Vice President JD Vance echoed his boss’ urging that the central bank ease monetary policy.
The statement followed a Bureau of Labor Statistics report showing that the consumer price index increased just 0.1% both on the all-items reading and the core.

U.S. Vice President JD Vance speaks, during a tour of Nucor Steel Berkeley in Huger, South Carolina, U.S., May 1, 2025.
Kevin Lamarque | Reuters

President Donald Trump and Vice President JD Vance are now double-teaming the Federal Reserve in an effort to get lower interest rates.
In a social media post Wednesday morning on X, Vance echoed his boss’ urging that the central bank ease monetary policy, after the latest inflation readings showed that tariffs are yet to exert any substantial upward pressure on inflation.

“The president has been saying this for a while, but it’s even more clear: the refusal by the Fed to cut rates is monetary malpractice,” Vance wrote.
The statement followed a Bureau of Labor Statistics report showing that the consumer price index increased just 0.1% both on the all-items reading and the core that excludes food and energy. On an annual basis, the respective inflation levels stood at 2.4% and 2.8%, both above the Fed’s 2% goal.
While Trump had yet to address the CPI numbers himself Wednesday, the president has been badgering Chair Jerome Powell and his cohorts on the Federal Open Market Committee to cut rates. The Fed last eased in December, and officials lately have expressed concern over the longer-term impacts that tariffs will have on prices. Trump has said he wants a full percentage point cut from the current target level for the fed funds rate at 4.25%-4.5%.
The FOMC will release its interest rate decision in a week, and markets are assigning zero probability of a rate cut following the two-day meeting. Traders expect the Fed to ease in September, according to CME Group data.
Administration officials have emphasized the easing inflation data as well as a moderating labor market as reasons to lower rates.
“To me, that combination says it may be time for another rate cut, but I expect the Fed to emphasize the ongoing uncertainty and a desire to not act too early. It’s a tough spot,” said Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Wealth Management.

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