Donald Trump threatens Japan and South Korea with steep tariffs

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Good morning and welcome back to FirstFT Asia. In today’s newsletter:

Trump threatens Asian allies with steep tariffs
Wall Street trading firm fights India ban
Hong Kong’s listings pipeline hits record high
Dishoom’s guide to dining in Mumbai

Donald Trump has renewed his threat to hit major trading partners with steep “reciprocal” tariffs even as he granted a three-week reprieve for countries to negotiate trade deals with the US.

What happened: Trump sent letters to Japan and South Korea, both among the US’s biggest trading counterparts, saying the country would impose 25 per cent levies beginning on August 1. The president also announced big levies on Malaysia, South Africa and several other countries. The tariffs were roughly on a par with those Trump unveiled during his “liberation day” announcement on April 2.

In the letters, addressed to Shigeru Ishiba, Japan’s prime minister, and Lee Jae-myung, South Korea’s president, Trump said that if either country increased its tariffs in retaliation “then, whatever the number you choose to raise them by, will be added on to the 25 per cent that we charge”. But he indicated that the proposed tariffs could be negotiated down if the countries opened their markets

Market reaction: The scale of Trump’s tariff threats yesterday pressured markets despite the delay in their implementation. The S&P 500 ended Monday down 0.8 per cent. Meanwhile, the Japanese, South Korean and South African currencies all declined about 1 per cent against the US dollar.

Here’s what else we’re keeping tabs on today:

Economic data: Taiwan publishes June inflation and trade figures.
Monetary policy: The Reserve Bank of Australia is expected to cut interest rates. (The Guardian)
Asean meeting: Foreign ministers from the south-east Asian bloc gather in Kuala Lumpur, Malaysia, for meetings continuing until Friday. US secretary of state Marco Rubio is expected to be in attendance.

Five more top stories

1. Jane Street plans to contest a finding by India’s financial regulator that the Wall Street trading firm engaged in “an intentional, well planned, and sinister scheme” to manipulate the country’s markets. The Securities and Exchange Board of India banned Jane Street from dealing securities in the country and ordered the firm to return more than $550mn of “illegal gains”.

2. Iran’s president Masoud Pezeshkian has said that Israel attempted to assassinate him during last month’s 12-day war between the two countries. Pezeshkian made the claim in a video interview with American conservative media personality Tucker Carlson, during which he also signalled that Iran remains open to renewed diplomacy with the US over the Islamic republic’s nuclear programme. Read the full story.

3. Russia’s state investigative authority said yesterday that the country’s transport minister had died from a suspected suicide, on the same day he was fired by President Vladimir Putin. Roman Starovoyt’s death came amid a corruption probe into the construction of defensive fortifications in Kursk, which he governed until May 2024.

4. Italian authorities have arrested a Chinese citizen suspected of being linked to a state-sponsored hacking group that sought to steal Covid-19 vaccine secrets from the US at the height of the pandemic. The Beijing-backed group was accused of penetrating Microsoft email software in 2021 in a mass espionage campaign, a person familiar with the matter said.

EU-China climate stand-off: The EU is holding back on signing a joint declaration on climate action with China at a leaders’ summit this month, unless Beijing pledges greater efforts to cut its greenhouse gas emissions.

5. Tesla shares tumbled after the electric-car maker’s chief executive Elon Musk said he would form a new political party, escalating a feud with Trump that could imperil the billionaire’s business empire. A return to political activism is contrary to what Musk promised shareholders in late April.

The Big Read

Almasa Salihović, whose brother was among more than 8,000 Bosnian Muslims rounded up and murdered by Bosnian Serbs in 1995, walks among graves at the memorial centre in Srebrenica © László Balogh/FT

As the world prepares to mark the anniversary of the Srebrenica massacre three decades ago this week, Bosnia and Herzegovina is facing a risky moment of political upheaval. Read why trouble is brewing again in the ethnically riven Balkan state.

We’re also reading . . .

Immigration crackdown: Trump has catapulted ICE into America’s best-funded law enforcement agency — and increasingly beyond accountability, writes Edward Luce.
Death of the apprenticeship model?: As hybrid working and AI upend on-the-job learning, employers will have to be more deliberate in the training they offer junior staff, writes Emma Jacobs.
BlackRock’s HPS takeover: The public markets giant tried private credit once before. Will its latest big foray fare better?

Chart of the day

The number of companies applying for a listing in Hong Kong this year has hit an all-time high, as the territory tries to regain its status as a top financial hub.

Take a break from the news

. . . and check out Dishoom’s guide to dining in Mumbai. The cousins behind the cult Indian restaurant chain share where they eat and drink in the megalopolis that inspires their cuisine.