Donald Trump announces US-Indonesia trade deal

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

• The US-Indonesia trade deal

• How BYD caught up with Tesla

• Taiwan’s Han Kuang military drills

Donald Trump has said the US has reached a trade deal with Indonesia that will result in the south-east Asian nation paying a 19 per cent tariff on its exports to the US and buying American energy and Boeing jets.

Deal details: In a social media post, Trump wrote that Indonesia had committed to buying $15bn worth of energy exports and $4.5bn of agricultural goods from the US. It would also buy “50 Boeing Jets, many of them 777’s”. He also told reporters Indonesia was “known for . . . very high-quality copper, which we will be using” — a comment that comes after he imposed a 50 per cent levy on the metal last week.

Why it matters: The preliminary deal is the first with the more than 20 trading partners who last week received letters from the US president threatening tariffs (Trump had threatened to impose a 32 per cent levy on Indonesia). But he said yesterday he thought the latest arrangement — under which the US will pay zero tariffs on exports to Indonesia — was “a good deal for both parties”. Here are more details.

• US-China trade news: Commerce secretary Howard Lutnick said Washington’s reversal of restrictions on sales of chips to China followed recent trade negotiations with Beijing over rare earths.

• US-EU: Brussels plans to impose tariffs on Boeing aircraft, cars and bourbon as part of a proposal for further retaliation against €72bn of annual US imports if trade talks with Washington fail.

• Opinion: As Trump returns to tariffs, Martin Wolf asks, what is to be done about this madness?

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

• Monetary policy: Indonesia’s central bank announces its interest rate decision.

• China: The four-day International Supply Chain Expo begins in Beijing, with AI chipmaker Nvidia taking part for the first time.

• Results: Tech Mahindra, ASML, Goldman Sachs and Morgan Stanley report earnings.

Five more top stories

1. China’s economy expanded 5.2 per cent year on year in the second quarter as the world’s biggest exporter shrugged off the impact of Trump’s trade war. The rate, which beat analysts’ expectations, shows how China has been able to keep growth on track through exports and investment even as it struggles with weak demand at home.

2. The UK government set up a secret multibillion-pound scheme to relocate thousands of Afghans to Britain after a data leak put them at risk of reprisals from the Taliban — and gagged the media with a super-injunction. The names, contact information and other personal details of about 25,000 Afghans were accidentally disclosed by a British soldier in emails in February 2022.

3. Donald Trump has privately encouraged Ukraine to step up deep strikes on Russian territory, even asking Volodymyr Zelenskyy whether he could strike Moscow if the US provided long-range weapons, according to people briefed on the discussions.

4. Yields on 10-year Japanese government bonds hit their highest level since the 2008 financial crisis as markets begin to price in the risk of populist campaign pledges and political uncertainty ahead of an election. “The market sold off on the expectation the [ruling Liberal Democratic party] is going to lose its majority in the upper house,” said Wei Li, head of multi-asset investment at BNP Paribas in China. Read the full story.

5. Jamie Dimon has warned that the independence of the US Federal Reserve is “critical” as the Trump administration increases its pressure on Jay Powell, the central bank’s chair, to cut interest rates. The JPMorgan chief’s comments came as Treasury secretary Scott Bessent said the “formal process” to select Powell’s successor had begun.

• Wall Street results: JPMorgan Chase and Citigroup struck an upbeat tone on the strength of American consumers, underscoring how the US economy has remained resilient despite Trump’s tariffs.

The Big Read

China’s BYD is catching up with Tesla and is poised to overtake its US rival in electric vehicle sales for the first time. In the past three years, the Chinese auto group has narrowed the technology gap between the two carmakers, including in autonomous driving. Read what is powering BYD’s headway in the EV market.

​​We’re also reading . . . 

• Taiwan defence: Taiwan’s military has taken the annual Han Kuang exercises to civilians’ doorsteps this year, as part of efforts to better prepare for a Chinese attack.

• ‘Epstein files’: For years Trump insisted on a deep-state plot that only he could expose. Now he says there is nothing to show, writes Edward Luce.

• Rare earths: A small mining company won Pentagon backing as Trump sought to counter China and take a new approach to national defence.

Chart of the day

Chinese ecommerce giants JD.com and Alibaba have ignited a battle for the country’s fast-growing instant retail market, luring shoppers with huge discounts in a push to grab market share from rival Meituan.

Take a break from the news

Maxed out on matcha lattes? Hojicha, a new Japanese green tea trend, is coming to a café near you.