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Good morning and welcome back to FirstFT Asia. In today’s newsletter:
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Trump’s latest attack on the Fed chair
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US set to ban Chinese tech in submarine cables
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FT investigates US immigration detention facilities
Donald Trump asked lawmakers whether he should fire Federal Reserve chair Jay Powell in a move that fuelled a fresh bout of concerns over the central bank’s independence and hit the dollar.
What happened: Trump asked Republican members of Congress during an Oval Office meeting late on Tuesday whether he should remove Powell, according to a White House official. Lawmakers supported the idea, the official said. Speaking in the Oval Office yesterday, Trump pushed back at the prospect that he would imminently sack Powell, who the president has relentlessly criticised in recent weeks for declining to cut interest rates. “We’re not planning on doing anything,” he said.
The dollar swung in volatile trading, with an index tracking the currency against its peers sliding as much as 0.9 per cent, before trimming its losses to roughly 0.3 per cent.
Fed independence under attack: Trump has repeatedly pressured the Fed chair to slash rates, saying lower borrowing costs would help reduce the public debt burden of his “big, beautiful” budget bill. However, Powell and many other members of the Fed’s policy-setting board are worried Trump’s tariffs could increase inflation. Worries over the Fed’s independence have been bubbling on Wall Street, with JPMorgan chief Jamie Dimon on Tuesday warning “the independence of the Fed is absolutely critical.”
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Maga split: Trump has attacked his “past supporters”, accusing them of pushing “the Jeffrey Epstein Hoax”, as his administration’s handling of the files relating to the late paedophile financier continues to divide his political movement.
Here’s what else we’re keeping tabs on today:
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Economic data: Japan reports monthly trade data. Australia and Hong Kong publish June employment figures.
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Results: TSMC and Volvo Cars report second-quarter earnings.
Five more top stories
1. The US telecoms regulator is poised to introduce a measure that would bar companies from connecting submarine communication cables to America that include any Chinese technology or equipment. The new rule was partly influenced by a massive Chinese ongoing attack on US telecoms networks called Salt Typhoon that Washington is struggling to tackle because of the cost of replacing vulnerable systems.
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Nvidia CEO in Beijing: Jensen Huang said the AI chipmaker would “accelerate the recovery” of its China sales, after a détente between Beijing and Washington allowed the company to resume shipments of a key processor specifically designed for the Chinese market.
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US-China business: Almost half of the big US companies operating in China have been adversely affected by overcapacity in the country, according to a new survey.
2. China has sentenced a Japanese pharmaceutical executive to three and a half years in prison for espionage. The decision will heighten concerns among foreign businesses in China over the transparency of the country’s judicial system, given that few details of the allegations against the executive have been disclosed. Read the full story.
3. Ursula von der Leyen’s plan for the EU’s biggest ever budget has sparked uproar inside the European Commission, with colleagues warning the president’s ultra-centralised style has already compromised the €2tn cash call. The revolt has underscored the long-bubbling resentment at her “rubber stamp” approach towards the commission.
4. Israel carried out strikes near Syria’s presidential palace and on the military headquarters in Damascus yesterday, a significant escalation of its bombing campaign in the neighbouring country. The Israeli military also carried out strikes in southern Syria, where deadly sectarian violence raged for a fourth day
5. A dispute between the government of Vietnam and renewable energy developers over subsidies is threatening to disrupt power supplies, a move that could hit manufacturers that have moved to the country in droves from China. In a letter to Vietnam’s ministry of industry and trade, state utility EVN warned that government cuts to subsidies risks country’s credibility and may lead to power shortages.
Visual investigation
© FT composite
Trump has launched the largest domestic deportation operation in US history, and his administration is establishing more facilities to take in a record number of detainees. The majority are run by for-profit companies — a multibillion-dollar industry that has exploded over four decades. An FT investigation found a number of sites housing hundreds more people than they were designed to hold, while lawyers and detainees said some people have been sleeping on the floor.
We’re also reading . . .
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GM’s Korea plants: The company’s key South Korean factories principally serve the North American market, leaving the Detroit carmaker fully exposed to US tariffs.
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‘Fire’ and ‘ice’: Markets will be closer in the future to a singe from inflation than a freeze in growth and prices, writes Pimco co-founder Bill Gross.
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Zohran Mamdani: The socialist mayoral candidate won over some of his critics at a private meeting with New York’s business elites.
Chart of the day
America’s trading partners have largely declined to retaliate against Trump’s tariff war, with only China and Canada hitting back so far. This has allowed a US president taunted for “always chickening out” to raise nearly $50bn in extra customs revenues at little cost, US Treasury data shows.
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Take a break from the news
Does the perfect hat exist? The FT’s Robert Armstrong writes that his bald head — a “heat-leaking, solar-radiation-collecting roof panel” — requires coverage. Style-wise, this creates challenges.
The key to a panama is to wear it confidently, not sheepishly © Getty Images