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Good morning. Today I’ll be covering:
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The provision in Trump’s tax bill that is chilling Wall Street
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China’s shift towards homegrown AI chips
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The US and China’s “stalled” trade talks
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And South Korea’s Bernie Sanders
A little-publicised provision in Donald Trump’s “big, beautiful” bill that allows the government to raise taxes on foreign investments in the US is chilling Wall Street, as traders warn it could reduce the appeal of the American market and hit domestic industry.
What is the provision? Section 899 would allow the US to impose additional taxes on companies and investors from countries deemed to have “unfair foreign taxes”. (Most EU countries, the UK, Australia, Canada and others around the world would be affected, according to law firm Davis Polk.) It would affect dividends and interest on US stocks and some corporate bonds, as well as the American portfolio holdings of sovereign wealth funds.
Why it matters: The measure could deter foreign investment, add pressure to the dollar, undermine competitiveness, weaken demand for US assets and raise borrowing costs, analysts said. It is also likely to compound current investor sentiment towards the US market, which has cooled on fears about the country’s deficit spending and Trump’s tariff blitz.
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Opinion: Trump’s “big, beautiful bill” comes with a ticking time bomb, writes Gillian Tett.
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Unhedged 🎧: Katie Martin and Robert Armstrong talk about the US president’s reaction to the nasty Taco question (the Trump Always Chickens Out one).
Here’s what else we’re keeping tabs on today and over the weekend:
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Shangri-La dialogue: US defence secretary Pete Hegseth and French President Emmanuel Macron are due to speak at a global security gathering that starts today in Singapore.
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Oil: Opec+ meets today to review market conditions, conformity and compensation. The cartel will also decide July production levels.
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Poland: Voters will elect the country’s next president in Sunday’s run-off.
How well did you keep up with the news this week? Take our quiz.
Five more top stories
1. US-China talks are “a bit stalled” and may need reinvigorating by a phone call between the countries’ leaders, Treasury secretary Scott Bessent told Fox News yesterday. The comments suggest there has been little progress since the countries agreed to cut their tit-for-tat tariffs on each other in Geneva two weeks ago.
2. A US federal appeals court gave Trump’s global tariff plans a temporary reprieve, pausing a ruling earlier this week that had found his “liberation day” levies illegal. The decision leaves the longer-term fate of the scheme in the balance, but allows the US to continue collecting tariff revenues while the stay is in place.
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Cross-border “break-up”: Trade tensions are straining close ties between Detroit, Michigan, and Windsor, Ontario, neighbouring cities connected by a bridge across the US-Canada border.
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Explainer: How the courts reined in the White House on tariffs.
3. Trump told Federal Reserve chair Jay Powell that he was making a “mistake” by not loosening US monetary policy, in their first meeting of the US president’s second term. Powell stressed afterwards that decisions would be based solely on economic data and “careful, objective and non-political analysis”.
4. Alcohol groups are devising new tactics to counter a hardening public health stance against drinking, as investors fear the industry is facing its “tobacco moment”. To fight back, the sector is disputing research on the risks of alcohol and promoting the social benefits of consumption.
5. China’s biggest technology groups have begun a shift to homegrown chips for artificial intelligence development, as they contend with a dwindling supply of Nvidia processors and tighter US export controls. Trade tensions have added further pressure to tech groups’ need to adapt.
How can science help achieve global food security, especially in vulnerable regions such as Africa? Join FT agriculture correspondent Susannah Savage and a panel of experts for a live webinar and Q&A on Tuesday. Register here.
The Big Read
Several English football clubs are trying to convince the UK government that new stadiums could help regenerate cities and are seeking public money to build projects. But ministers will need to decide whether it makes sense to spend large amounts of government funds on schemes backed by wealthy private investors.
We’re also reading . . .
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Gaza’s medical crisis: Doctors are battling to save patients in the war-torn territory’s last hospitals.
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Stellantis’s new chief: Antonio Filosa discusses his strategy for keeping Fiat and Jeep afloat in an era of trade wars and electric vehicles.
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Nigeria crackdown: Authorities are jailing people for throwing cash at parties after a 70 per cent drop in the naira’s value over two years.
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Undercover Economist: Can behavioural science “nudge” us towards higher growth?
Chart of the day
Other presidential candidates in South Korea’s election are trailing leftwinger Lee Jae-myung, a former factory worker who has said he aims to be a “successful Bernie Sanders”. The impact of next week’s vote will have far-reaching implications for the country’s relations with the US, China and Japan.
Take a break from the news
Once too snooty for football, Paris is now home to billionaire-backed clubs and the sport’s biggest talent pool. Simon Kuper explores how the French capital fell for the beautiful game.
