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Good morning from the Financial Times.
Today is Friday, August 1st, and this is your FT News Briefing.
Apple had a stellar quarter, and today is a turning point in the global trade war.
Plus, Samsung could reverse its fortunes through a chipmaking deal with Tesla.
I'm Sonia Hudson, and here's the news you need to start your day.
Apple posted much better than expected revenues on Thursday for the quarter.
That was thanks to a surge in iPhone sales and a rebound in China.
Revenue increased about 10 % year -on -year to $94 billion.
That was well above estimates.
The company told the FT there was some evidence that sales were boosted by customers placing orders to get ahead of U .S. tariffs.
In China, Apple had suffered from competition from local companies like Huawei, but revenue increased there by 4 percent in the quarter from a year ago.
Analysts say that was thanks to the iPhone.
A government subsidy program for smartphones gave it a boost. higher U .S. tariffs are back after months of change deadlines and intense negotiations President Donald Trump's signature trade policy is hitting full force last night he reimposed elevated tariffs on dozens of trading partners including Canada India and Taiwan here to talk about what we've learned and where the trade war leaves the U .S. economy is Amy Williams. She's the FT's U .S. trade correspondent.
Hey, Amy. Hello. Can you walk us through at a super high level how these trade negotiations have gone since Trump first announced the tariffs back in April?
Well, he first announced the tariffs back in April, caused a global stock market rout and and a sharp sell -off in treasuries, had to pretty much suspend all the tariffs for 90 days.
He then did another suspension and that brings us to today.
So we've had essentially this kind of revolving door of U .S. trading partners sending negotiators and officials to Washington to haggle with U .S. officials.
And of course, the foreign countries want these tariffs dropped, very damaging to their economy.
So we've had this back and forth, this tussle.
We've landed now with a handful of deals.
Yeah. So tell me about those deals.
What did the U .S. get out of them?
I think the deals fall into two separate, broad buckets in terms of at least how the U .S. thinks about them.
The first is that they want other countries to drop what trade people call non -tariff barriers.
So that's the rules, the regulations, the things that are not tariffs, but might keep US products out of that particular economy.
They also looked at the other country's tariffs on US goods.
The second bucket, there are deals that had these big investment pledges.
So the US offered to drop the tariff that it was threatening.
And the other country, Japan, the EU and South Korea a little bit as well, put up a big amount of money that they said they'd invest in the U .S. and the U .S. described as buying down their tariffs.
Well, Amy, where do the tariffs stand now with countries that have made those deals?
Well, after these deals, a lot of countries have lower tariffs than Trump initially threatened on Liberation Day, but they still have much higher tariffs than they had before Trump came into office.
And there are a few countries that really have a big difference.
South Korea already had a Free Trade Agreement with the US.
It had a lot of tariff free trade.
Now it has a blanket tariff of 15%, including on its cars, which are a huge export for South Korea to the US.
A lot of these countries, even when they've come out with the best case scenario of a Trump deal, it's still not that great, still not as good as it was for them.
So it sounds like Trump was pretty successful He's successful in getting what he wanted by threatening these massive tariffs, right?
Pretty much. And why did his strategy work so well?
So a lot of countries, interestingly, did not really retaliate.
I think there are only a few countries who can meaningfully hurt the U .S. more than they're shooting themselves in the foot.
And to some extent, you have to make the calculation if you're running, you know, small middling economy country.
it might be worse to poke the bear and anger Donald Trump than to just quietly accept the tariffs and fly your negotiators over to Washington and try and sort this out.
Do you think these deals will make a material difference in the U .S. economy?
I think it's hard to say.
Taking a step back, we are left with a situation where the U .S. has substantially raised its tariffs on some of its biggest trading partners.
And I think that is is really the material economic change here?
We haven't yet seen meaningful inflation in the US economy.
So if you're Donald Trump, you're probably thinking, this is great.
I'm boosting US tax revenue.
What's the downside?
And I think we don't fully know the answer yet because so many businesses are only just reporting results where this stuff will come through.
They are holding off on investment decisions.
I think there's a lot of quite intangible stuff that isn't filtering through into economic data yet.
We don't quite know yet how this will exactly manifest itself in the U .S. economy.
Amy Williams is the FT's U .S. trade correspondent.
Thanks, Amy. Thank you.
Ukraine has made a major policy U -turn.
The country's parliament voted yesterday to restore independence to anti -corruption agencies.
Just nine days ago, President Volodymyr Zelensky rammed a bill through that eliminated autonomy of the agencies.
He says this was to counter Russian interference and to curb inefficiency.
But the move sparked the first anti -government mass protest since Russia's full -scale invasion in 2022.
And it put Ukraine's bid to join the European Union in jeopardy.
Even though Zelensky reversed course, his credibility may have been damaged, both with his own party and the broader public.
Samsung has been in a bit of a slump, and it's hoping a multi -billion dollar chip -making deal with Tesla will turn things around.
But it's going to have to address longstanding issues with its production.
Here to talk more about this is the FT's sole correspondent, Christian Davies.
Hi, Christian. Hello.
So tell me, what exactly are the details of this deal?
Well, Samsung's foundry division, that means the division which is a contract chipmaker for other companies, will be making Tesla's next generation artificial intelligence chip, which will be used in its EVs and humanoid robots and its data centers for training.
It's the self -driving programs. It's a 16 and a half billion dollar deal over eight years.
And so this is a really big contract for a company which has really struggled to secure big name customers for its contract chip making business.
Yeah, Christian, just give me a sense of how Samsung's chip business is doing overall.
Well, Samsung, five or six years ago, was a really strong competitor to the other main player in this market, which is TSMC, Taiwan Semiconductor Manufacturing Company.
But TSMC over the last decade or so has really pulled ahead of Samsung to the point where TSMC has about two thirds of the global foundry market and Samsung has less than 10%.
And these two companies have both been building huge fabrication plants in the US.
But whereas TSMC's Arizona plant has secured a series of really big name clients like Apple and Nvidia, Samsung's plant in Texas had not secured any big name customers until Tesla came along.
And how did Samsung get into this position?
I mean, how did it lose all this market share to TSMC?
Yes. So in this business, it's key to secure large orders, which allows you to produce high volumes of chips.
These high volumes allow you to iron out technical issues and to have a high yield rate, which means a low proportion of chips that are defective or that don't work.
that allows you to then offer competitive rates to your customers, and that then allows you to secure customers and it creates a virtuous circle.
In a sense, that's what TSMC has been doing for years.
Samsung has had the opposite problem.
Samsung has been struggling to secure big name customers, which means it's been struggling to raise its yield rates.
And so their hope is that by finally securing a big name client for its fab in Texas, that it's actually going to break out of the negative cycle.
How much impact do you think this deal could actually have on Samsung's future?
A lot of analysts believe this is a really important first step.
So if Samsung delivers on time and is able to iron out some of its technical issues, which has been dogging the company for for years, then it can really start to attract new customers.
And interestingly, Musk has said himself publicly that he will personally supervise the production line in this fab in Texas.
Now, whether he really does personally inspect the line or not, it suggests that this may be actually a deeper partnership in which Samsung will not only receive a large order, but will actually potentially benefit a lot from Tesla's expertise in the AI space.
And of course, the same thing will happen in the opposite direction, that Tesla may well learn a lot from Samsung about chip fabrication, and that may help Tesla in the long term as well if they had their own chip ambitions.
Christian Davies is the FT's sole correspondent.
Thanks, Christian. Thank you.
Before we go, I want to let you know about an FT Globetrotter guide to Los Angeles.
It's your roadmap to exploring LA written by people who know the city best. The guide has stories on the taco scene, architectural wonders, and how Altadena is faring after this year's wildfire.
We'll have a link to the guide in the show notes.
You can read more on all these stories for free when you click the links in our show notes.
This has been your daily FT News Briefing.
Check back next week for the latest business news.
The FT News Briefing is produced by Mark Filippino, Fiona Simon, Ethan Plotkin, Josh Gabor Doyon, and me, Sonia Hudson.
Our intern is Michaela Sia.
We had help this week from Michael Lello, Peter Barber, and Gavin Kalman.
Blake Maples, Kelly Gary, and Alex Higgins mixed the show.
The FT's acting co -head of audio is Topher Forges, and our theme song is by Metaphor Music.
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