China hits out at US-UK trade deal – Charm

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Today’s agenda: EU’s Ukraine tariffs; Macron on nuclear defence; Trump lauds Saudi ties; Moët Hennessy’s crisis; and HTSI on the best in-flight champagne

Good morning. We start with an exclusive story on China, which has attacked the UK’s recently inked trade deal with the US.

Why is China upset? The US agreed to cut punitive levies on UK car and steel exports, but only if Britain met its demands on supply chain security and the “ownership of relevant production facilities”. UK officials said Donald Trump made clear China was the intended target of the condition. London’s acceptance sparked surprise and concern in Beijing, UK government advisers said, especially since Britain had been working to improve ties with China. Beijing told the Financial Times it was a “basic principle” that agreements between countries should not target others.

Why it matters: Beijing has warned countries against signing trade deals with the US that threaten Chinese interests. One expert said the UK deal showed Trump was likely to force other trading partners to accept similar provisions to isolate China. Beijing’s recent remarks also place London in a difficult position between the two economic superpowers and could make it more challenging for the UK government to reset relations with China. One Chinese government adviser told the FT the UK “should not have rushed to agree to the deal”, adding: “China will need to respond”.

UK-US: Washington is eyeing a multibillion-dollar slice of Britain’s pork, poultry, rice and seafood sectors, as it looks to expand the trade deal.
US-China: Ports and shipping lines are braced for a demand “whipsaw” as businesses race to stockpile Christmas goods during the 90-day trade war ‘ceasefire’
Iran: The US has imposed sanctions on more than 20 companies it says are involved in shipping Iranian crude oil worth billions of dollars to China.

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

Economic data: Germany publishes its consumer price index for April while Opec releases its monthly oil market report.
Nato: The military alliance’s foreign ministers meet in Turkey to discuss Ukraine, while its defence chiefs meet in Brussels.
Trump in Riyadh: The US president is expected to meet Syrian counterpart Ahmed al-Sharaa a day after announcing he would lift sanctions on the war-torn country.
Results: ABN Amro, Alstom, Burberry, Hapag-Lloyd and Porsche report.

Join us for a subscriber-only webinar on May 28 for insights into the most consequential geopolitical rivalry of our time: the US-China showdown. Register now and put your questions to our panel.

Five more top stories

1. Exclusive: The EU is preparing to apply much higher tariffs on Ukrainian imports within weeks. Diplomats said the move to abruptly end special trade arrangements — which allowed most Ukrainian goods to enter the EU duty free — came after Poland led a push to protect the bloc’s farmers. Andy Bounds and Paola Tamma have more details from Brussels.

Zelenskyy: Ukraine’s president has vowed to travel to Turkey regardless of Putin’s plans, raising the stakes in a western-led ceasefire effort.
Shifting views: US officials appear increasingly impatient with Russia’s leader, as suspicions grow that he may be the biggest obstacle to peace.

2. Emmanuel Macron is open to stationing France’s nuclear weapons in other European countries to beef up defences against Russia. The French president has been holding talks with Germany, Poland and others about how France’s nuclear deterrence could be extended on the continent, and told local media he was “ready to open a discussion”.

3. Exclusive: Julius Baer has been ordered to pay more than SFr4mn ($4.75mn) by Switzerland’s financial regulator over anti-money laundering and compliance failings in its handling of high-risk clients. The enforcement decision, contained in a document dated November 2024 and seen by the FT, has not been publicly disclosed. The bank declined to comment. Read the full story.

4. Trump hailed the US-Saudi Arabia relationship as a “bedrock” of security and prosperity yesterday as he began the first leg of his three-nation tour of the oil-rich Gulf. Before the president’s speech, the White House unveiled what it said was $600bn worth of defence, artificial intelligence and other deals with the kingdom.

5. Exclusive: Tesla’s board has formed a special committee to explore Elon Musk’s pay, which could lead to the electric-vehicle maker’s chief being offered a fresh package of stock options. People familiar with the matter said major investors have given the board their views on the billionaire’s pay and continued leadership of the company.

Doge: Six months after Musk’s so-called Department of Government Efficiency was unveiled, it has yet to find a fraction of the hoped-for savings.

News in-depth

Moët Hennessy went from generating €1bn in cash in 2019 to burning through €1.5bn last year, according to documents seen by the FT, as a global downturn in sales of alcoholic drinks hit LVMH’s wine and spirits empire hard. But people familiar with its operations say strategic decisions made under the leadership of former CEO Philippe Schaus, who left the group at the start of this year, exacerbated its problems.

We’re also reading and watching . . .

‘Golden passports’: Christian Kälin, the man behind the rise of citizenship-by-investment schemes, says a landmark EU court ruling won’t stop the trend.
Milk is back: The dairy industry’s efforts to woo customers away from plant products are a masterclass in corporate survival tactics, writes Brooke Masters.
Sinking cities: The problem of human-induced subsidence is global, urgent and spreading, writes Anjana Ahuja.
🎬 $40bn bitcoin bet: Michael Saylor transformed lossmaking Strategy into the world’s largest corporate holder of the cryptocurrency. Can it can survive a crash?

Chart of the day

US stocks have wiped out their losses so far this year, as yesterday’s lower than expected inflation figures added fuel to a rally sparked by Trump’s deal with China to cut tariffs.