US adds ‘poison pills’ to Asia trade deals to counter China

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

• Trump’s ‘loyalty test’ for south-east Asian countries

• How Saudi Arabia’s Neom dream unravelled

• An interview with Argentine President Javier Milei

The Trump administration has added “poison pill” termination clauses to trade pacts with south-east Asian countries, creating a new diplomatic weapon in Washington’s strategic competition with China. 

What to know: The clauses, embedded in two new deals signed with Malaysia and Cambodia last week, threaten to end the agreements if either country signs a rival pact that jeopardises “essential US interests” or “poses a material threat” to US security. Trade experts say the highly unusual and sweeping clauses amount to a “loyalty test” for smaller countries that also have close trading relationships with China.

Analyst insights: “This is the US protecting its market access strength through these agreements to try and reshape the ‘factory Asia’ that has developed over recent decades,” said Simon Evenett, professor of geopolitics and strategy at IMD business school in Lausanne, Switzerland. Maria Demertzis, head of the economy strategy centre at the Conference Board think-tank in Brussels, said the poison pills were “another nail in the coffin” of multilateralism. “It’s [US President Donald] Trump saying ‘I’m the big guy, you deal with me.’” Read more about the controversial trade deals.

Here’s what else we’re keeping tabs on today and over the weekend:

• Economic data: China reports October foreign exchange reserves and trade data today — and monthly inflation figures on Sunday. The Philippines publishes third-quarter GDP today.

• Trump-Orbán talks: Hungarian Prime Minister Viktor Orbán will meet Donald Trump at the White House to seek an exemption from US sanctions on Russian oil companies.

• Japanese companies: Mitsubishi Heavy Industries, Honda and Mazda report results.

How well did you keep up with the news this week? Take our quiz.

Five more top stories

1. China’s leading flying taxi company aims to launch airborne services from major airports within three years. EHang says its uncrewed electric aircraft could carry passengers into major Chinese cities for as little as $30 — and expects to be allowed to deploy its craft in a wider range of contexts soon.

• Driverless cars: Two of China’s biggest robotaxi start-ups fell as much as 15 per cent upon listing in Hong Kong yesterday, as analysts raised concerns about profitability.

2. Singaporean lender United Overseas Bank set aside its largest ever loan provision of S$615mn (US$470mn) yesterday in anticipation of potential losses in the Hong Kong and US property markets. South-east Asia’s third-biggest bank by assets said it had spotted “troublesome” areas in its Hong Kong and US commercial property loans and acted “proactively”.

3. The White House will slash prices for obesity drugs for patients by hundreds of dollars after striking a landmark deal with Eli Lilly and Novo Nordisk. The list price for shots of Novo’s Ozempic and Wegovy will drop from at least $1,000 a month to $350 when bought through TrumpRx, the president’s new website that is scheduled to launch in early 2026.

• Pharma news: Novo Nordisk’s chief executive challenged Pfizer to increase its bid for obesity start-up Metsera, as the Denmark-based drugmaker again bested its US rival’s offer for the biotech.

4. US stocks slid yesterday as weak private-sector jobs data prompted a new bout of volatility on Wall Street. Equity markets have been hit by turbulence this week as investors grow nervous about elevated valuations for AI-linked companies that have powered this year’s rally.

5. China has issued dollar bonds at rates equivalent to US Treasury yields, in what bankers on the deal said was the first time Beijing’s borrowing costs had matched Washington’s. The bond offering is the latest example of countries taking advantage of being able to issue international debt cheaply.

Visual investigation

The Line was meant to be the centrepiece of Neom, the mega-project that Crown Prince Mohammed bin Salman hoped would redefine life in Saudi Arabia and beyond. But his dream of a utopian city in the desert is being undone by the laws of physics and finance.

We’re also reading . . . 

• Javier Milei interview: The Argentine president rejected investor calls to allow the peso to float freely and vowed to accelerate his free-market reforms.

• Japanese diplomacy: A shiny Ford pick-up truck has become the symbol of new Prime Minister Sanae Takaichi’s diplomatic dance with the US, writes Leo Lewis.

• Latin America’s oil dilemma: As the COP30 climate summit approaches, Brazil and Colombia are offering competing visions of a “just energy transition” for developing countries.

Chart of the day

Pirates off the coast of Somalia have launched the first successful boarding of a commercial vessel in 18 months, according to maritime authorities and shipping analysts. The attack raises fears of a return to hijacking on a trade route that had stabilised in recent years.

Take a break from the news . . . 

From the Enlightenment to today’s “tradwives”, three new books look at the tension between production and reproduction amid signs of a shift in women’s changing role in global economics.