Europe is ‘losing’ the battle to rival US and China, warns Dimon

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

• Dimon’s blunt message to Europe

• How heatwaves are boosting Uniqlo’s profits

• The Fed’s independence under threat

JPMorgan Chase chief executive Jamie Dimon warned European leaders they have a competitiveness problem and that they are currently “losing” the battle to rival the US and China.

Dimon on EU competitiveness: “Europe has gone from 90 per cent US GDP to 65 per cent over 10 or 15 years. That’s not good,” Dimon said at an event in Dublin organised by the Irish foreign ministry. “You’re losing.” The comments from Dimon, one of the most influential voices in global finance, underscore the challenges facing the EU as it battles to invigorate its economy.

On tariffs: Dimon also warned that financial markets had become too relaxed about Donald Trump’s repeated threat of tariffs. Investors yesterday brushed off the US president’s latest threat of a 50 per cent tariff on copper, 200 per cent tariffs on the pharmaceutical sector and levies on countries including Japan and South Korea. “Unfortunately, I think there is complacency in the market,” he said.

Dimon also shared his thoughts on the so-called Taco trade and potential trouble ahead for Trump. Read more.

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

• Economic data: Malaysia publishes the industrial production index and manufacturing sales for May. June PMI is due in New Zealand.

• Australia-China ties: Australian Prime Minister Anthony Albanese begins a visit to China on Saturday.

• Wimbledon tennis: Amanda Anisimova of the US faces off against Poland’s Iga Świątek in the women’s singles final on Saturday. The men’s final, which is still to be determined, takes place on Sunday.

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

Five more top stories

1. Fast Retailing, owner of the Uniqlo brand, has reported a global shift of shoppers buying lighter layers of garments to cope with longer, hotter summers. The trend has helped keep Asia’s largest clothing retailer on track to hit record annual profits — and underlines how climate change is starting to reshape consumer behaviour.

2. The Pentagon is making a $400mn direct investment in a US rare earths producer, in an unusual arrangement highlighting the Trump administration’s determination to break Chinese dominance of critical minerals and bolster domestic supply chains. The company, MP Materials, said yesterday that the Pentagon would become its largest shareholder.

3. South Korean policymakers are struggling to stimulate economic growth in the face of an escalating global trade war, as they fear cutting interest rates could boost property prices in some of the most desirable parts of Seoul and inflame an already overheated market. The Bank of Korea yesterday held rates at 2.5 per cent, defying pressure to support an economy that contracted in the first quarter.

4. Moët Hennessy is facing accusations of sexual harassment, gender discrimination and unfair dismissal in a lawsuit that people who have worked at the business say is symptomatic of wider cultural problems at LVMH’s €6bn drinks division. Adrienne Klasa has more details on the case.

5. Indonesia has asked Brussels to further delay its landmark deforestation law, adding to mounting pressure from EU governments that have demanded policymakers cut back “onerous” requirements on producers. The controversial ban on products coming from deforested land being sold in the bloc has been heavily criticised by several of the EU’s trading partners including Brazil and the US.

The Big Read

Donald Trump’s increasing frustration with the US Federal Reserve has led him to variously describe its chair, Jerome Powell, as “stupid”, “terrible”, a “numbskull”, “a stubborn mule” and “a total and complete moron”. The insults have led some to worry about the central bank’s independence and weighed on the dollar, but replacing him with someone more pliable will not be straightforward. Can the Fed stay independent under Trump?

​​We’re also reading . . . 

• Trump vs Lula: Brazil’s leftwing president is seizing on the US president’s tariff threat to revive his re-election prospects.

• Tesla’s wild card: The huge Elon Musk premium in the electric car maker’s shares is an extreme version of Silicon Valley founder syndrome, writes Richard Waters.

• ‘Obvious and intelligent’: Billionaire mining entrepreneur Robert Friedland welcomed Trump’s vow to impose a 50 per cent tariff on copper imports.

Chart of the day 

Market volatility has dropped to near its lowest levels of the year and stocks are trading at record highs as investors brush off Trump’s latest tariff threats. “I don’t care about tariffs any more,” said Max Kettner, head of multi-asset strategy at HSBC.

Take a break from the news

Here are our six films to watch this week, including the latest Superman movie — a “fun-ride with an appetite for ugly politics”, writes FT film critic Danny Leigh.