India downgrades relations with Pakistan

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

• India downgrades ties with Pakistan

• The US Treasury secretary’s remarks on China trade war de-escalation

• Chinese internet users mock Trump’s tariffs

India has downgraded diplomatic relations with Pakistan and suspended its participation in a crucial cross-border water treaty, accusing Islamabad of being involved in a deadly attack on tourists in the disputed northern region of Kashmir.

Prime Minister Narendra Modi convened senior ministers yesterday to decide how to respond to Tuesday’s killing by suspected militants of 26 tourists in the India-controlled territory of Jammu and Kashmir. Here’s what to know about the simmering tensions between India and Pakistan.

India’s response: At the meeting, the “cross-border linkages of the terrorist attack were brought out”, India’s foreign secretary Vikram Misri told a news briefing without giving details of Pakistan’s alleged role. Misri said the Indus Waters Treaty of 1960, which governs the use by the two countries of water resources in the Indus river system, would be held in “abeyance . . . until Pakistan credibly and irrevocably abjures support for cross-border terrorism”. The foreign minister also announced new travel restrictions.

Fears of a confrontation: Indian defence minister Rajnath Singh vowed to deliver a “very loud response” to those behind the attack. New Delhi has long accused Islamabad of supporting terrorism in Jammu and Kashmir and has previously staged military strikes on its nuclear-armed neighbour in response to militant attacks in the territory.

Pakistan’s foreign ministry did not immediately comment on India’s allegations of involvement, saying in a statement yesterday that it was “concerned at the loss of tourists’ lives in an attack in Anantnag district of Indian Illegally Occupied Jammu and Kashmir”.

Setback for Modi: The prime minister’s government has claimed to have brought peace to Jammu and Kashmir since 2019 when it reduced what was India’s only Muslim-majority state to a territory under direct federal rule. The attack was the deadliest in the region since a 2019 suicide bombing when 40 Indian paramilitaries were killed — prompting India to launch an air strike inside Pakistan on what it said was a terrorist training camp. 

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

• Economic data: Japan reports March services PPI inflation figures and South Korea publishes advance first-quarter GDP.

• Companies: Alphabet, SK Hynix, Tech Mahindra, Fujitsu and Hyundai Motor report earnings.

Five more top stories

1. US Treasury secretary Scott Bessent has cautioned that any de-escalation in the US-China trade war would have to be mutual, denying reports that President Donald Trump would unilaterally cut levies on Chinese goods. Bessent also told reporters: “A break between the two countries on trade does not suit anybody’s interests.”

• More trade war news: Trump is planning to spare carmakers from some of his most onerous tariffs, following intense lobbying by industry executives.

• China-EU relations: Beijing is preparing to lift sanctions on European lawmakers as it tries to revive an investment deal with the EU after losing most of its access to the US market in Trump’s trade war.

• Boeing confronts trade war fallout: The US aircraft maker is prepared to look for alternative buyers for its planes destined for Chinese airlines, its chief executive has said.

2. Trump has attacked Ukrainian leader Volodymyr Zelenskyy for refusing to recognise Russia’s occupation of Crimea, accusing him of harming peace negotiations with Moscow. His intervention came days after the US floated ideas for a possible resolution of the war that included Washington recognising Russian control over Crimea, the Black Sea peninsula that Russia annexed in 2014.

3. World Economic Forum founder Klaus Schwab allegedly manipulated the organisation’s research to curry favour with governments, according to whistleblower claims that led to his resignation as chair of the organisation over the Easter weekend. In a statement circulated yesterday, Schwab said he was the victim of a “character assassination” and denied all the claims against him.

4. The British banker tasked with overhauling Nomura’s global investment operations after a $2.9bn hit from the collapse of Archegos has said his traders are finally closer to being able to go “max risk”. Christopher Willcox told the FT he was increasingly confident of taking bold, high-stakes bets in an interview at the bank’s Tokyo headquarters.

5. Jordan banned the Muslim Brotherhood yesterday, casting doubt on the future of the Islamist group’s political arm, which emerged as the country’s largest opposition force in last year’s election. The move comes a week after Jordanian authorities said they had arrested 16 members of the Brotherhood, whom they alleged had been trained in Lebanon to carry out rocket and drone attacks within the kingdom. Read the full story.

News in-depth

Internet users in China mocked Trump’s claim that “jobs will come roaring back” to the US as a result of his tariffs with artificial intelligence-generated videos depicting American workers sweating over trainer and smartphone assembly lines. The videos highlighted that there is little chance of the US replicating the labour force advantages that turned China into the world’s factory over more than two decades.

We’re also reading . . . 

• Maga Catholics: A growing number of Americans hope Pope Francis’s death will mark a decisive conservative shift and pave the way for a “Trump-like pope”.

• Banking at the beach: Citigroup is closing its beachside Málaga office less than three years after opening the hub to offer bankers a better work-life balance.

• Tradwives: Domestic influencers have become pin-ups of the religious right’s quest for higher birth rates, writes Chine McDonald of think-tank Theos.

Chart of the day

Jane Street’s trading revenues almost doubled last year and boomed during the tariff-induced turmoil of the first quarter of 2025, as the secretive US firm generated profits rivalling those of Goldman Sachs and Morgan Stanley.

Take a break from the news

Are you a fashion hoarder? Read Alexa Chung’s guide to letting go of — some of — the clothes you no longer need.

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