0:04

Good morning from the Financial Times.

0:07

Today is Friday, April 25th, and this

0:09

is your FT News Briefing. Tariffs

0:11

are pushing some iPhone assembly

0:13

out of China, and this

0:15

trade war is also causing a

0:17

downturn in Chinese manufacturing. Plus,

0:19

the Trump administration is trying

0:21

to void paper checks. Something

0:24

that the non -US mine kind of struggles

0:26

to comprehend why checks have remained so

0:28

popular in the US. I'm Mark Filipino

0:30

and here's the news you need to start your day. Apple

0:46

plans to shift to India for the

0:48

assembly of all US iPhones as soon

0:50

as the end of next year. That's

0:52

according to FT sources. The company

0:54

currently assembles most of its phones

0:56

in China, but US President Donald Trump

0:58

is targeting the country with massive

1:00

tariffs, and those have hit Apple hard.

1:03

Apple still heavily relies on Chinese

1:05

suppliers for earlier steps in the

1:07

production process, though. Now,

1:09

the tech giant has already started

1:11

diversifying its production to India, but it

1:14

needs to ramp up its capacity

1:16

there even more in order to meet

1:18

US demand. Of

1:26

course, it's not just U .S. companies in

1:28

China that have been bitten by tariffs. Chinese

1:31

factories are slowing production and furloughing

1:33

some of their workers. Many

1:35

American companies are now canceling their orders

1:37

and production lines are feeling the

1:39

pressure. I'm joined by the

1:41

FT's deputy Beijing bureau chief, Ryan McMurray,

1:43

who's been reporting on this. Hey, Ryan.

1:46

Hi, Ryan. Thanks for having me on. So

1:49

tell me what we're seeing in

1:51

Chinese factories, which companies or products

1:53

are really being affected? So

1:56

from what we can see so far, it

1:58

really seems to be a wide range of

2:00

products, everything from shoe soles

2:02

to blue jeans to electrical

2:04

outlets to portable stoves. It's

2:06

factories that have a lot of orders

2:08

that go to the US. And

2:11

what we heard universally was this

2:13

is not a good time for

2:15

them. The local governments with many

2:17

exporters like Shenzhen or Dongguan are

2:19

starting to step up and put

2:21

out policies to help affected factories.

2:23

But A lot of these factories

2:26

will ultimately close if this trade

2:28

war goes on. And just do

2:30

me a favor, Ryan, and remind me about the

2:32

tariffs. Where are we at with the US -China

2:34

trade war? So the

2:36

US has hiked duties

2:38

on China to 145 %

2:40

for most products, although

2:43

there's a large carve out

2:45

for smartphones and other electronics. And

2:48

China's retaliatory tariffs are at

2:50

125 % for most US

2:52

products. The Trump administration in

2:54

recent days seems to be indicating

2:56

they want to lower tariffs

2:58

to some degree because these are

3:00

very unsustainable for the US economy.

3:02

And President Trump day by day

3:04

seems to indicate that he more urgently

3:06

wants a phone call with Xi Jinping.

3:09

But for now, the Chinese are holding

3:11

out. And yesterday, the

3:13

Chinese commerce spokesperson said that

3:15

China wanted to see all

3:17

the unilateral tariffs put on

3:19

China canceled before negotiations could

3:21

really get underway. So

3:23

who did you speak to and what did you hear from workers? So

3:26

altogether we probably spoke to

3:28

about a dozen people, workers, factory

3:31

owners and some factory recruiters.

3:33

Many factories are putting their workers

3:35

on leave. Some factories are

3:37

just cutting their overtime. The

3:39

factory recruiters are telling

3:41

us job openings are diminishing

3:44

and they're not sure

3:46

what the future looks like. Some workers

3:48

have told us they don't have any

3:50

wages and they're just put on leave. Other

3:53

factories are mandated to

3:55

provide their workers basic minimum

3:57

wage. And so the

3:59

factories that are putting workers on leave in

4:01

those areas, they're still getting something. It's

4:03

not very much and much less than

4:05

what they usually earn, but it's still something

4:07

that they can live on. That

4:10

sounds like these people are really struggling and these

4:12

factories are in really rough shape. How long

4:14

do you think they can hold out for? So

4:16

a lot of factories in China are

4:18

trying to transform their factory from exporting

4:20

abroad to selling domestically and that's going

4:23

to be more doable for some and

4:25

less doable for others There's some of

4:27

the factory owners that we spoke to

4:29

said they're looking at Europe So it

4:31

seems likely there will be a lot

4:33

of cheap Chinese goods on their way

4:36

to Europe at some point in the

4:38

near future Big picture Ryan. What does

4:40

this mean for both the Chinese

4:42

economy and the US economy? so

4:45

Big picture with some

4:47

Chinese factories trying to sell their

4:49

products domestically, it's going to

4:51

worsen the overcapacity problems that China's

4:53

economy is already facing. The

4:55

country currently has a real estate

4:58

crisis with... property values continue

5:00

to fall. So the economy in

5:02

the recent year or two

5:04

has been really relying on exports

5:06

to produce growth. And

5:08

so this trade war is really

5:10

hampering the ability for China to

5:12

continue to use exports as its

5:14

growth model. On the other side of

5:16

the Pacific in the US, the lack

5:18

of products is probably going to

5:20

worsen inflation problems. And some

5:22

analysts think that there will even

5:24

be empty shelves come summertime

5:26

if this continues. That's the

5:29

FT's Ryan McMurrow. Thanks, Ryan. Thanks

5:31

for having me on. Google's

5:39

parent company Alphabet had a very

5:41

profitable first quarter. Its

5:43

net income jumped

5:45

46%. That's thanks to

5:48

growth in Google's search and advertising

5:50

business, plus a boom in AI -related

5:52

demand for cloud computing. Investors

5:54

were happy and Alphabet shares went

5:56

up more than 4 % in after -hours

5:58

trading, but things haven't been

6:00

so rosy for the stock the rest of

6:02

the year. Shares have

6:04

fallen about 17%. Like most

6:06

big tech companies, Alphabet has been

6:09

affected by the threat of U .S.

6:11

tariffs. People are worried about the levees

6:13

disrupting supply chains and pushing consumers

6:15

to cut back on spending. The

6:23

Trump administration is waging a

6:25

war on paper checks. The

6:28

White House says they're costly

6:30

and inefficient, but checks still

6:32

remain stubbornly popular in

6:34

the United States. I'm

6:36

joined now by the FT's US Banking Editor,

6:38

Joshua Franklin, to talk more about this. Hey,

6:40

Josh. Hey, Mark. So I

6:42

did not know this, but Americans use

6:44

paper checks way more than the rest

6:46

of the world. Exactly. Americans

6:49

are the global leaders in

6:51

Czechs. They write, according to one

6:53

estimate, 10 times the number

6:55

of Czechs that Britain, Australia, Italy,

6:58

Germany, and France write combined.

7:00

Wow. So this really is

7:02

American exceptionalism in action. And

7:04

it's pretty interesting. I think it's something that

7:06

the non -US mind kind of struggles to comprehend

7:09

why Czechs have remained so popular in the US.

7:11

Yeah. And Josh, what are the reasons? So I

7:13

think there's three big reasons why paper checks

7:16

have endured in the US in the way that

7:18

they haven't in pretty much any other country

7:20

in the world. Part of that

7:22

is the highly fragmented nature of the

7:24

US banking system. So it's pretty hard

7:26

to form consensus to promote what could

7:28

be a replacement system that would use

7:31

electronic payments. And then the other reason

7:33

is there's a lot of incentives in

7:35

the payments ecosystem for people to push

7:37

credit card payments in the US more

7:39

so than in other parts of the

7:41

world. So if your credit card and debit

7:43

cards in the US, you have interchange

7:45

fees or swipe fees that aren't really capped

7:47

in the same way that they are

7:50

in the EU, for example. So that means

7:52

that there's been a much slower push

7:54

for direct account to account payments that could

7:56

rival checks or credit card payments as

7:58

an alternative. And that's one of the reasons

8:00

why you see small businesses are among the

8:02

biggest proponents of checks because they want

8:04

to try to avoid these card fees.

8:06

And then the third reason is just

8:08

local payments habits. So once consumers tend

8:10

to find a way of paying for

8:12

something that works, it's very hard to

8:15

wean them off it. So

8:17

Josh, what is the Trump administration

8:19

doing to cut back on the use of

8:21

checks in the United States? So

8:23

it's coming from this executive order

8:25

at the end of March from

8:27

the White House where they mandated

8:29

the federal government basically to cease

8:31

issuing or accepting paper checks where

8:33

it's legal to do so. It's much

8:35

more expensive to write out a check or

8:37

even print a check and send it

8:39

in the post than it is just to

8:41

send an electronic payment. And then also

8:43

there's just a lot more risk of something

8:45

going wrong in that process. So something

8:47

gets lost in the post, maybe it gets

8:49

stolen in the post. Someone else can

8:52

photocopy that check and then modify it to

8:54

kind of repeat fraud with a

8:56

single check multiple times. So it's a

8:58

riskier form of payment than the

9:00

electronic payments. So what

9:02

impact then do you think this executive

9:04

order banning paper checks and the federal

9:06

government will have more broadly? Could it

9:08

potentially lead to the death of the

9:10

paper check? I think the

9:12

sun is setting on the paper check in

9:14

the US in the same way that it

9:16

has already set in other parts of the

9:18

world. It's just setting more slowly. I think

9:20

this does help push that

9:22

process along, especially when you consider that

9:24

paying the government is a very

9:27

popular form of check use in the

9:29

US. About one in five payments

9:31

in 2023 via check were to pay

9:33

the government. So a lot of

9:35

that is potentially going to go away.

9:37

So I think this does usher

9:39

along the process of the check fading

9:41

from view, but I don't think it's

9:43

going to go anywhere anytime soon. I think it's

9:45

still got a little bit longer left. Josh

9:48

Franklin is the FT's U .S. banking

9:50

editor. Thanks, Josh. Thanks much. We

9:59

want to take a moment to honor a colleague. Our

10:02

audio engineer, Joe Salcedo, passed

10:04

away suddenly. Joe was

10:06

a crucial member of our team. He

10:08

was amazing at polishing the audio in our

10:10

shows so that these episodes that you

10:12

listen to every day sparkle. But

10:15

above all else, he was a great

10:17

guy, just an absolute pleasure to work

10:19

with. and a beloved member of our

10:21

team and the FT's team in Manila.

10:24

Joe, you will be dearly

10:26

missed. The

10:30

FT News Briefing is produced by

10:32

Sonya Hudson, Fiona Simon, Lulu Smith,

10:34

Ethan Plotkin, Kasia Brucellian, and me,

10:37

Mark Filipino. We had

10:39

help this week from Misha Frankel -Duvall,

10:41

Andrew Georgiatis, Katya Kumkova, Michael Lelo, Peter

10:43

Barber, David De Silva and Gavin

10:45

Kalman. Our executive producer is Topher Four

10:47

Hez. Cheryl is the FT's head

10:49

of audio, and our theme song is

10:51

by Metaphore Music.