Flagship

Trump faces high-stakes Xi meeting

US President Donald Trump arrived in Beijing on Wednesday along with senior American officials and top CEOs, against the backdrop of the Iran war and pressing questions about the future of the US-China economic relationship. Ahead of Trump’s Thursday meeting with Chinese leader Xi Jinping, the White House left the door open for a deal on Chinese direct investment in the US, Semafor reported. But any offer from Xi of investment in US manufacturing would be a Trojan horse, a former Trump national security official argued, and one that Washington shouldn’t fall for. American automakers are especially nervous about the potential of Chinese EV investments in the US, an idea that Trump’s Commerce secretary shut down last month.

Xi to push Trump on Taiwan

Beijing is poised to press Donald Trump on US arms sales to Taiwan, amid rising concerns that the president could alter his stance toward the island. Trump on Monday said he would discuss the weapon sales with Chinese leader Xi Jinping, alarming the island’s supporters; some US lawmakers warned against “unilateral changes” to Washington’s Taiwan policy, Semafor reported. In his eagerness for trade deals, The Washington Post wrote, Trump may soften his tone on US defense of Taiwan, which Beijing sees as a renegade province. Taiwan’s legislature recently approved a defense budget to buy US weapons; an opposition leader who was instrumental in paring it down warned Taiwan “must not become a bargaining chip in the games of great powers.”

Huang a ‘bargaining chip’ in China

The Nvidia CEO’s last-minute inclusion on US President Donald Trump’s trip to Beijing raised the possibility of a deal to break an impasse over AI chip sales to China. Trump in January greenlit shipments of Nvidia’s high-powered H200 chips to China, but not a single one has been sold. Jensen Huang’s presence shows that Trump wants him at “the table to be [a] bargaining chip,” a former Taiwan legislator said. But the White House’s support for Nvidia will be a tougher sell to American voters, who are souring on AI, Semafor’s tech editor noted. Chinese tech firms, meanwhile, are increasingly using homegrown semiconductors, demonstrating confidence to Washington that curbs haven’t derailed China’s AI development, The New York Times wrote.

AI’s role in US elections expands

AI is playing an increasingly prominent role in US elections. The largest donor in this year’s midterm elections so far is venture capital firm Andreessen Horowitz, which has expanded its interests beyond crypto to also boost pro-AI candidates, The New York Times reported. Some politicians, by contrast, are campaigning on their opposition to data centers, which are central to the AI boom: A new Gallup survey showed 70% of Americans oppose the facilities in their area. A high-profile Democratic congressional primary in New York City has become a proxy battle over AI regulation, with interests on both sides of the issue pouring money into the race to either back or oppose one candidate who supports curbs on the technology.

Japan, EU seek out cyber AI models

European institutions are seeking access to high-powered AI models to protect them from cyberattacks after Anthropic denied EU regulators access to its powerful Mythos model. French AI startup Mistral is reportedly in talks with European banks to provide a cybersecurity-focused model, similar to Mythos, while Anthropic rival OpenAI said it would grant the EU access to its latest model. Governments and businesses are racing to detect and fix software vulnerabilities before AI systems get to them first, with access to the tech intertwining with US foreign policy: AI safety is on the agenda at the Trump-Xi summit, while three Japanese banks were reportedly given access to Mythos following the US Treasury secretary’s meeting with Japan’s prime minister.

Oil inventories fall at record pace

Global oil inventories are declining at an alarming rate, the International Energy Agency warned Wednesday, as the Strait of Hormuz shutdown continues to strain the energy sector. “Oil is in a race against time,” one analyst said. Even if the mounting pressure on oil stockpiles forces the reopening of the strait in June — as JPMorgan analysts recently predicted — the market will be “severely undersupplied” until October, the IEA warned. Import-dependent countries are turning to the US, which has become the world’s “supplier of last resort,” with exports hitting a record high, a Bloomberg energy columnist wrote. But it can only play that part for so long; the US’ crude oil and gas inventories are consistently falling.

Iran war threat to low-cost air travel

A consolidation of the airline industry in the wake of the Iran war energy crunch could end the era of cheap flights. A jet fuel price spike has led airlines to cancel thousands of flights, and analysts expect several carriers to go out of business alongside the US low-cost airline Spirit: There are concerns over its competitors, JetBlue and Frontier, and investors have taken short positions on Hungary’s Wizz Air. The industry is “notorious for its low margins,” the Financial Times reported, and crises regularly wipe out weaker airlines. If that happens again, it might diminish competition in the market, and remove much of the downward pressure on fares even after the immediate crisis is over.

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The geopolitics of undersea cables

Undersea cables are becoming a potent geopolitical pressure point. The US’ war on Iran has “exposed the fragility of the internet’s multibillion-dollar physical backbone,” Bloomberg wrote, as unexploded missiles and mines litter the seabed, halting cable projects in the Gulf. Japan is investing hundreds of millions into the infrastructure, a move that could counter the rise of an ascendant Chinese competitor and deepen ties with Western allies. Some defense experts are warning that cables’ critical value to the global information ecosystem could make them prime targets in future conflicts. One tech executive said US adversaries like China and Russia could “inflict devastating economic chaos almost at will.”