(Bloomberg) -- Shinzo Abe is borrowing from Donald Trump’s playbook.
Japan’s prime minister is tightening controls on exports of material vital to South Korea’s tech industry, shortly after Japanese companies were held liable in a Seoul court for cases of forced labor before and during World War II.
While Abe denied it was retaliation, South Korean President Moon Jae-in warned today he would take further action if Tokyo didn’t reverse course.
The melee shows how countries – China is another one with a track record here – are increasingly using trade leverage in political disputes, with potentially disruptive consequences for global supply chains.
While the Trump administration officially cited national security concerns in blacklisting Huawei Technologies, the U.S. president has since used the company as a bargaining chip in his trade war with Chinese leader Xi Jinping.
Trump’s actions are particularly risky when it comes to Japan and South Korea, both longtime U.S. allies with a history of conflict dating back decades. Instead of playing the role of mediator, he's used U.S. economic weight to demand better terms for basing troops in each country.
As such, it’ll be hard for Trump to tell Abe not to put “Japan First” when it comes to South Korea ties.
Global Headlines
Biden’s mea culpa | Democratic presidential front-runner Joe Biden spent the weekend apologizing for his remarks about his civil relationships with segregationist senators in the hopes of putting the issue behind him. But Trump wasn’t ready to let it go. “Sleepy Joe Biden just admitted he worked with segregationists,” the president, who himself is often accused of using racially charged rhetoric, tweeted.
Facing the consequences | After removing Turkey’s central bank governor for failing to lower borrowing costs, President Recep Tayyip Erdogan made clear he expects the successor to toe the government’s line on monetary policy. But the move is likely to backfire. The lira slid as investors braced for bigger and quicker rate cuts than warranted by slowing inflation, making it difficult for new governor Murat Uysal and putting further pressure on Erdogan after he lost control of Istanbul in elections last month.
German retreat | The culling of 18,000 jobs at Deutsche Bank (DE:DBKGn) is significant on two fronts. It is a symbol that German economic might has its limits – its flagship lender ultimately couldn’t break into Wall Street. Secondly, its politicians are not kicking up a fuss about the cuts. On the contrary, they’re relieved about not having to worry about messy state aid and embrace a return to serving the banking needs of the country’s big companies.
Call for help | Niger President Mahamadou Issoufou is urging greater U.S. involvement in the fight against mushrooming Islamist insurgencies in West Africa — as Trump scales back America’s military presence on the continent. Issoufou told Katarina Hoije that too little is being done to combat the fighters, some of whom have been linked to al-Qaeda and Islamic State.
Secret weapon | Hector Rodriguez has emerged as the fresh face of the middle-aged regime of Nicolas Maduro, Alex Vasquez reports. In some circles in Venezuela, Rodriguez’s name is whispered as the best chance of holding onto power if an international coalition forces new elections to break the stalemate with youthful opposition leader Juan Guaido. But even if Maduro somehow left, Rodriguez would bear the weight of his predecessor’s ruinous economy.
What to Watch
- Iran may choose to enrich uranium at 20% purity level as its next step in a new policy that’s gradually undoing the restrictions imposed by the 2015 nuclear deal, the official Islamic Republic News Agency reports.
- Greece’s center-right New Democracy party leader Kyriakos Mitsotakis won a healthy majority in Sunday’s election. The Harvard-educated former banker quickly needs to show he can tackle the country’s persistent economic problems when he’s sworn in today as prime minister.
- This could be a critical week for Trump’s lawyers in their fight to keep the president’s financial records out of the hands of congressional Democrats.
And finally... Trump put his feud with the co-captain of the U.S. women’s national soccer team on ice following yesterday’s historic World Cup win, telling the players, “America is proud of you all!” On June 26, Trump took on Megan Rapinoe — a purple-haired LBGTQ rights activist whose goal helped clinch the team’s fourth title — for saying she wouldn’t go “to the f__king White House” if the team won, based on her opposition to Trump’s policies. "Megan should WIN first before she TALKS,” Trump said at the time.