Letter from Nikkei Asia's editor: Israel-Iran war highlights Asia's vulnerability
As readers of this newsletter are aware, Hong Kong is one of the key maritime hubs along Asia's sea lanes. In times of international crisis, strategic points along these routes -- such as this beautiful city, with its skyscraper-lined waterfront -- draw global attention. This week, one of the most vital of those routes, the Strait of Hormuz in the Middle East, has fallen into a critical situation.
Following U.S. strikes on Iran's nuclear facilities, Tehran hinted at the possibility of closing the strait. In response, Nikkei Asia quickly assessed the potential fallout. According to our analysis, Asia would be the region most severely impacted if the strait were to be shut down.
Roughly 80% of the crude oil transported through the Strait of Hormuz -- which narrows to just over 30 kilometers at its tightest point -- is destined for Asia. Major economies like China and India are expected to face particularly severe consequences in the event of a disruption.
Crude oil prices surged following the U.S. strike on Iran's nuclear facilities. However, just a few days later, President Donald Trump unilaterally declared a ceasefire between Israel and Iran via Truth Social. His statement sent oil prices tumbling and Asian stocks soaring. A shaky ceasefire has since taken hold.
Whether this marks the end of the latest crisis remains uncertain, but one thing is clear: Any conflict that spreads globally will have a profound impact on Asia. As I've emphasized many times in this newsletter, Nikkei Asia is committed to analyzing and explaining global events through an Asian lens. For the latest updates and in-depth coverage, please visit the Nikkei Asia website and app.
Webinar: Trading Asia Live
Lastly from me, Nikkei Asia will host a free webinar just a day before Trump's 90-day pause on tariffs ends. Here are the details for "Trading Asia Live: What to expect from markets when the Trump tariffs kick in."
Date and Time: Tuesday, July 8
New Delhi | 9:30 am - 10:30 amBangkok | 11:00 am - 12:00 pmSingapore | 12:00 pm - 1:00 pmTokyo | 1:00 pm - 2:00 pm
Our market editor and reporters will discuss how experts are calibrating the expected economic impacts of Trump's tariffs and how investors and traders plan to navigate the renewed tariff war. Sign up here, where you can also submit questions.
My suggested reads
1. Singapore has begun a bold expansion of its main gateway, Changi Airport, to stay competitive as a regional economic hub. Terminal 5, scheduled to open in the mid-2030s, is projected to boost total airport throughput by 50% to over 140 million passengers annually. Read our comprehensive report -- packed with dynamic graphics and images -- to learn more about this ambitious project.
2. Japan is attempting to get back into the cutting-edge chipmaking game, but one part of the country's supply chain has never lost its edge: little-known companies with a near total control of key components or materials. A prime example: Nitto Boseki, the textile maker turned AI enabler.
3. Japan may seem far removed from America's fentanyl crisis, but a Nikkei investigation has revealed evidence of a hidden connection to the flow of these powerful synthetic opioids. The findings raise questions about Japan's role in a shadowy trade that has ratcheted up tensions between the U.S. and China.
4. South Korean mega boy band BTS is set to reunite now that all members have completed their military service, sparking hopes of a K-pop revival amid falling album sales and intensifying global competition. Our photo- and graphics-rich deep dive explores what their comeback could mean for both the group and the future of K-pop.
5. In recent years, English education in Japan has accelerated, driven largely by pressure from the business community to cultivate globally active talent. However, with rapid advancements in AI, a new question has emerged: Is learning English even necessary anymore? NIKKEI Film explores the future of English education in the age of AI.
Through the lens
This week's top photo pick : Cambodians carrying their belongings prepare to cross the border to Cambodia during a temporary opening that enabled stranded Thais to come the other way. The Ban Khlong Luk border checkpoint in Aranyaprathet district, Sa Kaeo province, and other crossing points were closed by the Thai military following a border spat. This was presented by the Thai army as part of a broader crackdown on multiple transnational scam centers operating along the border. (Photo by Rungroj Yongrait/EPA/Jiji)
Check out more of our photo coverage here
Wishing you a wonderful weekend!
Akito Tanaka
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The Mainichi
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- The Mainichi
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(AP) -- President Donald Trump on Monday vowed more changes to the way elections are conducted in the U.S., but based on the Constitution there is little to nothing he can do on his own. Relying on false information and conspiracy theories that he's regularly used to explain away his 2020 election loss, Trump pledged on his social media site that he would do away with both mail voting -- which remains popular and is used by about one-third of all voters -- and voting machines -- some form of which are used in almost all of the country's thousands of election jurisdictions. These are the same systems that enabled Trump to win the 2024 election and Republicans to gain control of Congress. Trump's post marks an escalation even in his normally overheated election rhetoric. He issued a wide-ranging executive order earlier this year that, among other changes, would have required documented proof-of-citizenship before registering to vote. His Monday post promised another election executive order to "help bring HONESTY to the 2026 Midterm elections." The same post also pushed falsehoods about voting. He claimed the U.S. is the only country to use mail voting, when it's actually used by dozens, including Germany, Switzerland and the United Kingdom. Similar complaints to Trump's, when aired on conservative and conservative-leaning networks such as Newsmax and Fox News, have led to multimillion dollar defamation settlements, including one announced Monday, because they are full of false information and the outlets have not been able to present any evidence to support them. Trump's post came after the president told Fox News that Russian President Vladimir Putin, in their Friday meeting in Alaska, echoed his grievances about mail voting and the 2020 election. Trump continued his attack on mail voting and voting machines in the Oval Office on Monday, during a meeting with Ukrainian President Volodymyr Zelenskyy. The announcement signals yet another way that Trump intends to stack the cards in his favor in the 2026 midterm elections, after he already has directed his attorney general to investigate a Democratic fundraising platform and urged states to redraw their congressional districts to help the GOP maintain its majority in the House of Representatives. Here's a breakdown of Trump's latest election post and why Congress is the one entity that can implement national election rules. Trump's post Trump for years has promoted false information about voting, and Monday was no exception. He claimed there is "MASSIVE FRAUD" due to mail voting, when in fact voting fraud in the U.S. is rare. As an example, an Associated Press review after the 2020 election found fewer than 475 cases of potential fraud in the six battleground states where he disputed his loss, far too few to tip that election to Trump. Washington and Oregon, which conduct elections entirely by mail, have sued to challenge Trump's earlier executive order -- which sought to require that all ballots must be received by Election Day and not just postmarked by then. The states argue that the president has no such authority, and they are seeking a declaration from a federal judge in Seattle that their postmark deadlines do not conflict with federal law setting the date of U.S. elections. Trump also alleged that voting machines are more expensive than "Watermark Paper." That's a little-used system that has gained favor and investments among some voting conspiracy theorists who believe it would help prevent fraudulent ballots from being introduced into the vote count. Watermarks would not provide a way to count ballots, so they would not on their own replace vote tabulating machines. While some jurisdictions still have voters use electronic ballot-marking devices to cast their votes, the vast majority of voters in the U.S. already vote on paper ballots, creating an auditable record of votes that provides an extra safeguard for election security. In his post, Trump also claimed that states "are merely an 'agent' for the Federal Government in counting and tabulating the votes" and must do what the federal government "as represented by the President of the United States" tells them to do. Election lawyers said that's a misrepresentation of the U.S. Constitution. It also flies in the face of what had been a core Republican Party value of prioritizing states' rights. Thousands of elections, none under presidential control Unlike in most countries, elections in the U.S. are run by the states. But it gets more complicated -- each state then allows smaller jurisdictions, such as counties, cities or townships, to run their own elections. 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Yomiuri Shimbun
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Nikkei Asia
24 minutes ago
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Trump opens door to selling version of Nvidia's next-gen AI chips in China
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Trump's administration halted sales of Nvidia's H20 chips to China in April, but the company said last month it had won clearance to resume shipments and hoped to start deliveries soon. "The H20 is obsolete," Trump said, saying China already had it. "So I said, 'Listen, I want 20% if I'm going to approve this for you, for the country'," he added. The deal is extremely rare for the U.S. and marks Trump's latest intervention in corporate decision-making, after pressuring executives to invest in American manufacturing and demanding new Intel CEO Lip-Bu Tan resign over ties to Chinese companies. Analysts said the levy may hit margins at the chipmakers and set a precedent for Washington to tax critical U.S. exports, potentially extending beyond semiconductors. The U.S. Commerce Department has started issuing licenses for the sale of H20 chips to China, another U.S. official said on Friday. Both the U.S. officials declined to be named because details have not been made public. The China curbs are expected to cost Nvidia and AMD billions of dollars in revenue, and successive U.S. administrations have sought in recent years to limit Beijing's access to cutting-edge chips that could bolster China's military. Washington does not feel the sale of H20 and equivalent chips compromises national security, said the first U.S. official. The official did not know when or how the agreement with the chip companies would be implemented, but said the administration would be in compliance with the law. The U.S. Constitution prohibits Congress from laying taxes and duties on articles exported from any state. The Export Clause applies to taxes and duties, not user fees. When asked if Nvidia had agreed to pay 15% of revenues to the U.S., a company spokesperson said: "We follow rules the U.S. government sets for our participation in worldwide markets." "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide," the spokesperson added. A spokesperson for AMD said the U.S. approved its applications to export some AI processors to China, but did not directly address the revenue-sharing agreement and said the company's business adheres to all U.S. export controls. The Commerce Department did not immediately comment. China's foreign ministry said the country has repeatedly stated its position on U.S. chip exports. The ministry has previously accused Washington of using technology and trade measures to "maliciously contain and suppress China." The Financial Times, which first reported the development, said the chip firms agreed to the arrangement as a condition for obtaining the export licenses for their semiconductors, including AMD's MI308 chips. It added that the Trump administration had yet to determine how to use the money. "The Chinese market is significant for both these companies so even if they have to give up a bit of the money, they would otherwise make it look like a logical move on paper," AJ Bell investment director Russ Mould said. Still, analysts and experts questioned the logic of resuming sales if the chips could pose a national security risk. "Decisions on export licenses should be determined by national security considerations and the tradeoffs of U.S. policy goals, not a revenue-creating possibility," said Martin Chorzempa, senior fellow at the Peterson Institute for International Economics, an independent research institution. "What it ends up creating is an incentive to control things, to then extract a payment, rather than controlling things because we're actually concerned about the risk to national security." U.S. Commerce Secretary Howard Lutnick said last month the planned resumption of sales of the AI chips was part of U.S. negotiations with China to get rare earths and described the H20 as Nvidia's "fourth-best chip" in an interview with CNBC. He said it was in U.S. interests for Chinese firms to use American technology, even if the most advanced chips remained barred, to keep them on a U.S. "tech stack". Some elements of Trump's trade policy are already facing legal scrutiny, with a federal appeals panel skeptical of his claim that a 1977 law, traditionally used to sanction enemies or freeze assets, also empowered him to impose tariffs. "We aren't sure we like the precedent this sets," Bernstein analysts said of the revenue-share deal. "Will it stop with Chinese AI? Will it stop with controlled products? Will other companies be required to pay to sell into the region?" "It feels like a slippery slope to us." The analysts estimated the deal would cut gross margins on the China-bound processors by 5 to 15 percentage points, shaving about a point from Nvidia and AMD's overall margins. Nvidia generated $17 billion in revenue from China in the fiscal year ending January 26, representing 13% of total sales. AMD reported $6.2 billion in China revenue for 2024, accounting for 24% of total revenue. Nvidia has warned a China sales halt for H20 chips could cut $8 billion from July quarter revenue, while AMD has projected a $1.5 billion annual hit from the curbs
