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Hello and welcome to World Business Report on the BBC World Service.
I'm Will Bain. Great to have your company on the programme today.
Coming up we'll be hearing from the farming sector in the United States in just a moment to gauge what impact Monday's tariffs imposed by China on products ranging from pork and corn to soybeans and beef might have.
And we'll also be hearing too.
What the escalating trade war between the world's two largest economies could mean for prices for Chinese consumers as a result.
Also today, we'll hear about Canada's new leader and find out whether his background as a central bank governor, both at home and abroad, might help him as he gets set to deal with, well, his frontier in that particular trade conflict.
And first, you cry, a pretty unsaid Congo looks set to try and use its mineral wealth to attract US financial and perhaps military support.
If they give maybe the minerals to the U .S.
government and then in return the government of U .S., we also provide military support.
And a boom for this street food in India.
It's not healthy. It's a guilty pleasure for me.
I like it. I try to control it.
Yeah, all that to come.
Let's start, though, as we often have in the past couple of weeks, talking tariffs because Chinese tariffs on many U .S.
farm products came into force on Monday as the trade war between the world's two largest economies ramped up.
Beijing will enforce 15 % import taxes on US products like chicken, wheat and corn, as well as 10 % on things including soybeans, pork, beef and fruit.
We'll look at the potential impact on US producers with two joining us live in just a moment.
But first, Han Lin, China Country Head at the consultancy The Asia Group in Shanghai, told Sean Farrington what impact he thought the new tariffs might have on Chinese consumers.
The challenge right now is not inflation prospects, it's actually Chinese deflation, particularly with prices going down.
Now, that may not be a bad thing, because the key driver for deflation is that Chinese food prices are going down.
And so in many ways, when the announcement of tariffs on US agricultural goods was announced, it probably results after President Trump's election, what we were calling the Trump.
So if it doesn't have that big an impact on China right now, are you expecting America to retaliate to the retaliations and keep going stronger with various parts of the trade war until there is an impact on China?
I think it's quite possible.
I think a key goal is that ultimately Trump and Xi do want to meet each other.
But certainly before any discussion or negotiation of some grand trade deal, you need to enter it from a position of strength.
Right. And so you're seeing a lot of tit for tat between both sides to demonstrate that neither side will back off easily.
Han Lin in Shanghai there.
So what about US producers and exporters?
Well, among the 700 plus products earmarked by the Chinese for those additional tariffs, some are meat products like boneless beef and swine and offal.
So good that we're going to be joined by Joe Shealy.
Joe's the Senior Vice President of Communications at the US Meat Exporter Federation.
and we're also joined by Michelle Klieger.
Michelle is the president and founder of the consultancy Stratagem, works with clients right across the agricultural sector and she's joining us live from the US state of Massachusetts.
Welcome both to World Business Report.
Michelle, first of all, do the broad picture for us here.
I guess everybody knew across the agricultural sector in the United States that some kind of response was coming.
Does that mean they've been...
...something that presidents historically have taken into account?
President Trump in his first term...
Well, thank you for having me.
I think that, you know, everybody has been watching it is of key concern.
But there's really only so much planning you can do in uncertainty, especially when we're now entering planting season and seeds and inputs and other things have been purchased already.
So I think there's a lot of eyes on what's going on in trade right now, but still a lot of uncertainty that is in the market.
joe is that the feeling among members uh kind of here we go again yes the additional duties on us pork and beef are are certainly a concern but not particularly surprising uh for us pork china is our top destination for off fall products organ meat feet ears that kind of thing and it's difficult to uh to remain competitive when you're already facing retaliatory duties we already face a retaliatory duty on pork and so this uh ups the effective duty to 47%.
And then on the beef side, our primary competitor on the higher end of the higher end of the beef market in China is the Australian grain -fed beef.
And that product enters China duty -free under a free trade agreement.
And so with the additional 10%, we're actually facing a 22 % tariff disadvantage.
Well, it's a combination of things.
They did actually have some weaker guidance on sales which you know for individuals could have might have did have joe um did did you see uh your customers your clients um sell less into china sell none at all what was the kind of impact and what might you expect this time as a result i guess on the pork side it's been a little bit difficult to judge uh the impact the tariff impact on volumes because China's imports of pork always depend on where they are in their own production cycle.
China has just a massive pork industry.
They produce and consume about half of the world's pork.
And so the volumes that we're moving to China on the pork side are always going to depend primarily on what's happening with their domestic production.
As far as beef, we really first gain meaningful access to the Chinese market under the first Trump administration under the phase one trade agreement.
And so that process had been working fairly well.
We actually reached $2 billion in exports to China in 2022.
Demand has been down a little bit from that, but still very strong market.
But our primary concern right now, in addition to the tariffs, is we're facing an upcoming deadline for our plants, our U .S.
plants, pork source from British Columbia, and the oysters, those are perishable products with a shelf life.
So you're pretty limited in what you can do.
And presumably that becomes political now as well, right?
Presumably the concern would be that that becomes political too.
Well, we are concerned about that.
We don't have any evidence that the reason that those registrations have not been renewed or the trade tensions but that's certainly a concern that it may become entangled in this michelle um i heard about pork in particular there from joe and some of those specific types of meat products that that his clients are exporting his members are exporting the whole point in these kind of sort of tip -for -tac tariffs aren't they that they've got pitch pinch points specific pinch points ideally ideally kind of geographic ones ones that they think might hurt president Trump and the administration politically.
Are there parts of the U .S.
where you look now, bits of the country, sectors in bits of the country where you think that is going to be painful potentially?
Whenever we're talking about China and trade, it does go back to soybeans, and soybeans accounted for roughly half of U .S.
exports to China. So there's definitely a lot of focus on soybeans, especially with that new tariff.
And so you're seeing now that with a tariff on that, you know, there's concerns of what impact that will have on the industry.
However, it's coming at a time where it is less likely to have as big of an impact.
So right now, we are planting soybeans in the United States, they are harvesting them in South America.
So Brazil is the largest exporter of soybeans in the world, and they have extremely large production this year.
Argentina has also increased their output this year.
From now until September, most of those soybeans are going to be coming from Brazil and Argentina.
You would expect lower exports from the United States right now.
It's really when you get to the end of summer to see how this situation evolves as to the impact it's going to have on U .S.
producers. And Michelle, just briefly round us out as well.
Then I started by asking Joe about was anything learned this time?
Do you think farmers in America are better prepared for trade war 2 .0?
Yes, I do. I think that we saw how soybean, we saw a couple of things.
We saw how global trade still happens, right?
So the U .S. exports to China lowered for a period of time and then they rebounded.
and now they're down again.
But exports to other places have changed.
Also, the huge driver of demand for U .S.
soybeans right now is sustainable aviation fuel and renewable fuel.
That's really the only people who would have domestically really benefited off of this in a meaningful way and for a longer period of time.
Final question to you.
The agricultural consultancy stratagem and Joe Shealy, the senior vice president of communications of the U .S.
Meat Exporters Federation.
Well, let's take a look at what the latest ratcheting up of the tariff war is impacted, it's having on financial markets.
And to do that, Rachel Winter is with us, partner investment manager at Killik & Co.
here in London. Rachel, welcome back to World Business Report.
How much of this can be attributed what's going on on stock markets today?
Stock markets around the world down.
How much of it is attributable to trade war?
How much of it is domestic concerns about domestic economies, do you think?
I think a lot of it this week is about the trade war.
I think people are just a bit nervy about what's happening because the rules around the tariffs just keep changing.
We've had tariffs being threatened and then rolled back and then reimposed and then changed.
And I think markets just don't know what to make of that.
And then furthermore, the more tariffs we have, the higher inflation is likely to be.
That will mean the interest rates will have to go up to keep that inflation under control.
And that's bad news for markets.
So I think that's why markets are down this afternoon.
Yeah, we'll talk about that in a bit more detail in just a moment, because Canada has a new prime minister.
Tariffs, of course, top of the intree as those pretty turbulent economic times.
Well, maybe the most turbulent they've ever faced in the country.
In first place. Be the dumping ground for seafood for countries that are producing and have inferior quality seafood.
Peter Jankowski is still with us.
Fascinating to hear from a small business like Brian.
Because we are Canada strong.
Vive la Canada. Mark Carney there, former Central Bank governor, both in Canada and here in the UK, won the race to succeed Justin Trudeau as the leader of the country's governing Liberal Party and as such, for now, the Prime Minister as well.
Thanking his supporters, Mr Carney promised action on issues like the housing crisis in Canada, but he knew what was most immediate on his to -do list.
There's someone who's trying to weaken our economy.
Donald Trump, Donald Trump, and Donald Trump, as we know, has put unjustified tariffs on what we build, on what we sell, on how we make a living.
He's attacking Canadian families, workers and businesses and we cannot let him succeed.
And we won't. We won't.
Well speaking to NewsHour on the World Service, the Liberal Party MP Cody Blois said Mark Carney's speech reflected the political mood in the country and that Mr Carney had the experience to $400 ,000 a day from the states of New York, Michigan and Minnesota and increased household costs there.
On an average, this will add around $100 per month to the bills of hardworking Americans.
And so I thought Mark did a very good job reflecting the mood of the country last night and he highlighted what has to be the focus.
We cannot control Donald Trump, but we can control what we do in our own country.
Mark has great economic and fiscal credentials, He wants to position the Canadian economy to be the best in the G7, focus on competitive issues in our country, how we build up our supply chains, how we look for other trading partners.
Canada has what the world needs in natural resources, agricultural products, steel.
You know, we have what the world needs.
Well, as I mentioned, Mr Carney was the head of the UK's Central Bank, the Bank of England, as governor between 2013 and 2020.
And speaking to the BBC a little bit earlier on, Mohamed Al -Erian, Chief Economic Advisor at the big insurance firm Allianz, who worked alongside Mr Carney in his time at the Bank of England, says he has an impressive resume.
If you look at his career, it's been from one amazing job to another.
You know, Harvard and Oxford educated, Goldman Sachs, Bank of Canada, Bank of England, UN envoy.
So he has been preparing for this, but not in the political sense, but in the technocratic sense.
In terms of how he will do, I think...
What do you do with this product?
Is that just a loss you're going to have to write off now?
Well, there isn't really a good answer for this because these products do have a best before date that gives us some time to kind of wait and see what will happen, hopefully cool it.
He's very good at thinking of what comes after the crisis, the day after, as they call it.
That's the economist Mohamed Al -Arian speaking to the BBC a little bit earlier on today.
Rachel Winter from Killik & Co., still with us.
Rachel Mohamed Al -Aryan listing just a couple of those crises.
He's certainly known plenty of financial storms before hasn't he?
The financial crisis of 2008, Covid pandemic, the changes here in the UK that Brexit threw up.
I guess in that sense a man who knows what a kind of economic challenge looks like in terms of what this trade war might throw up.
Exactly he's got a huge amount of experience and speaking from my personal point of view here in the UK I think he was very well received when he was the governor of the Bank of England here.
He was here for seven years.
And I think the general consensus is he did a really good job of steering the country through a very difficult time.
In particular, he was very good at communicating with the markets.
He was very good at explaining exactly what he was doing.
And I believe it was him that encouraged the bank to publish its minutes while they were making announcements about changes to interest rates.
So overall, I think he's a very good, very experienced individual.
That's really interesting.
So it was that kind of clarity, because I've seen that written up a few times in the financial papers this morning here in the UK, of finding those products, making them yourself maybe, and moving away from the US.
Absolutely. So we're actively working on that right now.
But as a small business, just as you have your capital tied up in this American inventory, it's really hard to pivot.
Forewarning the market and explaining things.
I think there were less surprises as a result of that, and it really helped to keep the seas calm.
And I suppose that's almost precisely really what he's faced with here, isn't it?
I mean, we've started the program talking about tip for tat sanctions.
We've got a tariff.
Sorry, we've got more coming down the track in April that are on pause, aren't they specifically aimed for Canada?
I guess it's it's it's being clear with your own businesses in your country and investors who invest into your country about what you are planning to do as a country in as a government in response to some of that.
As long as you're clear, perhaps that shock, you know, mitigated is probably the wrong word, isn't it?
But but it can at least be sort of planned for.
It can. Exactly. And I do think the situation in Canada now is quite difficult.
And I think you want someone in power who's got a really, really good understanding of economics so that they can negotiate from a position of strength.
In terms of that volatility, to bring it back round again to what you were talking about just before we got into that sequence of hearing from Mr Carney, Rachel, why do you think it is so volatile in such specific sectors?
Gideon, who's producing our programme today, asked a good question about why in particular those tech...
Overall perspective.
...today. I'm looking up above my head at the Bloomberg screens, you know, Apple down just shy of 5%, Nvidia the chip maker.
the united states feel the same level of pain they think that that might be the next frontier in this tariff or that they'll move from agriculture to to technology comes from exporting to the u .s to deal with interest rates um so when interest rates are rising are expected to rise investors tend to want to reduce the amount of risk that they're taking so they tend to sell the stocks that they view as being relatively risky and that tends to be the technology stocks so you tend to find that when interest rates are rising for example as they did in 2022, that's when the riskier sectors like technology
will perform the worst.
And I guess then the market needs to take the kind of Mark Carney approach, perhaps be a little calmer in its reactions to what is going to be kind of daily headlines.
Yeah, absolutely. Rachel, thanks so much as always for your time there.
Rachel Winter, the investment manager and partner at Killick & Co here in London, looking through those financial markets.
Hello, I'm Robert Innes.
And I'm Brian Cox. and we would like to tell you about the new series of The Infinite Monkey Cage.
We're going to have a planet of Jupiter versus Saturn.
It's very well done that because in the script it does say wrestling voice.
After all of that, it's going to kind of chill out a bit and talk about ice.
And also in this series we're discussing history of music, recording with Brian Eno and looking at Nate Business Report.
So listen wherever you get your podcasts.
You're with World Business, another important BBC World Service.
Well, let's return to what's been a bit of a theme for us today here on the programme.
The issue of food prices, although now at least, as we're going to hear, it's a pretty domestic issue.
No less pressing, though, for Japanese households trying to buy rice because the spiralling price of the kitchen staplers caused the government in Tokyo to take an unusual and pretty rare step.
It's going to release rice reserves the government itself holds for emergencies to try and bring the price back under control.
Yukane Onoue, staff writer at The Japan Times, took out the story for us in Tokyo.
Ever since 1995, the Japanese government has a system in place where every year they would stockpile around 200 ,000 tons of rice each year in order to prepare for an emergency situation where for some reason not enough rice is on the market.
So they would have some type of a backup to feed the population, basically.
And this all started because of the severely poor harvest that happened in 93.
But since then, it has mainly been used under circumstances of very serious natural disasters.
So the major ones were the earthquake in 2011 and another earthquake in 2016.
But this move by the government today was quite significant.
driving these two very powerful economies closer to one another.
What do they want from each other?
What could be the sticking points in a deal between them?
Well, I think for the European Union, it's pretty clear that, you know, when they look at a whole range of exports, be it vehicles, be it alcohol.
And this was because a combination of reasons, including, you know, not a very drastic, but a little bit of a poor harvest.
But it wasn't significant enough that it was going to have a huge impact on it.
And people thought that the price would come back to normal once the new harvest of rice began, which usually starts around fall.
And something to know here is rice is an annual harvest.
So it's only made once a year and it always comes out at the same time.
So people thought the price would come back around that time.
However, the price of rice never returned to normal.
And according to the experts I've talked to, they think this is because a lot of distributors who aren't usually used to dealing with rice enter the market in order to capitalize on the scarcity of rice.
So there's a little bit of saturation in the market right now.
So I guess the key thing is here, or maybe there's two key things here now that you can.
One is how quickly does this government rice kind of end up on shelves?
Two, is this a one off or are they planning to release more in kind of batches?
So the government announced this plan last month in February, and today was the day where they first started their first batch of auction.
And in the announcement that the government made last month, they announced that they would be releasing 210 ,000 tons of rice.
And the auction that happened today was the first round, which included 150 ,000 tons.
So we assumed that there was going to be a second batch of the auction happening, sometimes at a later date.
According to the agricultural ministry, they think that since today was the day that the distributors auctioned off the price, they think at the earliest it might start hitting the shelves later this month, so late March or beginning of April.
And they assume that the stock would kind of roll out on shelves like either after end of March to beginning of April.
Our thanks to Yakana Anui, their staff writer at the Japan Times, who had written up that story for them there.
Let us know if you're listening in Tokyo or around Japan, what are you seeing in terms of the price of rice?
You can get in touch with us on our WhatsApp, plus 44 330 678 3033.
So that's plus 44 for the UK, 330 678 3033.
And I'm sure Ryle Tandon and the team on the late edition of World Business Report and on Business Matters later on tonight, our time would be really interested to hear your thoughts and see what you're seeing out there.
So rice, farm products in the US, now noodles, instant noodles, To be more precise on our foodie themed World Business Report because India is the third largest consumer after China and Indonesia of instant noodles and this seemingly simple snack has exploded in popularity, especially among the country's younger population.
But as that demand rises, the market is facing pressure from multiple directions, health concerns, changing consumer tastes and price inflation once again.
Savina Gupta has been taking a look.
it's almost evening and I'm at a popular instant noodle shop in Delhi which is packed with young people there's a smell of fried oil in the air the menu here has a variety of ingredients like cheese chili pepper and much more now each plate costs less than a dollar and the service is quick so let's speak to some of the customers here so I'm here with a group of young students so what attracts you to instant noodles I think the taste but it's not healthy it's a guilty pleasure for me I like it and say in a week how many times do you have instant noodles not in weeks it's like more of a once or twice
a month thing for me once a fortnight so you control it yeah I try to control it yeah yeah okay what about you it's spicy it's spicy so this entire group wants to have spicy instant noodles you think instant noodle is healthy no it's not So we prefer taste over health.
India's instant noodles market is growing at a rapid pace, with consumption reaching an estimated 5 billion packets per year.
But as more people turn to this quake snack, the industry faces some critical challenges.
Rising costs have put brands on edge.
In the last one year, the commodity prices have gone up.
So for us it's oil and wheat which contributes the most amount, then followed by the labour costs.
All of it has increased.
So that has put a strain on the margins.
That's Varun Oboroy, vice president of Nissin in India.
Nissin is a Japanese company credited with inventing instant noodles after the World War II in 1958.
They entered India three decades ago.
This price increase has lasted longer than what everyone expected.
So now in the last month, and you'll see more in the coming months, there'll be a slight price increase.
It should not put a big dent in the consumers' pockets, but it will still cushion some of the increase for the brands.
Varun shared that price hikes are coming.
But there's another issue at play here of shrinkflation, where some brands are reducing the size of products to maintain price points.
Here's what a consumer Aastha Agarwal has observed.
I don't know what's happening with these noodle companies these days, you know.
More interest in Greenland.
You have a very strong China that sit very heavily on the critical raw materials.
Companies involved in this and the government involved around this are looking to safe places where they can access the critical raw materials.
And Greenland is a safe jurisdiction in many ways.
It's very close to Europe, it's very close to North America.
But despite the hype, any potential gold rush has been slow to get going.
And while dozens of exploration permits have been issued...
Price points, which is typically 20 rupees and above, we've seen price increases.
But with the pressure to keep noodles affordable, there's another concern.
Instant noodles have long been criticised for their unhealthy reputation of being high in sodium fat and preservatives.
We are not trying to unnecessarily defend it, that it's a healthy item.
We do not encourage it to be had as a meal, but it's a healthy, fun snack.
And fortunately, consumers are aware enough to eat responsibly.
And meanwhile, we keep offering them the other versions also, you know, with Atta, with millets.
But it is also a lot about how much affordable that can be.
So Atta again is wheat flour.
When you look at the instant noodle market for India, what's the latest trend that you see here?
International flavours.
So we'll have Italian flavour, we'll have a Japanese flavour, a seafood flavour, we have a Korean flavour.
That was Varun Oboroi from Nis in India.
So as the world's most populous country chooses more international flavours of instant noodles, this market here will depend on how well brands can balance cost, quality and health.
Not sure how I feel about Italian flavoured pot noodles, but spicy unhealthy otherwise does sound right up my street.
unfortunately Davina Gupta with that report there there's plenty more of that on the business daily podcast if you want to hear a bit more of Davina's report just search for biz daily wherever you get you get your podcast from should say just to Rachel Winter's point about what's been going on the stock markets today and riskier scene stocks Tesla's shares down more than nine percent at the moment Apple's down more than five percent so it's something Rahul and the team will talk about the late addition of world business report 22 30 GMT to join him and the team then Hello, I'm Robin Ince And I'm
Brian Cox And we would like to tell you about the new series Of The Infinite Monkey Cage We're going to have a planet off Jupiter versus Saturn It's very well done that Because in the script it does say Wrestling voice After all of that It's going to kind of chill out a bit And talk about ice And also in this series we're discussing History of music Recording with Brian Eno And looking at nature's shapes So listen wherever you get your podcasts I'm Robin Ince And I'm Brian Cox And we would like to tell you about the new series Of The Infinite Monkey Cage We're going to have a plan it off Jupiter vs. Saturn It's very well done that Because in the script
it does say Wrestling voice After all of that It's going to kind of chill out a bit And talk about ice And also in this series we're discussing History of music Recording with Brian Eno and looking at nature's shapes.
So, listen wherever you get your podcasts.
