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And this is Andrew Peach with World Business Report.
Thanks for being with us.
Today, Donald Trump defends tariffs on US imports.
Despite Wall Street suffering its worst day since the early months of the COVID pandemic, the Dow Jones was down by nearly four percent.
Other world leaders condemned the policy.
The system of global trade anchored on the United States is over.
Well, this is a tragedy.
it is also the new reality Today we'll focus on Ireland's pharmaceutical industry, which has escaped the tariffs for now One in four Americans have actually foregone treatment because of the costs associated with that treatment itself.
One in two actually struggled with the cost of healthcare on a general basis.
But first We begin this hour with a Fox News Alert Americans waking up to a new world order this morning as President Trump counts the rebirth of American industry with global tariffs now in place.
Worry's on Wall Street, the Dow plunging more than a thousand points overnight after President Trump announces historic tariffs on American trading partners, the prices that could be rising soon on everything from electronics and clothes to groceries.
Twenty four hours on from President Trump's theatrical rose garden announcement of tariffs upending decades of global order when it comes to trade.
On the US markets where traders put their money where their mouth is a big thumbs down to the policy more draconian than anticipated.
Let's go live to New York.
Michelle Fleury is there for us.
Put some flesh on the bone of that then Michelle.
How bad was it? I mean, it's pretty much about as bloody as you get.
We've seen US stock markets having their worst day since 2020.
The S &P 500 has seen about nearly 2 trillion dollars roughly wiped off its value all of this sort of plunging it back into correction territory you've got sharp falls with the Dow which is down 1600 points the Nasdaq down more than 4 % so all in all a pretty bad day for Wall Street and what we're seeing is that it's the companies that are most exposed to this new World Trade order that are suffering the biggest declines And if I can sort of mention one individual stock that kind of jumped out and that's Nike, the sportswear giant makes trainers or buys trainers a lot from Vietnam.
But now, since these tariffs, they will face 46 % import duties.
And that just makes them suddenly too expensive for the US market.
It's really kind of upending their business model and because of that, you're seeing investors responding, worried about what this will mean for future profits.
And so the share price is down 14%.
And you can go line by line through different stocks.
Apple, Meta, Amazon, which all in some ways have exposure to some of these tariffs and they're all getting hammered today.
Those stocks down around 9%.
When Donald Trump says, it's all going well.
Is he putting a brave face on it, or does he mean it?
It depends what your goal is.
So, from his perspective, he has sort of freely admitted, and many of his trade advisors have, that there is going to be what they're describing as an adjustment period, that there will be some pain along the way.
I mean the reality is, if you are trying to reshore jobs, bring back manufacturing to America amongst sort of the myriad of goals that they're trying to do, it is going to dislocate supply chains, and it is also going to push up prices for American consumers.
and I think that is the price or the cost if you like of what he's trying to do.
Michelle thank you.
Michelle Fleury live with me from New York.
So how do the businesses that deal with cross -border trade and customs duties cope with this kind of thing?
William Jensen is director of the Customs Brokerage Services at Seco Logistics and helps importers and exporters comply with tariffs and customs rules, that kind of thing.
He's live with us from Chicago.
William thank Thank you for joining us on what must be a busy day for you guys.
Yes. Thank you very much for having me.
I feel like I'm talking to you from the quote unquote trenches of this trade war, but I appreciate the opportunity to share my experience.
Right. So tell me what your clients are saying to you, what do they need from you right now.
So I mean the the level of supply chain disruption and I think panic is the level of covid -19 and supply chain disruptions, with supply chain shutting down.
So the biggest issue right now is information.
We know there's tariffs, we know there's tariffs soon, but when, and just some of the ins and outs of what's gonna hit and how things are gonna be impacted is the number one question.
From there, it's mitigation options, and what can we do?
And these tariffs are engineered that there's little that can be done.
Now, we knew it was coming, we've known for months this was coming and yet it doesn't seem to have been fully priced into the markets.
Is this just about the detail?
Is this because people thought that Donald Trump might in the end change his mind?
I think part of that is people calling a bluff.
But when I look back and think of what the most surprising parts are, first of all the reliance on China, right?
there's already been a 25 % tariff on the majority of items that Trump put in place in 2018 and 2019 on China.
And there was 20 % placed in February and March this year.
So these tariffs stack on top of that.
You know, you're getting a base duty rate of 74 % during the likes, which is, it's just extreme.
In other industries, we would think that would kill the desire to do business there.
The other piece that I think is shocking is how the tariffs were created.
So going back to 2018 2019, the message to importers was clear.
You know, move your supply chains away from China.
And what many importers did was looked at other countries in Southeast Asia, Vietnam, Cambodia, Thailand.
And the way these tariffs were calculated, was looking at trade deficits.
Of course, the countries that were moved to saw a surge in trade deficits.
So supply chains that have moved to other places in Southeast Asia, got hit with very high tariffs, and I think higher than anyone expected.
46 % Vietnam, 49 % in Cambodia.
Well, the message now is move production to the US.
Can they do that? It's going to be difficult.
Certainly, at these rates, companies are going to try.
I think, you know, we do a ton of business in the apparel and the consumer goods sector.
And there's, you know, only so much supply chain infrastructure with apparel and, you but the infrastructure and expertise sometimes is lacking.
So it'll be a case -by -case basis, but some industries, it's gonna be extremely difficult.
And obviously you can't move production in a matter of days, which is when the tariffs come in.
How quickly could you do that?
So when we looked at apparel companies and consumer products moving out of China, some did it very quickly.
One company in general I work with in the apparel sector had 70 % of their supply chain in China in 2017.
I spoke to them earlier this week and they had 8%, which is amazing.
And then the fact that their sales have been strong, they didn't have a decrease in quality is great, but you can only do so much and you can only control so many things.
Any change in business always creates winners as well as losers.
I've heard a few interviews today with business people from countries at the lower end of the tariff spectrum around the in the 10 % club, go hang on a minute, we could we could clean up here, we can take business that we've lost to China, India to name two countries where the tariffs are higher, you hearing any of that?
So it's interesting, definitely.
I mean, the one of the top mitigation tools to look at right now is how do I change my manufacturing process to change my country of origin?
Where I pause with that is when you look at how these tariffs were calculated, showing that the trade deficit was the calculator for how high the tariff should be.
So if we see a surge to one of those countries that isn't followed by U .S. exports to those countries I would fear that in a year from now we're in the same place.
Very interesting to chat.
Thank you for joining us William.
William Jensen live from Chicago.
Now the 25 % tariffs on cars and car components that we already knew about, imports into the U .S. took effect today the Canadian Prime Minister Mark Carney said Canada would match them with 25 percent on vehicles imported from the US.
The system of global trade anchored on the United States is over.
Our old relationship of steadily deepening integration with the United States is over.
The 80 year period when the United States embraced the mantle of global economic leadership, when it forged alliances rooted in trust and mutual respect and championed the free and open exchange of goods and services, is over.
Well this is a tragedy, it is also the new reality.
These new import levies will be a big blow to the Canadian car making industry, which ships over a million vehicles to the U .S. every year.
Live to David Adams, president and CEO of Global Automakers of Canada, an industry organization which represents car makers.
Thank you very much indeed for being with us David.
You've had time to acclimatise to get used to the idea, but The reality is still pretty tough.
Well it is. I mean, we've had a week to deal with these tariffs and try to digest them.
There still is a lot of confusion around what the tariffs actually mean and how they will be applied, but nonetheless, they are problematic.
And I think despite what the president might have Americans' belief, tariffs are taxes, plain and simple and their taxes on the American consumer and on American workers.
And you know, from our perspective, there is a better way to deal with trade irritants and that's through the existing mechanisms that we have. But the president seems to be blowing those up as well.
He does and he's surrounded, as you'll have seen, 24 hours ago by some American autoworkers.
he even call one of the leaders of that group up to speak in the Rose Garden yesterday.
So he does appear to have the US auto industry based in those swing states right behind him?
Well, look, I mean, I think the it's all about perspective in terms of looking at these tariffs.
And I think as far as Canada is concerned, the President has made it clear on several occasions that he doesn't think that there should be an auto industry in Canada that that should all be repatriated back to the United States, but I think the challenge that exists there is that our global supply chains, our global automotive industry has been structured the way that it has for a reason, which is to get the best quality parts and components at the lowest possible price to be incorporated into vehicles that can be sold to consumers at the lowest possible price.
And I understand his desire to repatriate the automotive industry do more manufacturing in Canada but that's not going to make for less expensive vehicles coming out of the factories in the United States.
You'd think it was more doable, wouldn't you, to relocate parts of the supply chain that have ended up in Canada or Mexico for that matter back to the US than some of the other shifts that we're talking about in different sectors?
Well, look, I would say that we've had an automotive industry in Canada that's been highly integrated with the US industry for more than 60 years.
Canada has a number of areas of specialization, frankly, that comparative advantage that don't exist and the United States in terms of our tool and die and mold making capacity just for one.
And I think the quality of our workforce is also recognized as being superior to that of the folks in the U .S. in terms of just measure by quality words alone from coming out of the vehicles coming out of the plants, regardless of who's producing them in Canada.
So I think look, as while I understand perhaps the desire I think the reality is if you look at the US right now, we're in a situation where there is essentially full employment.
So I know from talking to folks in Washington yesterday, they're already struggling, trying to find labour to work in the facilities in the United States.
David, thank you. David Adams, who's the president and CEO of the Global automakers of Canada.
Let's go to Alan next.
Lots of pharmaceutical firms have big manufacturing bases there making Life -Supporting medicines such as chemotherapy treatments and insulin and although EU exporters have been hit with a 20 % tariff it later transpired that Pharmaceuticals are excluded from that at least for now.
I've been talking to Gareth Sheridan Who's the founder of Nutriban Inc from Dublin, you know, there's a reason why for 30 years now Pharmaceuticals have been essentially immune to tariff discussions and because the disruption it costs at a human level and for the patient at the end Of the day is can be catastrophic You know, the disruption in the supply chain and the access to medications needs to remain in place during this period of time.
Because the key takeaway that pharmaceuticals were exempt from tariffs is that they are exempt for now.
For now being the key part of that.
And did you know that?
Or were you watching the TV last night like the rest of us?
Watching Donald Trump hold up his piece of cardboard with a list of countries on?
There wasn't a specific mention to pharmaceuticals out of the gate.
You know, it came after the fact.
It was quite a concerning transition period until we got some further insight.
And thankfully, they were excluded.
But I think we need to use this time now to come to, you know, a reasonable agreement for all parties involved, keeping the patient at the top of the narrative and making sure that the disruption is at a minimum, because you know, you could almost argue in a way, if we look at it from a different angle, pharmaceuticals are not going to be an overnight transition back to the United States.
But certainly this sort of talk is going to deter pharmaceutical companies relocating internationally and you could almost argue that the tariff discussions are working on the basis of that.
So that's the thing that I think will be the immediate impact that the the US government will see.
The idea is that Donald Trump has said publicly that's what he wants to happen there is a thriving American pharmaceutical sector which he'd like to support I'm sure.
Have you been given any indication as an industry, as to whether this reprieve is for a few days or a few months or what the basis on which it's still being talked about is or do you know nothing?
It's definitely not days.
I mean look to give you an example, if you're looking to move pharmaceuticals back to the United States, it's not as simple as, you know picking up your equipment and moving it to a plant in Ohio for example and start manufacturing pharmaceuticals in the U .S. It's a very tedious, long drawn out process, it's full of red tape, the amount of red tape involved would likely, it would take multiple years for this to come into effect.
And you're looking at feasibility work, you're looking at manufacturing scale ups, you're looking at registrations of facilities, you're ultimately looking at FDA approval.
And then all of that, you're looking to fulfill a supply chain in the U .S. that currently doesn't exist. So we're looking at a very slow, drawn out process, and I think the indication will be there from from the US government.
That's what they want to achieve, but it's certainly not something that's going to happen overnight.
It's not going to happen this year, and it's probably not going to happen next year.
But I think we need to use this this position now to come to the discussion table and come up with an agreement that works for for all parties, again, keeping the patient at the forefront of the conversation.
We're looking at a system particularly in America, that's that's notoriously known to be very, very costly.
And we're looking at a system now where tariffs of you know, 20 -25 % are being discussed on pharmaceuticals coming in, But insurance companies are not equipped, and they're not built, to take on a 25 percent hike in medications.
So the likely outcome you would see there is that 25 percent hike will be passed on to the patient, or the prescription holder.
Now we're talking about a system where one in four Americans have actually foregone treatment because of the cost associated with that treatment itself.
These are the types of issues that we'll see, and the fallout will be huge there because Because again, statistically, I've mentioned one in four Americans have foregone treatment, one and two actually struggle with the cost of healthcare on a general basis.
So the system is not equipped to take a 25 % hike.
But that does not mean that the tariff conversation is going anywhere anytime soon, from what I can see.
Pharmaceuticals boss Gareth Sheridan with me from Dublin.
This is Andrew Peach on the BBC World Service.
As we heard yesterday on World Business Report.
Donald Trump has been a firm believer in tariffs for decades, and he did introduce some in his first term in the White House.
Wilbur Ross was his Secretary of Commerce then.
He's been telling us what he thinks of the trade policy now.
My personal preference would have been to phase them in because it does take time to relocate production.
So if it came in over a 12 -month period, it would eliminate having a big hit in the early months to inflation.
Now, in some areas, like apparel, production can move very, very quickly.
But whereas China, Vietnam and Mexico, as well as Pakistan and Thailand and Indonesia and Bangladesh were all big players, I think you're going to see a lot of that being transferred to Mexico.
but heavier industry is obviously going to take longer.
You engineered a raft of tariffs during the first Trump administration, but you never went this far.
You never imposed this kind of global tariff.
Is that something that you would have wanted to do?
Well, we did put in global tariffs on steel and aluminum.
It's just that they weren't at these levels and they weren't skewed so much by country.
What we tried to do was have one -size -fits -all and then make a few exceptions.
The overall levels were a lot lower and, as a result, it was much less pain than these things.
When you put 46 percent tariff on everything, you basically told Vietnam, forget it, you're not going to sell US anything.
him. Now, the president has also made clear, though, that if the other countries will bring theirs down, he will bring ours down.
Let's talk a bit more about the market turmoil today now with Kerry Leahy, economist at Columbia University in New York.
Kerry, thanks for being with us.
We're listening to the former US secretary of commerce, Wilbur Ross, there, suggesting that Southeast Asia is a clear loser here maybe Latin American countries Central American countries could be the winners and gain some of the manufacturing do you think that's right I think that is I I think everyone's going to be hurts this question who's gonna be heard less and I would think there would certainly be an advantage for Central and South American companies and countries relative to Southeast Asia I think that's the reason for a reasonable takeaway one percent off global GDP as a result of this,
according to the World Trade Organization today?
Well, they are entering a chorus of individuals and institutions that are cutting their forecasts of growth and raising their forecast of inflation.
So, I wouldn't be surprised if the number one percent may be lowered even more than that if we go forward, particularly if there is retaliation by major nations against the US for the actions conducted yesterday.
Right. And when Donald Trump says even in the last couple of hours don't worry about it.
It's going fine. The US economy is going to boom.
Can he be right? Well perhaps in the longest of long runs that's true.
There's no denying if this is carried out there will be a larger manufacturing sector in the United States.
It may not be a particularly efficient manufacturing sector but it will be larger and there will be Americans happy with the fact that we have a more flourishing manufacturing sector.
But on most other judgments, such as price level inflation and the like, it'll end up being disappointing.
But I think for him, the best scenario is you get through this in the next two to three years because every person's told you on the program takes a long time to change supply chains and make the changes you want to do.
just aren't a number of idle factories in the US just waiting for big major machinery business coming their way.
Just a few words on oil prices because the OPEC countries are going to increase output faster than we thought.
Why? Well there are two reasons.
First is the market is making an understandable play or conclusion that the global economy is going to be weaker, the US economy is going to be weaker, so the demand for oil is weaker and oil prices go down to reflect that.
But at the same time, OPEC itself said they're considering some increasing production.
So it's both a possibility of reduced demand and increased supply, which is bad for prices at least today.
Carrie, thank you. Now, the biggest convenience store chain in the world, the Japanese -owned 7 -Eleven, has been the subject of a takeover bid from its Canadian rival, Alimentation Couche -Tard, which owns Circle K.
My colleague Ruth Alexander from the food chain here on the BBC World has been looking at why Japanese convenience stores have caught North American interest. There are many reasons to go into a Japanese convenience store, or konbini as they're called.
Usually I go to do like chores, to print stuff and then get a drink, get some snacks.
With fresh sushi, soups and hot teas ready to go, alongside baked goods, regional specialities and seasonal treats, they're a food destination.
Here is Daiji Sato from 711's corporate communications team.
We created a few hundred product in a week.
We place great emphasis on seasonal offering using seasonal green graded for limited time menus to deliver constant sense of novelty and excitement to our customers.
The company is in fierce competition with it's two other big competitors, Family Mart and Lawson, but in many other countries, a trip to the convenience store is borne out of necessity rather than choice, and any fresh food can be limited and sometimes disappointing.
Why? Rob Wilson, a retail analyst for L .E .K Consulting says the problem in the US is one of scale.
The United States is a big land mass, you know, 3000 miles coast to coast, we put that in perspective to like Japan, or the UK, it's like 300 miles.
And so it's just much more ground to cover, and then your food, your shelf life starts to become an issue.
The fresh prepared food offerings is not nearly as attractive.
And he says company bosses are realising that's got to change.
Four out of five stores are based in gas stations.
One of the things that is convenient about convenience stores in the US is when you're filling up for gas you can pop in and get something quick.
Cigarette sales used to be a big part of convenience stores as well, both cigarette and gas are under pressure, and so you're seeing C -stores shift more and more towards food in the US.
Another pressure for them, and in fact for all stores around the world, is the higher cost of living and the fact consumers are less willing to pay a premium for convenience.
Hello, Ruth from the BBC.
Oh, hi there, how are you doing?
In the north of England, I talked to store owner AJ Singh of Premier Morley about the need to get creative.
Due to the cost of living here in the UK and I think the cost of ingredients, a lot of products, the margins are getting decreased, you'll see a lot that there's price -marked items. Yeah, so there on this box of chocolate it tells you what you've got to sell it for, which is about a dollar.
That's correct, yeah, yeah.
So you can't actually add an extra ten cents.
That's correct, yeah.
So some products that we sell, you know, we're not really making a lot of money.
That's why I thought we need to really try different items. If you look around, you've got a cocktail bar where we offer cocktails.
Get yourself a blue lagoon or a strawberry daiquiri.
Nice. This was introduced during COVID when the bars and you know, and everything were closed.
We decided that deliveries were a big opportunity for us to deliver cocktails.
That was roughly making us around $2 ,000 a day.
AJ says food and drink deliveries now account for almost half of the shop's business.
So online, our average basket spend's actually gone up, and it's gone up from $20 up to $35.
Want to let you get that, though?
That's deliveries. The beep of the delivery order.
I hear that in my sleep.
I wake up to it! That was AJ Singh ending that report for my colleague Ruth Alexander.
If you'd like to hear more about convenience store economics, just search for The Food Chain wherever you get your BBC podcasts.
Online, we've got to more about the big losers on Wall Street today, the big US stock falls.
If you'd like to read more, just go to bbc .com slash news.
But for me, Andrew Peach and the team here on World Business Report, thanks for listening.
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