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Hello and welcome to World Business Report from the BBC World Service.
I'm Roger Hearing and on this edition, the conflict between Israel and Iran is pushing up insurance rates for ships, trying to use some of the world's busiest shipping routes.
Also Netflix doing a deal with French television to include their linear channels.
Is it the beginning of a change in the way that terrestrial and streaming TV work?
The Illinois toy company that's taking Donald Trump's tariffs to the Supreme Court, plus the problem of global e -waste ending up in Thailand.
But first, what's dominating the headlines right now is, of course, the conflict between Israel and Iran.
The question of whether the US will become involved.
Donald Trump remains non -committal on that.
Israel's bombardment of Iran, and in particular the capital Tehran, has led to thousands trying to flee the city.
For the millions still there, simply getting by is getting increasingly challenging.
We were under heavy bombing and airstrikes throughout the night.
I've been following the news on state TV, but they pretend everything is normal.
They mock the situation and laugh instead of telling us what's really going on.
It feels like they're laughing at us.
Well, that was Mohsin, who lives in the city of Quds, a few miles to the west of Tehran, who sent us his thoughts a few hours ago.
My entire family has left. Only my wife and I are still here.
We went out to do some shopping, but our debit card didn't work because the network is down.
Luckily, we had some cash already.
A military base near us has been destroyed.
Well, other residents are describing long lines for petrol.
Fuel rationing has been introduced.
Israeli military missile attacks on Iran's gas fields may have had a worsening impact on what were already regular power cuts in the city.
On Monday, Tehran's biggest marketplace, the Grand Bazaar, was closed, as were most shops in the city.
The grocery stores that were open in the capital saw long lines as residents struggled to stock up on emergency supplies.
Other cities have also been affected.
it. Nargess lives in the city of Isfahan.
I can't afford to leave the city.
My husband is paid daily.
So if he doesn't work, we have no income.
There are long queues everywhere in front of bakeries, at fuel stations, everywhere you look.
Even the bakeries have stopped giving out flour.
They can't bake because there's no electricity.
On top of that, food prices have have doubled.
Those who had money fled the main cities and are now safe in hotels.
But we don't have the money and there is no shelter.
The words of some Iranians speaking to us today here on World Business Report.
Well, the southern coast of Iran is one of the busiest shipping lanes in the world.
A vast amount of the world's oil travels throughout the Gulf.
In the light of the current tensions, insurance costs have risen sharply now for the tankers that use the route through the Straits of Hormuz, as I heard from Marcus Baker, Global Head of Marine and Cargo Insurance at Marsh McLennan.
The first thing to say is that no ships have been hit yet.
So whilst we've got a region that has heightened activity and heightened concern, because no ships have been hit, then it does mean that we're not quite in the situation that we have been in the past. But that doesn't mean to say that people aren't still nervous about the potential exposure.
So, you know, generally we're seeing like a slight uptick in some of the rating and the costs of going into the region from an insurance perspective.
Would you say a slight uptick?
What kind of thing are we talking about?
Well, on average, if you look at the Red Sea, for example, the rates were between point two and point two five percent on the basically that's charged on the value of a ship per voyage trading into the region.
those rates have now gone up from from 0 .2 to 0 .25 to 0 .25 to 0 .3.
OK, so not not dramatic in that respect, but still an increase on the costs going into the region.
The Arabian Gulf, the headline rates moved up from 0 .125 to 0 .2 percent on the hold values.
Which is about a 60 percent rise, isn't it?
Well, relatively speaking, it is.
But if you look at what happened post Russia's invasion of the Ukraine, rates there were hovering around about 5%.
So, I mean, a ship, $100 million ship, for example, the cost has gone up to $200 ,000 from $125 ,000.
I mean, it still seems like a big problem for a lot of shipping companies.
Well, absolutely. I mean, it's still additional costs that they don't need to – well, I say they don't need to spend.
they do spend because they need the insurance in order to trade into the region.
But it goes on to just the general costs of shipping cargo around the world.
There's lots of danger areas at the moment.
Would you say, as far as insurers are concerned, really, the Straits of Hormuz and the Gulf are probably the top one?
Well, I mean, if you look at the way that the underwriting community is actually underwriting it, you'd actually say the coast of Israel and the ports in Israel are considered to be more dangerous than the Red Straits of Hormuz.
That's interesting.
So they're still focusing on that.
But, of course, that could change depending on developments.
This is a fast -moving story, as, of course, we know.
The rates in Israel, just to put this into context, were hanging around about 0 .2%.
They're now up about 0 .7%.
So that is, as you say, a pretty major situation.
How is this affecting insurers, affecting traffic?
Because clearly shipping companies are suffering as a result of this.
Are they changing what they did?
Because we know what happened during the problems with the Houthis in the Red Sea.
People changed their direction of travel.
I suppose there's no way to avoid going through the Straits of Hormuz, though, is there?
Not if you're picking up oil cargo.
We're not seeing major changes just yet.
I think one of the important things that we shouldn't forget in all of this is I think the world is a place now where we are conscious of crew.
and the crew welfare, and more conscious of it now than perhaps we ever have been.
So I suspect that in time, if ships start to get attacked by either by the Houthis, or there's some challenge with the Arabian Gulf, then I think we might see some changes in how ship owners start to operate in that region, and whether they go into the region at all.
But that, again, that's supposition.
I don't know what's going to happen until we see how things develop over the next few days and weeks.
Could some insurers say, look, we're just not going to actually insure any stuff going through there?
Yes, it's possible.
Likely, do you think?
I don't think so. One thing to remember, the dynamics of the maritime hull insurance market are quite interesting in that there's probably $2 billion of capacity, hull capacity, in the world.
Now, what that means is that if you have one ship valued at $2 billion, you could place it once.
And FETI is probably more than that.
It's probably up to two and a half or even three billion if you really push it hard. But the average size of some of the ships that are going through this region are probably between 100 and 150 million max.
So you can place that ship, you know, a dozen times over quite easily and not have to worry about it.
My point is that there will be capacity around for people that decide that they want to support port shipping during these moments of crisis.
Not everybody will, but that doesn't mean to say we're going to lose capacity and ships won't be able to find coverage if they want it.
Marcus Baker there of Marsh McLennan.
In Fiji, music isn't something we do, it's who we are.
Music brings everyone one together.
Music is connection.
My favorite Fijian quote, it's called marautiko.
Marautiko means to stay happy.
Whatever you go through in life, be positive, stay happy.
Experience the real Fiji.
Visit fiji .com .fj to find out more.
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You're with World Business Report from the BBC World Service.
service. Now, what does this sound mean to you?
Well, if it's what accompanies you as you lounge on a sofa and watch the TV, you're probably one of the millions of subscribers to the streaming site Netflix.
If you live in France, it could also soon be that you're watching some of the main terrestrial TV channels there as well.
The broadcaster TF1 has struck a deal with Netflix that could be a sign of how streamers and TV companies are fighting back together against a drift away of younger audiences and trying to boost viewer numbers.
As I heard from Jo Redfern, founder of Consultants Futurehood Media.
It's Netflix testing this extension into linear content, really, and it comes down to boosting engagement.
Netflix in recent times has ceased reporting subscriber growth.
I think we all realise that we're at saturation point with the total addressable market for new subscribers now, and now they report hours viewed. So Netflix is all about stickiness.
And how do you keep people on your platform viewing more hours?
Then you need a lot of content.
So what this deal with TFN does is it brings a whole library of content to Netflix that tends to be longer form, so it keeps people watching for longer, but it is also a volume of content that they couldn't create if they were originating it themselves.
so it's about increasing those hours viewed that stickiness for Netflix and also it helps to get them around local compliance because there is a rule in France that actually there needs to be a certain amount of local content on Netflix so this helps them get around that in terms of compliance okay so what the deal means is that all of TF1's linear channels content will all be available on Netflix or just selected parts of it?
How is it going to work?
It's all five TF1 linear channels and one of their video on demand.
So one of their own streaming channels.
That means sports. It means reality TV, even soap operas, which aren't traditionally the preserve of streamers, will be fully integrated into Netflix France and it will be part of the existing subscription plan.
So no no extra cost. So this is a really interesting shift. It's an alliance that's not been seen before.
I do wonder if it might be a pilot for deals elsewhere in other markets.
For Netflix, we'll see.
Indeed. So I mean, when you say linear channels content being there, does that mean that people tuning into Netflix would also be able to see live news channels, for example, or live sporting events?
Or would all the stuff be pre -recorded and then available It feels like there's going to be a live, so a linear TV element to it.
That kind of implies that TFN will sit probably in a walled garden area rather than all of the content stripped out and mixed in with the rest of Netflix content.
But what it does mean is that Netflix ostensibly becomes a one stop shop.
It's the TFN network, which has about a quarter of linear TV viewing in France will sit within Netflix.
As the CEO, Greg Peters said in the release today, it gives French consumers even more reasons to come to Netflix and stay.
That's the crucial thing.
so it's bringing Teofan viewers with them into Netflix and hopefully they're going to stay they'll watch Teofan content but they'll also go and tuck into some other Netflix content whilst they're there And this is moving tanks onto YouTube's lawn really isn't it because that's sort of how YouTube functions in the US It is particularly with YouTube TV and it does really I mean there was a time when Netflix was the upstart you know the pretender to the throne right this almost feels like Netflix now is becoming establishment It's teamed up with traditional broadcast. Who have they teamed up against?
The might of YouTube.
So we've got these two camps.
YouTube free, but ad funded.
Takes a huge amount of attention, particularly amongst those younger cohorts.
Subscription services, linear TV, both coming under pressure.
Then now they're working together in this way.
And that's a really interesting shift. One wonders what will happen with YouTube TV, whether they'll roll that out outside of the US or what YouTube's response to this will be.
But, you know, isn't it interesting that actually linear networks are now hitching a ride with the very streamers that viewers are leaving them for?
And are the streamers going to follow the same path, do you think?
I mean, Disney Plus, one thinks of, I suppose, HBO, all kinds of areas where they could go in and do the same.
Potentially, yes, particularly with media being so fragmented, this is almost a way to start collaborating and bringing it back together.
In an era where there's unprecedented choice for content, so scarcity is not a battleground anymore, then keeping users in one place, using curation, using things like live sports and those soap operas that we talked about that people tune into time and time again are all levers now that the streamers are pulling as a way to keep people on their platform so they can increase those hours viewed, which, of course, is really significant for their ad partners.
Joe Redfern there of Futurehood Media.
Now let's have a look at what's been going on in the markets.
I'm joined by Susan Schmidt, Portfolio Manager at Exchange Capital Resources.
Susan, thanks for being with us again.
I mean, I suppose the thing that's in most investors' minds right now is what the Fed has been not so much doing but saying.
staying well that's certainly the focus for investors is how do we handle this growing difference of opinion between President Trump and the Federal Reserve and the Fed's chairman Chairman Powell on what happens here but today the Fed is saying no change in interest rates things hold steady and we continue to wait and see what the potential impact of inflation will be before we make any more decisions but they were giving a few hints about where they think things are going.
They're saying things are not going to look perhaps quite as rosy, at least they think they might not, in terms of inflation, unemployment, those kind of things.
That's right. But these are comments that have been slipping out from the Fed and the various emissaries of the Fed over the last few months.
So it's not a surprise to investors to hear this.
It is interesting to see them come to the forefront yet again.
And of course, there'll be a a discussion point between President Trump and the Fed on this.
Also, big changes in the price of oil and inflationary input there that have happened since the geopolitics have changed over the last 10 days.
Also, current in the Fed's decision -making today, and we're seeing comments circulate around that as well.
Now, Susan, there's another interesting thing that was hitting the headlines a little bit earlier in the day and certainly for the last six months or so.
Now, Now, all to do with the Japanese company Nippon Steel.
Now, there's been a deal about Nippon Steel operating in the U .S., and it gives the government, I think I'm right saying, a golden share.
Now, how is this going to work?
Well, devil is in the details, but we did see the Nippon Steel deal close today.
So they've finalized a $15 billion takeover of U .S. steel.
And remember that steelmaking is a forefront of American industry.
It was a very hot topic during the election, what would happen with this deal.
And what it does mean now is that this partnership between Nippon Steel and U .S. Steel creates a new entity, allows these steel jobs to remain in the U .S. and ideally improves profitability for both Nippon Steel and U .S. Steel going forward. OK, one last thought.
TikTok, you know, we keep hearing TikTok's about to have to be bought by a U .S. company or there's a deadline and it's coming up.
But now I think we're reaching another deadline tomorrow.
But it doesn't look as if anything is like to happen on that, does it?
Well, I think what looks like to happen is an extension.
And so we've seen that, strangely, with several of the deadlines that have been mentioned, particularly those referred to trade over recent months.
here's another thing creeping up where so many things have been happening that they haven't been able to address this that tiktok deal is supposed to have been determined tiktok has to get different ownership or it can't cease it must cease operating in the u .s that doesn't seem like that's going to hold to that deadline tomorrow that's being pushed out for sure i think it's one of the latest deadlines that's being pushed even further we get used to it uh susan thank you so much for talking Talking to Susan Schmidt there of Exchange Capital Resources.
Now, there are many companies in the US whose business is based on imports who are furious with President Trump and his enactment of big tariffs.
One is an Illinois toy company, Learning Resources, and it's challenging the legal basis of the president's action.
They had their say in front of the Supreme Court this week.
In fact, they filed an appeal asking the court to take up the case soon rather than let it continue to play out in lower courts.
reports the company argues the president illegally imposed the tariffs under an emergency powers law rather than getting approval from congress well rick waldenberg is the company's chief executive and he joins me on the line now rick thank you so much for being with us here on world business report um just explain if you would i mean i said that if you don't the argument is that he didn't make these tariffs under the right law in the right way is that right it?
So basically he declared the tariffs under a law called the International Economic Emergencies Powers Act.
It's a peacetime emergency law.
And he asserted that he had the right to impose tariffs at any amount on any party for any reason under that law.
And, you know, tariffs are taxation and the Constitution says he can't do that.
Right, and you've challenged that, and you've also done more than that.
You've actually said to the Supreme Court, sort it out now.
Yeah, so we consider this to be an urgent emergency situation.
The Secretary of Treasury has said publicly that they expect to collect $600 billion a year from the tariffs.
That's $50 billion a month.
We can't afford to wait around.
around that's a lot of money and frankly you know it's going to add up to a lot of money it would affect the deficit in the country to pay us back the money that they illegally took from us.
But it's also going to affect your company of course I mean Rick just take us through that how difficult is it for learning resources to keep going because you do import quite a bit of stuff don't you?
We do by the way we have an office in Kings Lynn with about 50 people in it So we're a U .K. resident also.
But our global company makes most of its products in Asia, principally in China, about 60 percent of our products.
And so with this massive tax imposed at the border, we've had to basically restructure what we do on an overnight basis.
So we have a team of 80 or 90 people working full time or part time on addressing the impact of tariffs on our business, including shifting products from China to other countries, redeveloping products, pausing products, doing financial planning and so on.
It's just a safety testing.
It's just a massive undertaking.
And it actually affects our UK business as well, because every time we move a product, we have to retest it.
And that's a big project for them.
Well, I suppose your president would say, well, hang on, just source this stuff, source everything you need from inside the U .S. Well, we don't think that's possible.
We've been looking for more than a decade for partners in the U .S. who can provide outsourced manufacturing for us, and we've really found nothing.
We've had plenty of incentive to find them.
They don't exist. And there's no toy companies that make anything that resembles what we do in the U .S. So no one else has cracked the code either.
We looked at setting up a 3D printing farm for our simplest products, and that resulted in like a 24x increase in cost. And so it's in the realm of the absurd. We just don't think it's possible.
So, Rick, take me through what's happened, because we think with the tariffs, of course, they've been up, they've been down, they've been in, they've been off, they've been on, they've been suspended.
I mean, have things improved for you?
Because we're into, I think, a sort of 90 -day period.
I've kind of lost track of it almost. most I think many people have, of tariffs suspended in some areas, have things got better?
Well, I think it's all relative.
So it's not as bad as it was.
At 145 percent tariffs out of China, we sort of stopped.
We're sort of in a never -neverland sort of area where we don't really know what the situation is.
There are some things we know as of today, but on July 9th, the pause on everywhere in the world except china comes off and no one knows what happens after that and you know that's like three feet away and as to china you know it's 30 percent until august 12th and again no guarantees after that businesses crave certainty there is absolutely no certainty here there's just different gambles and that's no way to run a business rick thank you so much Much for speaking to us, Rick Waldenberg there, the chief executive of the company, Learning Resources, that is currently taking the Trump administration to
the Supreme Court. We'll keep you up to date on what happens with that case.
Now, electrical and electronic waste is a global problem.
We all produce it, old mobile phones, computers, fridges and the like.
Some of it gets exported, mostly from wealthier to poorer nations, where recycling is cheaper and waste can be dumped more easily.
One such country is Thailand, which has seen a big influx of e -waste.
World Business Report's Gideon Long has joined government officials there on a visit to a recycling plant in Chonbure province.
There's a big warehouse full of piles of scrap metal and other junk.
Some of it looks like it's car parts, bits of car engines.
There are also smaller items, some keyboards, some circuit boards, and lots of metal cables as well.
Suddenly, a man appears and the government officials start questioning him.
Is this man the owner?
He's one of the managers of the factory.
The man says he's just looking after the site for its Chinese owners.
He says the scrap all came into Thailand from abroad.
In a second warehouse, we find a big crushing machine which is used to grind the waste into a kind of gravel.
And everywhere you look, there are huge sacks of this stuff.
I ask my translator Mao what's being said.
This is obviously East -East. Because you look at this, you will see so many cables and metal mixed here.
Some strings and boards.
And the woman who heads the ministry team is still grilling the manager of the site to find out what's going on here.
Eventually, they tell the man that he and his Chinese associates are likely to be prosecuted And we leave Thailand is not getting anything from these businesses at all That's Thailand's industry minister Akanat Pramphan I met him in Bangkok There's no value to the economy It destroys the environment It poses threat and endanger the livelihood of the people So we are very serious and I form a special task force to engage in a full -on crackdown on these businesses.
Those businesses have expanded into what becomes a sort of a garbage site, an international garbage processing facility in Thailand, which is not what we want at all.
Now, you remember that gravel that I saw back at the recycling plant, that kind of ground -up electronic waste?
Well, that all has to be smelted down to get the valuable metals out of it And it's a dirty business.
I went to talk to a farmer who lives close to one of the unlicensed smelting plants that have popped up in eastern Thailand in recent years.
His name is Sing. He's 58 years old.
He lives with his dogs in a one -storey wooden house next to a plot of land where he grows cassava.
he tells me he's been living there since long before the factory was there at first it was just one building but it's grown and grown since then and there are now about seven buildings he says it wasn't a problem at first but over the past couple of years he's really felt the impact and what has that impact been the worst thing he says is the terrible smell from the plant especially at night, which is when it seems they smelt the e -waste.
It's so bad you just can't sleep, he tells me.
And if you walk past the factory when they're smelting, you have to hold your breath.
The fumes are so strong.
He says it's affected his crops too.
His cassava plants don't flower like they used to and his harvests are smaller.
In some parts of the world, governments have passed laws to try and make sure gadgets are recycled once they reach the end of their life.
The Thai government has promised to follow suit.
Industry Minister Akanat Promphan again.
I'm hoping for the enactment of this new legislation as soon as possible, maybe towards the end of this year, maybe at the beginning of next year.
In the meantime, the battle goes on.
And I'm fully committed to take full actions against this illegal business and drive them out completely.
And that was Thailand's Industry Minister Akanat Promphan ending that report by Gideon Long on the ways in which e -waste that has been dumped in Thailand, people are trying to deal with it there, which is becoming an increasing problem.
You can hear more about that on Business Daily from Southeast Asia on BBC World Service.
But that's it from World Business Report.
From all of us here, bye -bye.
In Fiji, music isn't something we do, it's who we are.
Music brings everyone together.
Music is connection.
accent. My favourite Fijian quote, it's called Marautiko.
Marautiko means to stay happy.
Whatever you go through in life, be positive, stay happy.
Experience the real Fiji.
Visit fiji .com .fj to find out more.
