This BBC podcast is supported by ads outside the UK.
Pro -savings days are back at Lowe's with limited time savings on the supplies pros need.
Get up to 40 % off select major appliances.
Plus save an additional $100 on every $1 ,000 you spend on select major appliances.
And don't miss your chance to activate and earn three times the points on select Dewalt and Kline tools.
Lowe's, we help. You save. Valor the 328, selection varies by location while supplies last. See associate or Lowe's .com for more details on qualifying items. The New Year's here.
It's the perfect time to refresh those household essentials and score some cashback rewards with Colgate Palmolive.
From toothpaste to dish soap, chances are you've got Colgate Palmolive products on your shopping list and in your house right now.
We're talking brands like Colgate, Softsoap, Palmolive, Irish Spring, Fabuloso, and Toms of Maine.
And right now, you can get up to a $10 digital visa prepaid card when you buy up to $30 of Colgate Palmolive products.
Here's how it works.
Spend $20 on their products.
Get $5. Spend $30. Get a $10 reward. All you do is shop your favorite brands, snap a pic of your receipt, and upload it to cprewards .com.
It's so easy. That's cprewards .com.
So grab what you need.
Or maybe try something new.
and get rewarded just for doing your usual shopping.
And start your year fresh by earning cashback rewards with Colgate Palmolive.
Rewards available while supplies last, limits apply, U .S. only, $1 .25 through $3 .3125.
For full terms and conditions visit cprewards .com.
Hello and welcome to World Business Report.
Here on the BBC World Service I'm Rahul Tan and plenty coming up on this edition.
As always it's a year since a container ship crashed into Baltimore's Francis Scott Key bridge we're going to hear from Baltimore about how its economy has rebuilt.
And as economic pressure grows on governments around the world, should they be borrowing big to balance the books?
Now, one reason they might be doing that is because of increased tariffs.
So that's where we're going to start in the White House, where a short while ago, the US President Donald Trump made this announcement.
So we'll effectively be charging a 25 % tariff.
But if you build your car in the United States, there is no tariff.
And what that means is a lot of foreign car companies, a lot of companies are going to be in great shape because they've already built their plant.
But their plants are underutilised.
So they'll be able to expand them inexpensively and quickly.
But others will come into our country and build and they're already looking for sites.
They're looking for mostly sites.
They don't want to take the old buildings that are empty and falling down, they want to build new.
Donald Trump there.
So A lot to take in though because that is an extremely significant announcement that doesn't just affect the global car industry, will affect global trading relations as well.
Here to make sense of it is our North of America business correspondent, as we now call our tariffs correspondent, Erin Delmore.
I'll take it. Erin, what exactly has Donald Trump said away from the headlines?
Because there's quite a lot to unpack here, isn't there?
There is. Yeah, the clearest way through it is to think of it as a 25 percent tariff on all cars not made in the United States and no tariffs on cars made in the United States.
He also made a mention that Americans would be able to deduct interest payments on their car loans from their taxes if their cars are made in America.
We are waiting for the text of the executive order to come out to see if that reflects it as well.
You know, to me, one of the big things that stood out is he said he's not budging.
He said that these tariffs are permanent and that he's not putting this forward as a negotiating tactic to try to Get concessions from America's trade partners and future tariff negotiations.
He said this is permanent We are going to bring domestic production domestic manufacturing of cars and trucks back to the United States Significant isn't it because almost half of vehicle sold in the u .s. Can we come to that in a minute?
What about car parts coming into the u .s. Is there any clarification yet as whether they may face import duties?
Well, because that would be significant, wouldn't it?
Absolutely. Here's why it would be significant for two reasons.
One is because of course car parts can come in from foreign suppliers, but they also are made in Mexico and Canada as well, and then cross borders into the United States, into US production facilities for cars that look to be US -made.
They look and purport to be American -made cars, cars but perhaps within the cars there are not American made parts those are foreign made parts and so now the question yes is will they be tariffed?
The best indication and reporting we have now is that the answer to that question is yes foreign parts it looks as though would be subject to tariffs on foreign made cars excuse me but we are seeking further clarification on that from administration officials as we speak.
And on, let's go back to the fully imported cars.
I mean, even American car companies like Ford, 80 % of their cars are made in the US, but 20 % are imported.
GM, 40 % of the cars sold in the US are imported.
Can they possibly move their factory so quickly?
How long does that process take?
Years. Lightning speed would be about three years.
Likely you're looking at even longer.
I mean, we are talking about moving production facilities, all of the equipment, the workforce regenerating or relocating the workers and setting up a complete operations here in the U .S. Yes, that does take a large amount of time.
It's worth noting that one of the car manufacturers that has a majority of its parts, upwards of 75 percent made in the U .S., is Tesla.
There are very few, if you can imagine very few models and very few cars in themselves who can purport that, many average above 50 % of parts made in the US.
But President Trump did take pains today in his announcement to say that he hasn't received any lobbying or requests from Elon Musk when it comes to his trade decisions regarding the automotive industry.
Erin as always, thank you so much for joining us.
And as Erin said that, you know, we have these announcements by the President Donald Trump, but of course, then Erin goes through the executive order to get to the really fine details, and that takes time to clarify what is going on.
Let's bring in now Glenn Stevens, he's executive director of the Detroit based auto industry group, Mitch Auto.
Glenn, thanks so much for joining us here on the programme.
I'm sure you're digesting the announcement as well.
I mean, do you see this as positive?
Does it, will it help to bring more of the car industry back to the US?
We don't see any positives in the short term.
We had anticipated this, the President had signaled this, but about half of the vehicles sold in the United States every year are imported.
7 .68 million last year.
So this is a significant shock to the system.
Does he not have a point when he says take a company like Ford, you know, a US company importing at least 20 % of their cars from outside the US, why not just build them all in the US?
Well, the global auto industry has evolved over literally 120 years, so cars are made, trucks are made in many different markets, and that's why these import exports have developed.
Ford does make the majority of their vehicles in the US, but yes, they do import some vehicles, but it will take significant time, capital, and labor considerations to move production, and this is what we're all studying right now.
Glen stay with us because I wanna bring in another regular voice here on our program.
Susan Schmidt, Portfolio Manager at Exchange Capital Resources in Chicago.
How have the markets reacted to this?
I suppose particularly some of the companies we're talking about, the likes of 4GM.
What's happening with their stocks?
Well, those stocks are actually down in the after markets and investors aren't taking this news well.
Well there is a lot of ambiguity about it still.
We need to go into the details to see what's there.
But this broad announcement of 25 % tariffs has really discouraged investors.
This is going to put up quite a bit of barrier to trade in the auto sector.
Auto analysts are out tonight expecting to be in their offices all night long, trying to get through the details of this to see what it really is going to mean for profitability, competition, and where they'll be able to source their parts as mentioned previously, to get production into the United States is a multi year process.
It can't happen immediately, and that's going to cause a lot of stress within the industry.
What about the wider market when they hear statements like you know, the head of the EU, Ursula von der Leyen saying the EU will, will now assess how it's going to react to it's Doug Ford, Premier of Ontario, home to Canada's auto industry saying we're going to make sure we inflict as much pain as possible on the American people.
That sounds like an impending trade war, doesn't it?
The market won't like that, will they, Susan?
The market won't like that.
CEOs running these big companies who are going to get dragged into this trade war are already cringing about it but are doing so privately.
This is going to cause a very difficult environment for investors moving forward. layered on top of the changing statements that we've seen over the last several months, the changing dynamics of the tariffs on again off again.
Investors are getting very tired of this and very cautious as a result.
We've seen that in the volatility in the market and also in that downward pricing trend that we've seen in these stocks.
Glen Stevens, still with us.
Glen, we've talked about global reaction.
We've talked about what it might mean for the share price of some of these big car companies, what about consumers in the US now?
Are you expecting that car prices are going to go up?
We had anticipated this from the first tranche of tariffs with Canada and Mexico.
We also have steel and aluminum tariffs, we have China tariffs now reciprocal and now these tariffs.
The cost of the vehicle, the input costs will go up.
we expect anywhere from three thousand to ten thousand depending on the transaction price that the vehicle, it will increase and in the US the vehicle already cost forty nine thousand dollars to purchase new on average so it's already at an all -time high we're concerned about this.
I'm sure you are, I'm sure many consumers will be as well and just to end, at the global current you sort of hinted at this at the beginning it's very complicated doesn't it when we say you know Japanese cars are very popular in the US it doesn't mean that all Japanese cars are built in Japan, does it?
It's a complicated supply chain involving many parts of the world.
Yes, Toyota and Honda, Nissan, Hyundai -Kia, VW, they all build in this country, too, they build in Mexico and Canada.
We have a USMCA trade agreement, which we were hoping to be renegotiated, and as both of your other analysts have said, we have a lot of questions right now, tonight, that we're trying to sort through.
Well, listen, Glenn, thank you very much for joining us go and try and answer some of those questions.
What's a top one on your list that you're going to try and answer?
Which is the one you're struggling with at the most at the moment?
Do you try to make sense of this?
Yeah, then the number one issue is our vehicles from Canada and Mexico because of the existing USMCA agreement are they included in this?
It appears, as your reporter said, that they are but we don't have confirmation of that and that's a that is a big situation particularly for the company's based in Michigan Ford GM and Stellantis.
Okay well listen thank you so much for joining us when you work out that question do come give us an answer as well we've enjoyed having you on the program Susan, your final thoughts on this, I mean the problem is as well we could see some of these countries which are now having tariffs put on them retaliate against U .S. cars couldn't they?
Tesla could get affected there.
The manufacturers are also making these cars for selling overseas.
This product is exported as well.
It will be taxed and there will be consequences for this.
It's going to be a mess and hard to figure out for several months and perhaps the rest of the year as industry executives figure out what's in the ruling, what is the government trying to achieve and what will other governments demand of them as a result.
Susan stay with us I want to bring in the economist Vicky Price who's a former economic advisor to the UK government we're going to talk about a very important statement the spring statement here in the UK in a minute but I just want to get your thoughts Vicky, somebody who's been in in government when you see tariffs on the automobile industry, you know 17 % cars built in the UK head to the US.
It is a huge moment isn't it?
It is an interesting thing is when you look at the overall picture of what we export to the US some half of it is actually cars or trucks.
I mean you we actually do have a very substantial trade in this area with the US so it's going to hurt the industry quite significantly.
And the really interesting thing for me is What sort of preparedness have we had or were we just expecting and hoping for keeping fingers crossed it?
The UK currency might perhaps be exempted from this Well, it doesn't look like it and the other worry is that they could be more I mean we got cars now as we know that has been quite a detailed look at Particular sectors and they're going to announce it all back I thought by April the second but some of the things seem to be announced a little bit earlier There could be more areas that could be affected, we export chemicals from pharmaceuticals, and it's actually quite a significant part of the manufacturing base, which has very strong links with the US, and the added issue is that quite a lot
of what we do in the manufacturing sector, particularly in the car industry, is linked very much with what happens in Europe.
I mean, the supply chains with Germany are very, very strong.
So the whole thing therefore is going to multiply in terms of its impact.
It is and for Rachel Reeves, the Chancellor here in the UK who gave her Spring statement, this will be a further headache, because she has big decisions to make about government spending with the economy slowing down.
Let's hear a little bit of what she said today in Parliament.
The global economy has become more uncertain, bringing insecurity at home as trading patterns become more unstable, and borrowing costs rise for many major economies.
Mr. Speaker, the job of a responsible government is not simply to watch this change.
This moment demands an active government, a government not stepping back, but stepping up.
A government on the side of working people, helping Britain to reach its potential.
That was Rachel Reeves there, Vicky.
It's a problem many governments are facing at the government borrowing, because of those high interest rates, is going up so much. Should they be thinking of changing their spending models?
There have been quite a lot of speculation, that maybe we're going to hear a little bit about whether perhaps the fiscal rules, which Rachael Reaves, the chancellor, has placed herself in might be relaxed a little bit and therefore perhaps, you know, some of the spending cuts that have just been announced, including on welfare, which are really quite substantial, may not need to take place if one just goes out and borrows a little bit more.
And the interesting thing is that, of course, there are exceptional circumstances right now.
It's not just the tariffs which of course, you know, if they really have the full effect that we fear they might do, and we hear more perhaps in the next few weeks or months as well, will affect first of all the growth pattern in the economy, which is a real significant part we need to be worrying about.
And the second thing, of course, is that there is defense that we need to spend a lot more money on with the result that the pressures on the fiscal side are really rather significant.
And what we've seen in other countries is that people have, all countries and governments have, and actually, the politicians as a whole and the population have accepted that perhaps we need to think a little bit differently.
Look at Germany, which has decided to go for a debt break suspension.
In other words, they can now go out and borrow more and spend on defence in particular, but also infrastructure, because they do feel that they need to do that in the environment they're finding themselves in.
Lots of Europeans are doing exactly that.
The European Commission is allowing lots of countries to borrow more and be outside the rules, if like, of the Stability and Growth Pact.
So there is a move in the markets that says, well, perhaps we'll accept that.
The question is, of course, at what rate will the capital markets be still prepared, still lend to all these countries and we've seen bond yields go up a little bit as a result.
That is the big question.
Vicki, thank you so much for joining us on the programme.
Lots happening of course with that announcement by Donald Trump.
Quick question to Susan Schmiedt.
This is the big problem, not just facing countries but governments as well.
We lived in this era of cheap money with low interest rates, it's not with us anymore is it?
It's not. Interest rates aren't 0 % anymore and that creates a big stress on debt levels which debt now has to be paid for.
It changes the dynamics and it makes it particularly difficult in this type of environment when many governments and countries are thinking about, as Germany just did, expanding their debt limits, their needs that need to be met with their capital expenditure, their raising capital, they're increasing the debt, this is also something that the U .S. will have to confront as all of these plans in the U .S., should it further slow the economy, will also cause that debt burden in the US to be felt and will have to be also addressed.
Okay, we started with CalTES and to look at the markets with cars.
Tesla the share price, down again, in particular Tesla struggling at the moment.
Thirty seconds if you don't mind, Suzie.
Tesla is in a tough spot.
Elon Musk took on a role within the Trump presidency that has caused problems for the company not only in the flailing sales, the falling sales for his electric vehicles, but also now as a reaction to Elon Musk and his initiatives internationally.
Tesla's going to have pressure on the share price, we've seen that in recent months, down 40 % year to date.
It's having a tough go of it and probably will continue to do so until we see the sales rebound and thus far the markets haven't seen that.
Perfect, Susan. Yeah with well business report from the BBC world.
At Amika Insurance, we know it's more than just a car or a house.
It's the four wheels that get you where you're going.
And the four walls that welcome you home.
When you combine auto and home insurance with Amika will help protect it all.
And the more you cover the more you can save. Amika.
Empathy is our best policy.
The New Year's here.
It's the perfect time to refresh those household essentials and score some cash back rewards with Colgate Palmolive.
From toothpaste to dish soap, chances are, you've got Colgate Palmolive products on your shopping list and in your house right now.
We're talking brands like Colgate, Soft Soap, Palmolive, Irish Spring, Fabuloso, and And right now, you can get up to a $10 digital Visa prepaid card when you buy up to $30 of Colgate -Palmolive products.
Here's how it works.
Spend $20 on their products, get $5.
Spend $30, get a $10 reward. All you do is shop your favorite brands, snap a pic of your receipt, and upload it to CPrewards .com.
It's so easy. That's CPrewards .com.
So grab what you need, or maybe try something new, and get rewarded just for doing your usual shopping.
And start your year fresh by earning cashback rewards with Colgate Palmolive.
Rewards available while supplies last, limits apply.
US only, 1 -125 -331 -25.
For full terms and conditions, visit cprewards .com.
Service. Let's move away from our chat about tariffs and big economies, and look at an event that took place a year ago today, because that was when the Francis Scott Key Bridge in Baltimore collapsed after being hit by the Dali.
I'm sure you remember that was a container ship.
Six construction workers died when the bridge fell.
The region lost a major piece of infrastructure and the shipping channel to the port of Baltimore was blocked for over 10 weeks.
Marketplaces reporter Stephanie Hughes has spent the day in Baltimore finding out how the area is faring economically one year on.
The business of the port is moving things in and moving things out.
And when the key bridge fell, it meant that ships that were here were stuck here in the port and no new ships could obviously get in.
And so the stevedoring companies are the companies that make money from loading and unloading cargo.
One of them is Port America Chesapeake.
It runs the containership terminal where the dolly had actually been docked before it left and then hit the key bridge.
Port America told me they moved 35 % fewer containers last year than the year before and that had a significant impact on revenue.
And that's just one business.
There's also warehousing companies and trucking companies that were hurt financially, sort of a whole ecosystem.
So from what you're saying, clearly an area that has suffered economically, but in terms of that suffering, could it have been a lot worse?
That's right. I was talking to the Office of Maryland Governor Westmore and they told me that early estimates of how long it would take to clear the debris of the Key Bridge ranged from six months to a year, and instead it took only 74 days.
So that meant the port was able to come back to life a lot sooner.
And I actually took a boat ride around the wreckage as this cleanup was happening.
and in order to get the bridge up they had to pulverize it into smaller bits that were manageable to move and they had to think through all those different moves to do it safely.
And back in May I spoke about this with the Colonel S .T.
Pinchason. She was one of the leaders of the effort as part of the U .S. Army Corps of Engineers.
It's Jenga meets pickup sticks, which meets slinky rubber band.
Like when people look at this, it looks like calm and just sitting in the water.
We take it for granted, you watch it, it looks so graceful, they're just picking stuff up out of the water, there's a lot to it.
They can literally feel how the load is reacting.
And it did lead to a much faster recovery than people were expecting.
So today, ship traffic at the Port of Baltimore is back to about ninety percent of where it was prior to the bridge collapse.
That is good news, of course, for the whole area, isn't it?
In terms of the bridge itself, New Bridge?
Not there yet, is there a plan?
There is a plan. So, yeah, the state of Maryland unveiled a design for the bridge that will go where the Key Bridge once stood.
The old Key Bridge was a truss bridge, that's the kind of – it looks kind of like a cage that's holding up the roadway.
The new bridge is going to be what's called a cable -state bridge that has towers that suspend the road with cables.
And the space between the two pylons underneath the main span of the bridge, that's where the shipping channel is, it's going to be about a third wider and that will give cargo ships underneath more room to maneuver, and I talked about this with Cornell's Rick Gettys.
So the likelihood that a big ship is going to veer out of the channel and hit a part of the bridge is reduced by the fact that you have the towers about a third, which is a lot wider apart than under the old bridge.
So that makes the bridge more resilient as ships get bigger over time.
and I think that sort of anticipates this growth in shipping that we've seen over the past few decades.
So the New Bridge, another thing about it, it's also going to be a lot higher than the old one, and this will allow bigger ships to pass underneath the bridge.
You know, Baltimore is an older port.
It's more than 300 years old and right now certain ships can't access the Port of Baltimore because they're just too large.
And this New Bridge is being designed to last a century, and the idea is it'll be able to accommodate larger ships now, and hopefully bigger ships in the future as shipping and commerce overall develops.
You've been around the area, haven't you, for some time now talking to different people, give us your overall impression, you know, a year on about some of the conversations that you've heard, where have you just come from now?
Yeah, right now I have just been at a welding class.
There is, you know, as they build this new bridge, there's going to be a need for more workers to do it.
And a community college here in the area, the Community College of Baltimore County is expanding its welding program so that more people can learn how to weld.
There's going to be demand in general for welders in the U .S. in the, over the next three years at least, probably longer.
In terms of the mood, you know, the Key Bridge was a big part of Baltimore.
This was like, you know, it was part of the landscape.
It was a major thoroughfare.
People drove over it every day.
It was a big part of work, I would say, in the city.
You know, people would go there to get to work.
So I think there is a real sense of loss about that bridge.
People will miss it.
There's also a real hunger for what's gonna come next, and there's some excitement I would say about getting that bridge back in place and moving towards the future.
Reporter Stephanie Hughes there back in Baltimore.
Let us end the program by talking about this.
When we tampered with the stability of space time, OK, one day what that is that, of course, we're talking about Avengers, Marvel has announced production is underway for the latest movie in the Avengers franchise.
Avengers Doomsday has announced the cast as well.
Some familiar names.
Chris Hemsworth. Robert Downey, Jr. Let's speak to Carla Renata, an actress and film critic.
How big a moment is this?
Because this is a franchise that has earned a lot of money, hasn't it?
Yes, it has made billions and billions of dollars, and this was a huge moment because the Avengers has not been on the big screen for a minute.
We've seen iterations of his characters on the Disney Plus channel which is part of the MCU, but we have not seen a feature film from them in a minute.
I was trying to work out in the office, the biggest movie franchise of all time.
Is it Marvel, is it the Avengers, is it Star Wars, is it James Bond?
We're British, we're hoping for James Bond.
What is it? So the two top highest grossing franchises are the Marvel Cinematic Universe and Star Wars which are owned both by Disney and four of the five highest grossing franchises are based on either a series of comic books or a series of novels, including the Brit's faves, James Bond, Batman, Spider Man, Lord of the Rings, to name a few.
Yes, named quite a few for us, for us there.
So you know, the Avengers movies have done pretty well, haven't they, they've got big expectations from this, how are they going to keep getting people back in to watch them?
By announcing during that four and a half hour press conference, it was four and a half hours where they did a slow reveal of so many different characters that are coming back like Chris Hemsworth and Vanessa Kirby, Anthony Mackie, Letitia Wright from the Black Panther franchise, there's so many characters and they did a slow reveal with like two or three chairs at a time.
It was crazy. Stay with us for a minute, I want to bring in Susan Schmidt for for a minute here.
Susan, are you an Avengers fan?
Have you been somebody who's been gripped by this particular franchise?
Are you looking forward to Avengers doomsday i am looking forward to it i have been gripped by it and it's been a great series to follow and certainly investors have loved it because of that box office return color this idea of franchises do you think that is because so many have been successful mission impossible in there as well do you think that is something that a lot of the studios look at and think yeah let's try and get a franchise not for just one movie so we can make money for a few years here.
Yeah, you said it. It's all about movie.
It's all about the monetary growth that they get.
And for a minute, moviegoers were suffering from franchise or superhero fatigue.
So the movies didn't do as well.
For example, Disney saw a massive ding with 2023's Indiana Jones, which didn't click with audiences earning less than a stellar $383 .9 million.
But when it comes to more mature franchises, like John Wick Chapter 4, also handed by Lionsgate, They, over the four feature films at 440 .1 million, I would say, and saw and the screen franchise did well compared to their last instalments too.
Karla, thank you so much for telling us about Avengers Doomsday and all those facts and figures Susan Schmidt, thank you so much as always for guiding us through lots of different business stories there.
But of course, the main focus was on those tariffs on the automobile industry Canadian PM has said that that is an announcement that will hurt Canada.
we will have more reaction to this on business matters in a couple of hours.
The new year's here.
It's the perfect time to refresh those household essentials and score some cash back rewards with Colgate Palmolive.
From toothpaste to dish soap, chances are you've got Colgate Palmolive products on your shopping list and in your house right now.
We're talking brands like Colgate, Soft Soap, Palmolive, Irish Spring, Fabuloso, and Tom's of when you buy up to $30 of Colgate -Palmolive products.
Here's how it works.
Spend $20 on their products, get $5.
Spend $30, get a $10 reward. All you do is shop your favorite brands, snap a pic of your receipt, and upload it to Cprewards .com.
It's so easy, that's Cprewards .com.
So grab what you need, or maybe try something new.
And get rewarded just for doing your usual shopping.
And start your year fresh by earning cashback rewards with Colgate -Palmolive.
Rewards available while supplies last. Limits apply, U .S. only.
1 -125 -331 -25. For full terms and conditions, visit cprewards .com.
