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And this is Andrew Page with World Business Report.
Thanks for being with us.
Today, the auto industry comes to terms with 25 % tariffs on US car imports.
We'll get reaction from Asia.
What India exports to the US is the auto components.
21 billion dollars is the export out of India for auto components and 27 % of this 21 billion dollars goes into the US.
And reaction from Europe.
At the moment for American cars coming into the EU it's 10 percent tariff and the other way around is two and a half percent.
I think what President Trump signaled very early on in this year was he wanted reciprocity.
And later we'll hear from the president of Tokyo Metro which is about to take over a major commuter route in We provide nine train lines covering 195 kilometers of track between 180 stations in Tokyo.
To operate all the trains on time, we try not to let them stop at stations for longer than scheduled.
The first one industry across the world is reeling after the latest tariffs announced by President Trump.
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So, what is Donald Trump trying to achieve?
what basically is trying to force companies to relocate their operations to the US.
Honda is building one of the biggest plants anywhere and they've just started.
They wouldn't have done it without this in all cases.
They wouldn't have done it without what we're doing.
So we'll effectively be charging a 25 % tariff.
But if you build your car in the United States, there's 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 underutilized 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 Many of the US's major trading partners have condemned the tariffs.
We're going to hear from Asia first with South Korea's Industry Minister, Anduk Yeon, in a moment after the Japanese Prime Minister, Shigeru Ishiba.
Japan will carefully consider its response.
All options will be on the table, including countermeasures.
About 50 % of our automobile exports go to the United States, so there are concerns about significant damage to the auto industry.
The difficulties will be especially severe for not only the finished car manufacturers, but also the parts suppliers.
Susana Streater is head of markets at Hargreeves Lansdowne.
Susana, let's look at the Asian markets first for carmakers and car component makers.
Yes, well, I mean, in Japan overnight some $16 .5 billion was wiped off transport stops and useful shares in Toyota for 2 .7%, Honda 3%, Nissan 2 .2%.
Meanwhile, South Korea, Hyundai and Kia, where they dropped around 4 % each. So really setting the scene then for further falls that we saw in Europe.
Certainly, you saw Volkswagen fall by 2%, as well as BMW and Mercedes -Benz.
And we've got the open in the United States where General Motors slid 7 % and Ford Motors shedding around 2 .3%.
Interestingly, the only one of the big, or I would say a very well -known automaker, is Tesla because it's already making the moves that needed in Donald Trump's playbook.
Its shares have actually risen.
That's partly because it's factories in Texas and California where its models are made make it less vulnerable to the tariffs on auto imports.
We haven't had many good newsdays for Tesla of late so they'll be happy and that the shoutout for Honda from Donald Trump that we heard there didn't help at all.
No certainly I mean we are seeing kind of really vacillating policy from the White House and you have shout out one day at one day and a change of policy the next it's very hard to follow and actually these tariffs did come in a pretty unexpected move because the focus was actually on April the 2nd when other tariffs were expected to be announced I think that's why you've seen some of the sharp movements today.
More with Susannah on the way to India now, home to Jaguar Landrover's owner Tata Motors.
The industry analyst J .Kale from Elara Capital has been telling me about the impact on component manufacturers there.
Net -net, whatever be the scenario if the tariffs come through.
One thing is for sure that it will have an inflationary impact in the U .S. for the consumers and the demand is likely to take a hit.
Let's talk about Asia for a second or two.
mentioned 40 % of cars are imported.
What sort of number are we talking about from Asian countries?
Well, from Asian countries, it's largely from Japan and South Korea.
I think a large part of this around 35 or 40 percent is mainly from Mexico so it's relatively lower from Asia.
In India, it's hardly anything.
But what India exports to the US is the auto components.
21 billion dollars is the export out of India for auto components and 27 percent of this 21 billion dollars goes into the US so you know that's close to around 6 billion dollars of auto components are exported out of India into the US and just give me a sense of for our listeners what sort of components we talking about what kind of things are made in India and then exported to the US to be put into cars yeah a large part of them are drive transmission and steering and some bit of engine components mainly the forgings and castings is is the major portion of And hence companies exposed to this kind
of processes and components will be in focus.
So someone like a Sona VLW you know these kind of companies will get impacted.
But again one needs to see whether the components that they export the tariffs are applicable on those or not.
I mean what's it like to be trying to run a business in India right now where you don't We don't even know whether what you are exporting is subject to the tariffs or not.
We're waiting for that to be clarified.
It's not like you can even plan around it.
No, absolutely. I think everyone's in the wait and watch mode.
No one is taking knee jerk reactions in terms of, you know, shifting their production capacities or anything like that, because change of production locations does take time.
And unless companies have a clear direction that this is going to remain for a long period of time it's not feasible to shift production capacities and locations so I think everyone's in a wait -and -watch mode but what that will do is it will disrupt production.
Let's go to Europe next.
Germany and France said the duties Donald Trump is proposing a very bad news they want a firm response from the European Union and it's European politicians also in our sort of motive, they make Grenadier SUVs in France, the vast majority of which are exported to the U .S. So we started selling in the U .S. January 24, very quickly became our biggest market globally.
And as you see, we manufacture in France.
So, yeah, we're taking a full hit on this.
And the reason that that's particularly the case for your business is you make SUVs basically?
No, it's all automotive and all automotive parts that are hit.
I think the reason it's so particular for us is just that we're very small and up and coming and I don't think that the 25 % tariffs from President Trump are really there to address brands like us.
They're there to kind of kickstart some discussions with politicians about what reciprocity means.
We've got a million more cars moved from Europe to the US than the other way round and yet the tariffs are 7 and 1 .5 percent apart.
So I think this is a call to arms for the EU to negotiate and come up with a win -win deal which is clearly possible.
So it might be about some kind of reciprocity deal.
Yes. I think he looks at those numbers and thinks, well, why are Americans buying European cars not the other way around?
That of course might be the market.
Well, let's just give customers the choice.
Whether they're in the US or Europe, let's the choice are not punitive rate of tax.
And if the tariffs are much more aligned and equitable then maybe we will see more Europeans buying American cars, free market that would be wonderful.
Is it even possible for a business the size of yours to think, well what Donald Trump is really after here is for us to locate production in the US.
Is that even possible?
Well look, I think it's something that we were looking at anyway.
I mean in manufacturing you fill one plant first. So we have a plant, a hand back in France which you know is very important to us and we should fill first, but as we look at our growing business in the US and it is growing significantly and how much of our business is in the US, it would be remiss of us not to be thinking about US production, but that's you know not something we can do in a month.
We need some time. So I'd really like to kind of get that time to about what is the right thing for our business but to enjoy continuing growing the business in the US.
And you worry the tariff might kill you in the meantime?
Exactly what i'm worried about and that doesn't seem like the outcome that anyone really wants out of the situation a car that is you know being adopted in the US more than it is anywhere else in the world we would really like to see uh some sense prevail.
Do you think your customers would just pay more for the cars that you're selling?
I think it's possible, but it's not fair, you know.
It's not fair on the customer to have to take the hit.
It's not necessarily fair on the manufacturer to have to take 100 % of the hit, either.
I think if the EU were willing to come to the table and negotiate something sensible, we could end up with a reciprocal tariff that's significantly less than 25 % and gives, as I say, customers all over the world the choice of which cars they would like.
In the short term, what do you do?
Well, in the planning, including, you know, hoping to spur some conversations, as I say, to come up with a win -win solution.
But obviously, we're fast at work seeing how we can absorb some of it and how much of the market will be prepared to absorb.
But very, very clearly want to continue building our fledgling car business, which until now has been going really well.
And it's just interesting, Lynn, in our conversation, you sounded as frustrated with European politicians as you are with President Trump?
More so because all he's really asked for is a fair and equitable deal and he started these conversations when the inauguration happened and potentially before, so months ago and I just don't really understand why we couldn't have done more to protect our industry, our business, our jobs, our economies by just having a sane conversation to agree that it's not equitable, let's make it equitable win -win.
And just to be really clear to our listeners what you mean is the EU reducing its own tariffs?
Yeah, I mean at the moment for American cars coming into the EU it's a 10 % tariff and the other way around cars from the EU going into the US is 2 .5%.
I think what President Trump signaled very early on in this year was he wanted reciprocity which could have meant 2 .5 % or 10 % or anywhere in this point we've ended up at 25 percent and that's why I'm so frustrated.
That's Lynn Calder who runs Ineos Automotive.
Live now to Sigrid De Vries, director general of the Automotive Trade Group in Europe, the ACEA.
Sigrid, thank you for being with us on World Business Report.
Listening to Lynn there from Ineos Automotive you can see the problem European politicians are going to have now because some people like Lynn want European tariffs to be reduced and people want them put up?
Oh yes but I think everybody would really like to do without a trade war and certainly without the escalation which leads to a lot of additional pressure at a time that we can really do without, so this is really concerning.
Sure I mean Lynn might be in a minority situation because she's manufacturing in Europe and exporting almost everything to the U .S. but she thinks Donald Trump's got a point and it's European politicians you should have done more to avoid the trade war?
Well, that I find it difficult to judge.
I think there have been there are long standing relations between the US and the EU there, there is a, you know, a partnership that goes back decades, there have been earlier attempts made also to enter into a bilateral free trade agreement, which would have abolished tariffs altogether.
And this is the case also in many other FTAs.
and I think that is still something also to go for and to work towards and that could be part of a broader package that could be discussed when both parties now get to talking again and to a negotiation that ends in a fruitful outcome for both.
Let's look at the broader impact and taking it away from one business to your members across Europe of different sizes.
What are your fears if this 25 % tariff is introduced and sticks for a reasonable period of time?
That it really disrupts some of these, you know, long standing and very strong links between suppliers and OEMs between OEMs between continents.
And these are difficult to rebuild.
we've seen some of that with Brexit.
When we saw a very globalized and intertwined industry having to untangle some of these relations.
That led to a lot of costs and inefficiencies and I don't think we've recovered from that altogether yet and this is what might be happening now with the U .S. is really disruptive.
We can only hope it's temporarily that there will be an agreement made and the impact will become so clear on the economy, on consumers, notably in the US, that measures might be reversed.
We still are a huge advocate for free global fair trade.
We know that's not the most popular topic at the moment worldwide.
We see the trend going the other way, but it's still I think worth fighting for and worth defending.
and that's what we encourage also Europe to do.
Do you think your members like Lin will be thinking, well, hang on, what we could do here is relocate more of our production to the United States and then we wouldn't have this problem of tariffs?
Yeah, that's certainly one option amongst a few, I would say.
And that's up to manufacturers individually to decide it.
It will depend on their value chains, their supply chains, also on their portfolio strategies on the customer base that they serve.
I mean, these become very difficult and ultimately for individual companies strategic questions.
They might take some of these measures now to see if they can mitigate and they can do damage control.
But this can't happen overnight.
These supply chains have been built out for over a long period of time, there are contracts, commercial contracts, underneath those there will be a cost involved and it's not like you're making simple products.
It takes a huge effort and investment also to build production lines up and increase them.
So yeah, this is not something that is an easy fix.
Sigrid, thank you very much indeed for that.
Let's get reaction from North America itself now.
Canada is the US's largest car export market.
This is Brian Kingston from the Canadian Vehicle Manufacturers Association.
We just went through a trade negotiation with the Trump administration four years ago and ultimately concluded a trade agreement, the USMCA, which President Trump called the greatest trade agreement ever negotiated.
So this is their deal.
And their deal is working.
If you look at the automotive trade relationship between Canada and the United States, it is heavily balanced in favor of the United States.
The US sends more vehicles and components to Canada than we send to the US.
Not only that, but Canada is the largest vehicle export market for the Americans, by far.
The US sends more cars to Canada than to Germany, China, and Mexico combined.
So this relationship is working.
There's much more about this online, of course.
bpc .com slash news, our web address.
You're listening to World Business Report with Andrew Peach here on the BBC.
It's human. Amika. Empathy is our best policy.
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After 20 years of planning and construction, the Elizabeth line in London opened three years ago.
Training and Approaching is your first Elizabeth line service from Hamilton to Abbeywood via Canary Falls.
It is a railway service which links towns like Reading and Heathrow to the east through to central London through to Essex on the eastern side of London.
West to east right through the middle of the city.
And as someone who uses this service almost every day to get to work it has made a big difference in the last three years.
In a few months time the Elizabeth line is going to be taken over by Japan's Tokyo metro along with the Japanese conglomerate Sumitomo and the UK rail and bus firm go ahead.
So what difference will they'll be able to make to us passengers.
Our business reporter, Mariko Oye, has been talking to the boss of Tokyo Metro.
And she told me more.
I think a lot of commuters in London might be hoping for the punctuality and efficiency of the Japanese metro system.
Because as you might know, the Japanese capital is known for its, really is a spider web of rail and metro systems. And Tokyo Metro is the biggest operator of subway train lines.
And despite that, it's incredibly punctual, it's really rare for them to deviate from the schedule.
Sometimes they apologize if they leave, you know, three seconds too early, that kind of stuff.
But I guess the big question is whether or not they can actually, you know, do the same in London because of all the differences in system and whatnot.
So I put that question to the boss of Tokyo Metro, Akiyoshi Yamamura.
We provide 9 train lines covering 195 kilometers of track between 180 stations in Tokyo.
It is a dense network and we carry 6 .86 million passengers every day.
To operate all trains on time, we try not to let them stop at stations for longer than scheduled.
Each line has a committee to tackle possible delays.
For example, we ring a bell to inform passengers that the door is about to close.
We also have strategies to prevent anyone getting caught in the door.
We also use a new signaling system called CBTC to minimize the gap between each train.
Not all of our experiences in Tokyo may work in London, but I believe our system to avoid delays will work.
And what about this cultural differences between the UK and Japan?
Will these two operations be linked up all the time, say when there's industrial action?
That kind of thing?
Yes, exactly. That was the first thing that I thought of that, you know, It's all good and well, as the boss was just talking about it, trying to copy what worked very well in Tokyo, in London.
But as you said, in the UK drivers often go on strike, which is very, very rare in Japan.
Obviously, there are very strong unions in the UK.
Whereas in Japan, they do have unions, but they hardly ever walk out.
So I put that question to Mr. Yamamura as well, about how they're going to navigate this cultural differences between the two countries?
As for the UK's labour culture I realize there'll be differences but along with our partners GoHead and Sumitomo we aim to create an environment where employees enjoy working.
Now when the firm went public in Japan, it was the biggest share sale in six years, just tell us about the company and the challenges that it has.
Yeah as you said it was a very kind of exciting IPO share sale as you said the biggest in six years.
It does mean however, of course, that the company is now responsible and has to answer to the demand of investors and of course this comes amid the country experiencing the first kind of cost of living crisis.
Of course, Japan has experienced deflation, falling prices or hardly, you know, very little inflation for many, many decades and suddenly the company, the The cost is rising also consumers and workers are demanding higher pay, so obviously that increases Tokyo Metro's cost as well.
But interestingly, the company is also benefiting from the record number of tourists visiting Japan last year.
They saw a record number of tourists, you know, way above the level that they seen before the pandemic as well.
And as they are doing that, they also started testing the use of credit cards as their metro ticket.
So in the past, passengers had to buy their specific metro ticket for Tokyo metro.
But now, even overseas visitors soon will be able to use their credit cards.
But I asked him, many other cities have been doing this for many years now, so what did it take so long for them to do this?
So I put that question to the boss.
From March this year, commuters can use their credit cards or QR code as a special train ticket.
We plan to expand that to ordinary tickets in the near future.
It took us longer because in Japan a vast majority of passengers in our company's case 96 % of them use a rechargeable prepaid car to travel.
Tokyo's Metro network is also very dense and you can change the lines without going through a ticket gate, so it's taken us a while to make sure the fare calculation is accurate.
So that's Akiyoshi Yamamura, the president of Tokyo Metro, the company will start operating the Elizabeth line in London in May, so we'll see how they navigate those cultural differences that we've talked about and whether they can actually really bring that punctuality of Japanese trains to London.
America Oye with me from Singapore.
China has reportedly ordered state -owned firms to pause new deals with the Hong Kong billionaire Li Keqing after his announcement he plans to sell two ports in the Panama Canal to a US consortium.
Let's get the story from Tracey Burcham.
Media reports in China and the US detail Beijing's wrath at the Panama ports deal by Mr Li's C K Hutcheson conglomerate.
It announced earlier in March that it plans to sell a range of global port assets including two at the Panama Canal to a consortium led by US private equity firm Black Rock.
Beijing newspaper articles have been critical of the decision and some pro -China commentators have called 96 -year -old Mr Li a traitor and the multibillion -dollar deal an act of betrayal to the Chinese people.
The deal is due to be signed next week.
Susannah Streeter, Head of Markets at Hargreeves Lansdowne, is still here.
Let's talk about gold.
It's only a couple of weeks since we had that record gold price of 3 ,000oz.
What's happening now?
Well, it's a fresh, reached fresh peaks gold as investors seek out a safe haven for their money amid all of this trade turmoil.
Spot gold has hit an all -time high of 3 ,059.
US gold futures climbed one and a half percent to $3 ,069 hitting an all -time high at $3 ,070 earlier in the session so what we're seeing yes is investors are buying up more gold as they fear fresh volatility on financial markets.
Ok so this is the flight to gold which always happens when there's uncertainty and you can only imagine it's gonna keep going up.
Yeah well certainly what we're saying is so much uncertainty washing around financial markets.
We've had these latest tariffs bracing for tariffs from the nations affected, particularly those with large automakers, making up a big chunk of their exports.
But they could be further turmoil with other plans.
For example, to land heavy fines on ships entering US ports, transporting exports and imports.
so there could be further repercussions certainly for US inflation going forward which is partly why you're seeing this flight to gold.
And just finally, one other thing worth noting is that the British clothing firm Next has joined the Billion Pound profit club.
Yes, that's right. Profit before tax for the year to January was £1 .1 billion, and that was up 10 % year on year.
Its shares have risen off the back of those results.
And Next is really well known for a steady string of solid results, even though it warned that the increase in taxes was going to hurt it hard. Susannah, thank you very much indeed, and thanks to you for being with us.
This is World Business Report from the BBC World Service.
Good to have your company.
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