BBC Sounds.
Music, radio, podcasts.
Is the power about to be switched back on in Cuba?
They're going to let companies who want licences to resell Venezuelan oil to Cuba.
They will let that proceed as long as the sale of that oil is to private companies.
It's World Business Report from the BBC World Service.
I'm Rahul Tandon.
Why has the US now allowed the resale of Venezuelan oil to Cuba?
And NVIDIA's just posted record figures showing that the AI sector is still booming.
So just before we came on air, we had a couple of bits of big news that came through.
So that is where we want to start the program, because the United States says it will ease restrictions on Venezuelan oil exports to Cuba's private sectors, as Washington's blockade has led to a worsening crisis, as we've been talking about, on the Caribbean island.
Cuba's entire electricity system runs on imported fuel.
Its own production is limited.
Its infrastructure, decades old.
And without foreign oil, the lights simply, well, they're not staying on.
Here on the BBC World Service.
Over the past few weeks we've been hearing from residents in Cuba like this one.
My name is Jumar.
I'm in Baracoa in the east of Cuba.
These fuel shortages have hit us very hard.
Some days it feels like the whole town is standing still.
No public transport and extremely limited private transport.
Nothing's moving in town.
Power cuts, which were bad before, are now even worse.
We barely have two hours of electricity a day on average.
Finding food and cooking have become a major concern.
Life has always been challenging here, but lately it feels heavier.
So could that load be about to be lifted a little bit by this decision?
For more, I've been speaking to our North of America business correspondent, Michelle Fleury.
A bit of background here.
Venezuela for more than 25 years has been the main supplier of crude and fuel to Cuba.
And in January we saw Washington, with the capture of Venezuela's leader, Nicolas Maduro, seize control of oil exports from the country.
And they essentially stopped sending any oil from Venezuela to Cuba.
Now the other main supplier of oil to Cuba is Mexico, but they came under intense pressure from the United States, which threatened heavy tariffs on any country that would supply oil.
So effectively Cuba has been struggling with this blockade and they have not received any oil cargoes from Venezuela or Mexico.
And that has led to huge shortages in the country of basic necessities.
Wherever you are in the world, whatever economy you have, it is impossible to run without power, isn't it?
Well, that's right.
I mean, everything.
We're not just talking about, you know, oil.
If you think about Cuba, many people, tourists, think about those famous taxis.
Can't do that without petrol.
Businesses can't function.
Factories can't function anymore.
It starts to have a knock-on effect on other things like food production.
So very slowly and gradually, daily life starts to grind or halt.
And that's why you're starting to also see countries like Canada saying that they will try and provide some aid to Cuba.
But we've also seen obviously, the US administration and the Treasury Department now taking action, essentially saying they're going to let companies in the US who want licences to resell Venezuelan oil to Cuba.
They will let that proceed as long as the sale of that oil is to private companies and not to the Cuban government or anything tied to the Cuban government.
I'm just looking at some figures here.
Venezuelan oil exports to Cuba are around 30,000 barrels per day in late 2025.
I suppose the question now is...
That oil that can go to private companies, how soon that will start?
And we'll just have to wait and see, won't we?
The thing to remember here is that the US has had a blockade on Cuba for many years now.
But this latest squeeze really has pushed things kind of to another level.
And that humanitarian concern you can start to see is creeping in.
And you're now starting to see even the US administration saying well look, you know, our target here is the Cuban administration, not the people of Cuba.
And so that's why you're seeing this easing of restrictions.
Michelle Fleury there.
Throughout the program.
We're going to have Susan Schmidt, Portfolio Manager at Exchange Capital Resources in Chicago, with us.
Quite an about turn there by the U.S. government.
And again allows us to focus on Venezuelan oil, because we've seen changes in the oil industry there since the overthrow of Nicolas Maduro.
But it's going to take a long time for Venezuela oil production to really sizably increase, Susan.
It is going to take a long time.
And President Trump was very vocal, when we initially captured Maduro and he was extradited back to the US, about the changes the US companies made engaged in the oil industry would be able to make in Venezuela.
The companies themselves are quite hesitant to get involved.
Those changes take a lot of money and take a very long time.
Well, after President Trump will be out of office.
And I think there's still skepticism in the investment level as to what actually they want to commit to that.
So when we started the program, Susan, we talked about a couple of stories that came in.
One was the Cuban oil story that we've been talking about.
The other one was NVIDIA's results, the giant AI company.
And I've just been looking at some of the headlines around it.
New York Times says, astonishing.
Here on the Reuters news agency, it says NVIDIA smashes expectations in quarterly results.
And before we get into the results, that's important, isn't it?
Because So much was hanging on NVIDIA's results.
Because we keep talking to people like you about the AI bubble.
That's right.
So much was hanging on today's results from NVIDIA.
It was really price to perfection as we went into this earnings report, meaning that investors had given it sort of the optimistic viewpoint of what it could possibly report and what its outlook would be.
And it really had to match that expectation or best it for investors to come away satisfied.
Otherwise, we're really braced for investors to say, all right, not nice, but not as great as we thought.
NVIDIA came back with a great report, incredibly strong, talking about how much the business has grown, that net income doubling rate over a year ago.
The business data center, which is where all those AI chips are going.
That's over 90 of their business, up 75 in sales.
So a really strong quarter.
And importantly, NVIDIA's management talking about the continued strength that they see.
And that should assuage investors' concerns that are we in a bubble with AI?
Where are we on this?
How far can it go?
This certainly implies that there's a lot more runway ahead.
Just look at some of these figures.
They're incredible, aren't they?
The world's most valuable company expects fiscal first quarter sales of $78 billion.
And as you said, the CEO, Jensen Wang, saying our customers are racing to invest in AI compute.
So all that skepticism that we've had, is it misplaced?
Well, certainly not from NVIDIA's report.
NVIDIA is showing that they clearly have the dominant position still and that the chips that they are making are in hot demand by their companies, their customers, anyone really?
Who wants to get into AI feels like they need to be in these really forward-looking chips, these highly competitive, highly capable and very expensive to make chips.
And so NVIDIA is showing that they still have that lead in that race.
There are competitors coming.
We've heard about it from AMD Intel, etc.
But NVIDIA, with this report, is talking about how they've got the lead for certainly this next couple of quarters to come.
And that investors are still should be positive, are still optimistic, because clearly the customers are there buying them.
Yeah, those data centers are going to be huge.
And let's be honest here.
These figures could be even better if they were allowed to sell all their chips to China.
That's right.
Remember that they do have sales restrictions on them now.
They can sell some of their merchandise into China.
That's been prohibited in the U.S.
So there is global growth going.
NVIDIA is not seeing part of that growth because of their restrictions on where and what geographies they can sell into.
But it does say that the AI industry is still going strong in terms of investment.
That does mean that investors will be expecting a lot down the road.
So the pressure is not off, but the demand is certainly there.
Yeah, it is incredible.
The sort of sense of nervousness that you get across global markets when NVIDIA are reporting so much of the AI industry and how it's doing is linked to that company.
Now, remember on the programme yesterday, we started by talking about the State of the Union.
Well, that was a speech by Donald Trump.
Yesterday he boasted of a turnaround for the ages in his second State of the Union speech, seeking to reverse his dismal polls and see off mounting challenges at home and abroad ahead of crucial midterm elections.
Of course he spoke about the economy.
He said he would continue to impose tariffs on other countries despite a ruling by the Supreme Court overturning his import tax policy.
Almost all countries and corporations want to keep the deal that they already made.
Right, Scott?
Knowing that the legal power that I, as president, have to make a new deal could be far worse for them, and therefore they will continue to work along the same successful path that we had negotiated before the Supreme Court's unfortunate involvement.
Last night on the program we talked to business owner Jason Wadilla who runs some crumble cookie stores in South Tampa Florida.
Jason said to us he was going to be carefully listening to the speech.
What did you make of it, Jason?
Yes, good evening.
Thanks for having me back.
Well, I certainly listened.
I think we all listened for two full long hours.
You know, I'm afraid the speech failed to clearly explain how the economy will improve in 2026, after what was a flat 2025.
According to the president.
Of course it's roaring, although that's not what I'm experiencing as a small business owner.
I know what my 2024 versus my 2025 profit and loss statement showed regarding the revenue that I generated, the expenses I paid.
In 2025, revenue was down, expenses were up, my hiring substantially decreased.
What I didn't hear in the speech was how to reverse those trends in 2026.
I wonder here, why is what you're telling us so different from what the president...
Now we know that politicians try and make political points, but it's such a disparity in terms of he talks about hey, America's doing better than ever.
And you're saying you're struggling.
Well, that's what drives poll numbers, right?
That's what elects politicians, is putting a glowing shine on the economy.
It really comes down to the economy, how we feel our economic conditions are.
Now, some of the misstatements that continue to concern me, particularly as a small business owner, is that foreign governments don't pay tariffs, which he again conveyed in his speech last night.
You know, the American consumer does.
The reality is, in no uncertain terms, it's a federal sales tax.
You know, in fact, economists suggest that we paid, you know, 1000 per American in 2025 in tariff costs and that in 2026 we'll pay more, which raises questions how the economy is roaring, as he suggests.
Stay there with us.
I want to bring Susan Schmidt back into the conversation because the tariff question and he is trying to use other methods now, President Trump, to bring in tariffs which do bring a lot of revenue, one has to say, into the United States.
But it hasn't quite had the impact on prices yet that people expect. thought it was going to have.
Is that a fair comment, Susan?
Do you think we haven't seen inflation continuing to rise?
That's correct.
We haven't seen inflation spike, as some people had feared, due to the tariffs.
Now, there are arguments that it's just a matter of time.
People front-loaded on inventory and bought a lot in before the tariffs hit that.
We're still working through that, that we'll see the price rises and those increases come through in 2026 instead.
But we haven't seen that big price shock that many people expected when this was first announced.
We have seen continued confusion among business operators as to what the tariffs mean for their businesses and their costs.
And we're just going to see a continuation of that now with the Supreme Court ruling, President Trump's very vocal comments in relation to that and again in the State of Union last night saying that he's going out with another 15 tariff.
It makes it very confusing, not only for business owners, but for our trading partners as well, to try and understand this moving playing field.
And I think that's what investors are struggling to get their minds around right now.
Jason, you make an important point in terms of who is paying those tariffs when they're being put in place.
But it does look that because of the Supreme Court, that maybe we won't see the level of tariffs that people thought.
It may not be what the president intended, but that is going to be better for businesses like yours, isn't it?
So is there something to look forward to?
Well, again, as I said last night, I maintain a level of optimism.
I remain hopeful.
I want my business to be successful.
And I want all American businesses to be successful.
But what I've seen is I've seen my prices go up.
I've seen my packaging size go down.
So I'm paying more.
And unfortunately I can't pass that on to my customers because it then places my product out of reach for them to buy.
So we'll see what happens.
As I said last night, and I again extend this offer to the president if he wants to use me as his poster child, I encourage him to come visit my small business.
It's a small trip from his South Florida estate.
And if in fact my business again begins to roar, he can use me as an illustration of success before the midterms at next year's State of the.
I certainly welcome that.
I welcome the White House coming and using me and my small business as an illustration to all of America, to the world frankly, that the US economy truly is roaring.
Well, listen, we're going to keep in touch with you and see how that business goes.
Thank you very much for joining us on the programme.
I want to bring in Julia Manchester, political reporter at The Hill.
Julia, thank you for being so patient.
Before we talk about the Epstein files and impact on some well-known figures in the business world.
What did you make of last night?
Particularly on the economy, because that's where the president is struggling.
Do you think he got his message across or do you think Americans will still be sceptical on that issue of affordability?
I think they'll be skeptical until there's really a change if there even is a change ahead of the midterms.
I think the president said what he needed to say to his conservative base in terms of firing them up and reassuring them.
However, I think poll after poll shows there's real skepticism as to what President Trump is doing and whether it's actually working.
Let's get on to those Epstein files.
A couple of names have been mentioned. talking about this.
Bill Gates says he'll take responsibility for his action over ties to Epstein.
He made the comments to a meeting of employees of the Gates Foundation, and the former US Treasury Secretary and one-time Harvard president, Larry Summers, says he's retiring from his roles at the university after its review into his ties with Jeffrey Epstein.
Just because you're named in the files doesn't mean you did anything wrong.
But Julie, we are seeing a huge impact of those files still on the business world, aren't we?
The repercussions continuing.
They are continuing, and I think you're going to continue to see people making decisions as to what they're going to do next when it comes to the Epstein files.
I mean I don't cover the business world as much, but I can say when it comes to government and politics here in the United States –
Things aren't moving along as quickly as they are maybe in the private sector or even in the UK.
You know, bureaucracy seems to be getting involved and it's a slow process.
However, I think you're starting to see really the repercussions and the consequences being felt.
Do you think because we are seeing and we're talking about two well-known names here, but there have been a number of other people involved in high-profile businesses who have resigned that because we're seeing that in the private sector, it will put more pressure on those in the public sector?
I think it could.
However, it's unclear.
I think it just naturally got the pace of government in the United States moves very slowly.
You know, there's political implications here.
You know, even though there are Republicans who have been very open, you know, to the idea of having you know someone like Commerce Secretary Howard Lutnick come before the committee to testify about his relationship with Jeffrey Epstein.
You know, I think in general it's something that this administration and Republicans in general don't want to confront head on publicly.
Julia, as always, thank you for joining us here on the program.
You're with World Business Report from the BBC World Service.
Let's spend the last eight minutes of the programme talking about fashion.
Because Gucci is facing a backlash after using AI to make images to promote its forthcoming show at the Milan Fashion Week.
Posted on social media.
People have questioned how using AI instead of human models and photographers is in keeping with the fashion giant's values.
Earlier I spoke to Marianne Quay editor, fashion expert and celebrity stylist, to see what she thinks of those images.
I think it's awful.
It's awful because when it comes to people like Gucci, we're expecting the greatest artistry.
There is a standard in terms of the creativity, the creative direction.
And here we are with AI-generated imagery that falls under the category or as known as AI slop.
Is it all bad? using AI in this way.
Of course, models would have got work.
They didn't get work because of this.
So it looks like it's not something that's beneficial for the industry, but could there be benefits?
If it's in keeping with the brand's heritage image, creative output, and this wasn't the case...
And I think there are the issues where we are very concerned with the replacement of the work that a creative director would have done the model, the stylist, like myself,
So I think it is worrying.
I think it is worrying that they might, for maybe cost reasons, choose to generate an image that would have taken maybe days of editing shooting, styling.
So It can be good if they use the AI to maybe edit refine, enhance an image.
But it's that sort of replacement of all these sort of people.
And of course, it wasn't just that.
It's the fact that the image isn't very good artistically.
There are a lot of people who are saying that.
I was interested in what you said that, as a stylist, do you worry about the future in terms of AI being used for work that you're doing?
Absolutely.
Incredibly.
We've had to fight over years in reference to being paid, being paid fairly, being paid efficiently.
And all of a sudden now they can just sort of sit down and generate these images very, very quickly.
And they then cut the work of someone like myself.
And I am a stylist, so I normally style things like campaigns like this.
And all of a sudden, most brand's, especially on the high street, a lot of them are using AI generated imagery and sort of not needing someone like myself anymore to show up to dress the models.
So it is very worrying for me and my colleagues.
I was interested when you talked about the use of AI on the high street.
So it's there, isn't it, for let's be honest about it, slightly cheaper brand.
Absolutely.
If we're seeing it there, why are we so surprised if Gucci are using it?
Well, the difference is, of course, it's the price point.
It's what you are expecting from something like Gucci.
So the high street typically picks up the trends that it noticed on the catwalk, which brands like Gucci present to us.
You know, fashion weeks.
So it is disturbing because.
High fashion is linked to design inspiration, new thoughts of ideas in terms of where they're taking things design-wise, every season.
So what we might expect on the high street is not what we expect from high fashion.
So Gucci is just not acceptable.
We're going to bring Mark Lemley into the conversation in a minute.
Susan Schmidt still with us.
We talked about NVIDIA, great news there, sending the stock market soaring once again.
But here is a real example from Marion of the dangers of AI.
You know, work that she thought she was going to have, she's not getting anymore.
Susan?
That's correct.
And that's, I think, an issue that we've seen already being addressed by many industries.
So here we're seeing it in fashion.
We already saw a strike caused in the US by actors who are worried that images will be created in programs that copy their own images or replace live actors in the shows in terms of backgrounds.
And so you're seeing this fear rolling through different industries and different professions, wondering if they can be replaced by AI.
This is going to be an ongoing theme as we figure out how it deploys.
Yeah.
Let's pick up on those points with Mark Lemley now.
William H Newcombe, professor from Stanford Law School.
Mark, we heard from Marianne there.
We hear many conversations like that in the creative sector.
Is there anything that can be done?
I mean, are there legal limits as to where AI can go?
Well, I think there are, although what they are is something that we're in the process of testing right now.
There are upwards of 60 lawsuits nationwide around copyright and the training of AI, and also on the on the output side.
But we have relatively few answers.
The answers we do have both in the UK and in the US suggest that it's legal to train AI.
And so I don't think there's a problem with training AI on images and then generating new images, at least from a copyright perspective.
Yeah, and I suppose...
You know, you look to the law sometimes and we don't like things that may coming in.
But technology has always replaced jobs to some extent.
And have we seen legal protection arise because of that to protect workers?
Sure, and so one example that Susan just mentioned is the labor actions in the United States involving both video games and movies, and the production
And so that's one way of kind of holding on to jobs.
But it is right that we should expect to see job disruption.
I think the real question is –
In every previous example, people have lost jobs, but we've made more new jobs in the new technologies and the new industries.
And the question is whether that's going to happen here and what those jobs would look like.
Are there some industries where legal protection could be better?
You think of the music industry.
You can easily see that AI is taking something from an artist that we're all very familiar with.
In the world of fashion, when it's models and an image, it's a lot more complicated, isn't it?
I think that's right.
And so one of the things that that a Gucci would have to worry about is are we, are we using, are we generating an image of an actual human being or of something that looks like a human being?
And if so, then we have the problem of deep fakes and the and the possibility that people are going to think the person has has signed on to this when they haven't.
But if they steer clear of that, I think they've probably got a legal right to do it.
Although, as the backlash suggests, AI is one of those things that's very popular in the corporate boardroom, but it's not necessarily popular in the wider world.
30 seconds left, I'm afraid.
That's all we got.
Mark, you talked about all those court cases.
When could we see some verdicts in them?
Well, we've got one decision out of the UK in the Getty Images case.
It's on appeal right now.
So I think we should see something in the next year.
OK, let us see what happens then.
It is a conversation that is going to continue here on World Business Report and across the world.
As always, thank you very much to Susan Schmidt for guiding us through the stories.
We're going to be back same time, same place tomorrow.
