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Hello and welcome to World Business Report here on the BBC World Service.
I'm Rahul Tandem. We're going to hear from a Nobel Prize winner for economics.
He gives us his thoughts on tariffs.
If we do end up where he wants to be right now, I think the effect could be quite dramatic and in a negative way on the US economy and perhaps more negatively dramatic on America's trading partners.
And we're going to take you to Panama as well to talk about the Panama Canal.
But these are extraordinary times for the global economy as it tries to adjust to the tariffs that are being imposed by the Donald Trump administration.
And one of the challenges that it faces in doing that is that those policies, well, they're constantly changing.
Here was Donald Trump speaking last night about the tariffs he was imposing on Mexico, Canada and China.
Tariffs are about making America rich again and making America great again, and it's happening and it will happen rather quickly.
There'll be a little disturbance, but we're OK with that.
It won't be much, but we will take in trillions and trillions of dollars and create jobs like we have never seen before.
we have been ripped off for decades by nearly every country on earth and we will not let that happen any longer.
But as people woke up in the world's largest economy on Wednesday the U .S.
Commerce Secretary Howard Lutnick gave hints to Bloomberg TV that some of those policies well they could be about to change.
Remember this is not a trade war this is a drug war we've got fentanyl still pouring into the country and it's got to stop.
And if they can stop the flow of fentanyl, the president is open minded.
There are going to be tariffs, let's be clear.
But what he is thinking about is which sections of the market that maybe he'll consider giving them relief.
But I don't want anybody to forget April 2nd is the day that we announce our reciprocal tariffs around the world.
And so April 2nd is coming.
But this is about fentanyl this month.
OK, so some policies were about to change, and they have.
Here to explain, how is our North of America business correspondent, Michelle Fleury?
We've found out at least part of the answer, and that is that the Press Secretary, Caroline Leavitt, confirmed that cars imported from Canada and Mexico will be exempt from the 25 % tariffs for one month.
And this apparently follows a conversation that took place between Donald Trump and three of the major US car makers Stellantis Ford and General Motors presumably they were making their case that look cars because of the way they are made between these three countries they travel back and forth across the border and so tariffs would have had a huge impact so there is now a temporary reprieve as you say a temporary reprieve can you just remind us because it is a situation that's moving very quickly where exactly are we with the tariffs which are in place now and what is coming up?
So currently as things stand we have a 25 % tariff on goods imported from Canada and Mexico, 20 % on goods imported from China, then there are sectoral tariffs that are going to be coming down the line at a later date You may recall we were talking not that long ago about steel and aluminum.
Donald Trump wants to put tariffs on those.
There's also now a new investigation into lumber.
We don't know what the result of that will be or when we might learn more on that.
And then, of course, there is that date at the beginning of April that Donald Trump keeps referring to when reciprocal tariffs will go into effect.
So in other words, the United States will sort of match any tariffs from other countries that US goods face in those markets.
And that, if you like, is considered the big one.
It is the big one, isn't it?
It's not an easy job to make sense of what's happening because it's changing so quickly.
When you talk to businesses in the US, are they struggling to keep up?
And also, how do they plan when everything seems to be so unclear?
You know, I've been talking to businesses about this for months now.
and people who manage supply chains for months.
And there has been a degree of uncertainty.
How much was Donald Trump bluffing and how much would this just be a negotiating tactic to kind of get a good deal because we know he's a dealmaker?
It turns out to have been perhaps more serious than people were anticipating.
And so you're starting to hear from companies.
Yesterday we had from the retailers Target and Best Buy both warning that prices would go up.
And indeed, Donald Trump in his own speech before Congress said, look, there is going to be a little disturbance, as he put it.
But he said, you know, that was the price that had to be paid to kind of fulfill his vision of America first.
And that vision is one where he sees tariffs as a tool to try and bring manufacturing back to America, but also as a way to raise revenue because he has other plans like tax cuts that he wants to enact that will cost money.
And so it's a way of sort of paying down debt, as you hear the White House say.
There are lots of things they want tariffs to do.
And so I think that's part of the confusion, is that people aren't always sure.
Because in the case of Canada and Mexico, he says it's about stopping the flow of fentanyl into the US from those countries.
Very busy Michelle Fleury there, keeping a close eye on those changing tariff policies.
Let's bring in Susan Schmidt, Portfolio Manager, Exchange Capital Resources in Chicago.
Margot. Now, we know when the idea of tariffs coming in happened, the markets didn't like it very much.
How have they reacted today to this slight adjustment in the policy?
Well, they're positive because today's adjustment was in the right direction for them.
They heard compromise, they heard a reduction potentially in tariffs around the big auto manufacturers, where they know there will be big impact.
So investors took that very well.
And there's still hesitancy because, as we've been talking about, a lot is still unknown.
This is very much still fluid, a lot of moving parts, not a lot of clarity on what the actual tariffs will end up being and when the actual date of implementation will be.
Don't forget that we started talking about these going into place in February.
We're in March, and now we're really talking about impact in dates that are out into April.
So very fluid. Stay with us, Susan.
Let's pick up more on that automotive industry now, because that announcement that Susan was talking about there is an important one.
Premier Doug Ford of the Canadian state of Ontario had warned just a couple of days ago that many car factories would have had to shut down because of the tariffs.
The assembly lines in the auto sector will shut down within 10 days, I predict.
The supply chain that parts as you've heard many times goes back and forth up to eight times each time hitting a 25 % tariff on both sides of the border.
I am almost positive the assembly plants will shut down on both sides of the border.
Let's give you a business reaction to the announcement that has come from the Trump administration on suspension of those tariffs.
Here's Flavio Volpe, president of the Automotive Parts Manufacturers Association of Canada.
It makes no sense at all from an American business perspective.
And he had been hearing that from the Detroit three, the three biggest American assemblers, but from the entire spectrum of foreign automakers that are manufacturing in the US and parts suppliers.
But what we said was, if you went forward with the tariffs, the surtax is the equivalent of about four or five times the profit margin for any of these companies.
And there's about $300 million worth of parts and cars that ship every day from Canada to the U .S.
represents the wiping out of one week's profit for the entire industry.
So we're now in the second day of it.
We've wiped out two weeks worth of profits.
By the time we get to the end of this production week, all of these companies, the car companies and the parts companies, we're going to shut down.
You're making a very clear argument of why these tariffs, from your perspective, make no sense.
But then they've only been suspended, haven't they, for a month.
What do you think is going to happen after that?
Well, he hasn't changed the fundamentals of why it doesn't make sense for American industry.
Now, you've given that side of an argument, but it's only for a month now.
You worried that after a month, we go back to tariffs being in place.
I think in a month, American industry will be back in front of him and say, we're going to end up going over the edge again.
What's the point of this?
The argument from the American industry is an important one, that the USMCA, which is a trade agreement that he negotiated six years ago, has raised the American content in every vehicle by 25%.
So take the victory for the work that you did in 2018 and 2019 and crow about it.
Give an exemption to any car that's USMCA compliant, and that'll force the rest of them to go there.
That's what he should have been doing anyway.
But he spent four years out of office and I think he forgot that he signed the USMCA.
And I think the Detroit three were very smart to remind him that he did do some positive work for the American industry here and he should use that work to get the exemption.
It's my expectation that the more days that pass by, the more that math and science will rule the roost.
How difficult is it for Canadians in this industry to function at the moment when policy is changing so quickly?
Yeah, it's difficult for Canadians, but it's also difficult for Americans and Mexicans in this space.
It's the most integrated transnational sector on the planet.
This isn't sustainable.
His raising of tariffs is a raising of the cost of living in the US, which is going to lead to increases in the cost of money.
And so his desire to have things made in the US instead of in Canada and Mexico is going to come right up against companies that don't want to risk capital in a unstable us market either it's just a freeze for everybody and it doesn't make sense it's a self -inflicted moment you've talked a lot about the impact on American consumers possible price increases there what impact would it have had on the Canadian industry would it have led to job losses some people having to you know lay people off because profits would have been less well 100 % clear over the last month that the industry would have shut
down within a week on both sides of the border.
You're saying the total car industry?
The entire industry.
And we have two precedents in the last five years, so we don't have to look too far.
That February 2020 closure of the Ambassador Bridge and the pandemic.
So what would have happened is that everybody's operating, all the automakers operating with about 90 days worth of inventory.
And as that inventory starts to drop, you'll see the price of new cars and used cars shoot through the roof.
Susan, really interesting to hear the views of Flavia Volpe there from the Canadian side.
This is a crucial industry for the US, isn't it?
And if car prices had began to go up quite quickly, that would have been quite an, could have been an adverse reaction for Donald Trump's tariff policy from the US public.
Well, it certainly could be.
And that's not to say that that's not a reaction that we're going to be seeing or that we haven't started to see in recent weeks where we have started to see the used car prices increase.
Now, is that related to the threat of tariffs and buyers' concerns over having to go out and what the price of a new car will be six months down the line?
We're not sure yet, but we are seeing those used car prices tick up, which I do think is interesting.
There is a price impact here, and that's what investors are nervous about.
That's why you've seen, particularly with the carmakers, these stock prices be so volatile over the last couple of weeks.
We are still getting reaction and response from different parts of the world to Donald Trump's proposed tariffs.
We'd like to bring you those reactions here on World Business Report.
The French Prime Minister Emmanuel Macron in an address to the nation this evening covering many issues did say planned US tariffs on European products were incomprehensible.
So have we seen tariffs used like this before?
A question from one of this year's Nobel Prize winners for economic, Simon Johnson, who's from the MIT Sloan School of Management.
We have seen Donald Trump in power before.
We have seen him threaten tariffs.
We do know that everything is in negotiation with him.
He used it on Mexico in 2019, for example.
So we do need to be careful and recognise that what he said last night and where we are on the actual tariffs at the moment, may not be where we end up.
But if we do end up where he wants to be right now, I think the effect could be quite dramatic in a negative way on the US economy and perhaps more negatively dramatic on America's trading partners.
Would there be some countries that could suffer more than others?
Would developing economies suffer more?
Yes, absolutely. Look, small economies generally trade more.
That means that their exports and imports are higher as a percent of GDP than for big economies.
And depending on exactly what Mr. Trump decides to pick on, who he decides deserve special treatment and so on.
Yes, it could get pretty rough out there for some of the smaller economies.
When he talks consistently about the US being treated unfairly, because other countries have put higher tariffs on the US than they have, is he right there?
Well, there are some isolated instances where this is true.
And, for example, trying to sell cars, automobiles in Japan has been notoriously difficult, although that's mostly non -tariff barriers rather than tariff barriers.
So, overall, big picture, the U .S.
has had a fantastic deal from the world trading economy and lots of opportunities to access markets and to get particularly our services and to get Hollywood movies in and get protection of intellectual property and get patent protection.
The Americans have got everything they wanted, basically.
Now he wants reciprocity in a literal sense on tariffs.
Sure, there are some adjustments to be made there.
And you could use reciprocity, by the way, as the basis to lower tariffs on all sides, which wouldn't end up so badly.
If he, however, is taking it in the direction of just big barriers and he thinks that having these tariff walls is a way to develop or redevelop American manufacturing and manufacturing jobs, that is a different world.
on that idea of developing manufacturing jobs again even if you were to put tariffs on lots of countries like china you move them even to countries like india other possible big manufacturing centers is that going to bring the jobs back to the us probably not i mean if you look at the investments that he was flagging last night he talked about apple he talked about taiwan semiconductor uh he mentioned a big investment that oracle is is funding those are big money investments, but they're not big employment investments.
There's going to be a lot of automation in those factories and their data centers and so on.
He's also going to put tariffs on copper and steel and aluminum and other inputs into industry.
And those might generate some jobs, for example, in the steel sector, but they're also going to hurt jobs and limit employment growth in other parts of the economy.
And we're already seeing there's a GDP Now number that's put out by Atlanta Fed that just completely fell off a cliff based on two data releases, it's possible that we're already seeing some serious negative repercussions.
OK, the big question, where are we going to be with this in six months time?
It's very difficult to predict, but there seems to be shivers going through the global economy because of what may happen.
Do you think it will happen?
Honestly, I have no idea.
And that's part of the problem, isn't it?
When everyone is uncertain, you sort of hesitate.
You don't want to spend.
You think, well, I'm not going to take that vacation.
I'm not going to buy the car or even the book that I wanted to buy because I want to save those dollars.
I think that hesitation is something that Americans are feeling and people around the world are feeling.
What kind of retaliation is there going to be on the tariff side?
What kind of escalation?
What are the political implications and knock -on effects in Mexico or Canada or anywhere else?
This is unknown territory.
Mr. Trump has really turn the apple cart upside down and we have no idea where those apples are going.
No, no idea where those apples are going at the moment.
But stay with us on World Business Report over the next few months and we'll try and tell you where they're going to land.
Now, let's talk about Panama, because U .S.
investment giant BlackRock has struck a $23 billion deal to acquire ports along the Panama Canal, just as Donald Trump told Congress that his administration would seek to reclaim the canal if he returned to office.
They have bought it from a Hong Kong firm.
Let us get reaction to this, Rodolfo Sabongé is former Executive Vice President of Planning and Business Development at the Panama Canal.
Rodolfo, thanks so much for joining us here on World Business Report.
Were you surprised that the Hong Kong company sold this, have sold to BlackRock because they'd been under a lot of pressure, hadn't they?
Well, first of all, let me clarify that nobody's really talking about buying ports.
I mean, what BlackRock bought was actually a company that runs sports.
And in particular in Panama, they have a concession.
So what they bought is the company that has a concession.
That is a very different...
It is, it is, it is.
But that came following pressure, didn't it, from the Trump administration and the wider comments that he has talked about the Panama Canal, the control of the Chinese over the Panama Canal.
Do you think that following this deal, those concerns of him will go away?
Of course not. I really don't think that that is the issue.
I don't think that that was ever the issue.
I mean, it was quite evident from the purchase of Hutchison that it was not really run by Chinese.
I mean, it was really totally a commercial deal.
They run about 50 different terminals worldwide.
Panamas are only two, and they bought the whole thing.
They bought the whole company.
They didn't only buy Panamas.
Yeah, they bought a whole lot more with that.
But if this doesn't go away, and you know the Panama Canal very well, What will make Donald Trump change his mind on what's happening within the Panama Canal?
First of all, let me go back to his initial statements.
I really think that there is a problem with some of the things and understanding of supply chain and how this thing works.
You remember the first speech he made.
It was about shipping lines, American shipping lines.
There aren't such American shipping lines.
There are very few, and they only run in the Caribbean with very small vessels.
He was really talking about American shippers.
And that's quite a big difference between shipping lines and shippers.
And then when they went to the hearing, I don't know if you recall, but who did they have in that hearing at the Senate?
They had the World Shipping Council.
Who is the World Shipping Council?
It's actually the shipping lines of the whole world.
That's the lobbyist that works in Washington, you know, on behalf of shipping lines.
So when they're talking about increasing costs, they're not really increasing costs because of the Panama Canal.
You know, there is a whole missing understanding of how this thing works.
I'm sure a lot of people may agree with you on that.
But the simple fact is that the Panama Canal seems to be in the sights of the U .S.
president, rightly or wrongly, according to what you're saying.
How does Panama get it out of its size?
Well, the first thing that I'd like to point out from yesterday's speech, I don't know if you remember, that he told Rubio that that was his responsibility, OK, to get the Panama Canal back.
I mean, there is no...
That is the US Secretary of State, Marco Rubio.
Right. There is no legal way to do that.
I mean, the only way to get the Panama Canal back is through a military intervention.
And you know as well as I do that Donald Trump uses that sort of language to create pressure to get a deal.
So what sort of deal does he want from Panama here?
Well, for sure. And this is something that I also wanted to say about this BlackRock procurement.
You know, who benefits from this?
Because in reality, when you look at it, they are not really terminal operators.
The terminal operators here is still, which is a Switzerland company.
So, and in fact, they now, because of this purchase, double their capacity worldwide.
You know, the mere fact of that tells you that costs are going to increase worldwide.
When you make that kind of investment, you need to get a return.
Well, that is certainly the case.
It's been really good talking to you.
We look forward to talking to you again as this story continues to unfold.
Susan, the Panama Canal is an important part of the global supply chain, as Rodolfo said, that it doesn't seem that Donald Trump is going to move his focus away from it, in spite of what we're hearing from Panama, as we just said there.
That's right. This is clearly something that President Trump has set his sights on.
It's much like a discussion of Greenland.
It's something that's a global topic he wants to keep putting out there.
He is going to keep putting pressure on.
There isn't easy legal recourse to absorb the Panama Canal back into a US -owned entity, but there's certainly political pressure that can be applied, and that is Donald Trump style.
So keeping it in the news, keeping that headline out that he wants it, and then certainly seeing deals like this happen also puts it in the news.
And it's rather nice now that BlackRock, a US -owned company, is associated with the Panama Canal, having that U .S.
base, helping President Trump's rhetoric.
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You're with World Business Report from the BBC World Service.
Let's have a listen to this.
It's your uncle, Sam.
And this is the great America.
It's less than a month ago that we watched Kendrick Lamar headline at this year's Super Bowl halftime show in New Orleans.
His performance drew in lots of people.
Well, that might be the reason why World Cup organisers have announced that the 2026 final will stage a Super Bowl style halftime show for the first time, with Coldplay helping to pick a list of artists to perform.
Let's talk now to Sophie Williams, music journalist and staff writer at Billboard UK.
For Kendrick, it was a huge, huge moment.
his Super Bowl show has already become the most watched in history, surpassing 150 million views on YouTube alone.
In the past couple of weeks, he scored a number one hit in the UK and the US with Not Like Us, which originally came out last May has now skyrocketed to the top of the charts.
It was good for Kendrick Lamar.
He was obviously a big star already.
Is it good for the sporting event?
Is it good for the Super Bowl?
I presume that, you know, before he comes on to perform, those ad rates could get a little bit more expensive.
we've seen in reports over the years that you know the viewership skyrockets just before the show starts and then a lot of them end up saying on to watch the rest of the show i think having a superstar performer someone like kendrick lamar can really drum up a lot of anticipation before the event maybe encourage people who are not sporting fans to tune in just for the fact of seeing their favorite artists and get an idea of how this whole show plays out so no surprise then that the world cup which is probably the biggest sporting event on this planet at the World Cup final has decided to go down
the path of the Super Bowl?
I think it's really interesting.
And the fact that they've brought the biggest band in the world, Coldplay on board shows just how big they want this to become.
I think it's interesting that they stated that Coldplay are going to be producing the show at the World Cup next year rather than performing themselves.
That was a bit of a surprise, wasn't it?
That Coldplay will be producing it.
Surely Chris Meyer might get a bit tempted to say, ooh, maybe I'll just pop myself on stage as well Well, because they are such a huge band, it would be a good way to get this underway, wouldn't it?
Absolutely. And they've toured so extensively in recent years as well.
They even played India last month.
They just have a huge impact on global music.
We're seeing music and sport.
They're two huge businesses, aren't they?
Getting closer and closer together, aren't we?
Do you think we're going to see more collaborations like this?
We've seen the NFL has come to the UK for games in recent years.
Those have included halftime shows.
Youngblood played one of those a couple of years ago I think it's a really great way just to give artists a bigger platform on the global stage at a time where it's harder than ever to shift records at a time where it's harder to sell tickets due to the cost of living crisis and the cost of touring I think Coldplay can set a really good example here as well obviously they're really proud of what they do in terms of making their touring sustainable and eco -friendly it'll be interesting to see as producers whether they sort of bring that same ethos to the World Cup and how that will impact the show
that they're putting together behind the scenes.
Sophie Williams, a music journalist and staff writer at Billboard UK.
We will be back with you with Business Matters at 0100 GMT.
We're going to have guests in Silicon Valley in the US and we're also going to be taking a close look at what's happening inside one of South Asia's biggest countries, Bangladesh, and its economy there.
The challenge is that it is still continuing to face.
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