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This is Andrew Peach with World Business Report.
Today, a 15% US tariff for European cars and pharmaceuticals is confirmed.
We'll have the details in a moment. The benefits of a single market for goods and services between African countries.
We trade more with the rest of the world than intra-Africa.
So the idea of a free trade area creating a single market in Africa is to reverse all of that.
And concern about forming romantic relationships with chatbots.
These systems are built to maximize engagement.
They keep users hooked into the conversation by being overly agreeable, by being friendly.
Good to have you with us today. We're going to start the programme with the details of that tentative trade deal between the EU and the US, which have been... firmed up in the last few hours.
Here's the EU Trade Commissioner, Maros Sefcovic.
15% all-inclusive tariff cap for the European Union.
This is the most favorable trade deal the U.S. has extended to any partner.
A wide range of sectors, including strategic industries such as cars, pharmaceuticals, semiconductors and lumber, will benefit from this cap.
Our North America business correspondent, Michelle Flurry, with me live from New York.
So we've got quite a bit of detail actually set out about what the arrangements are going to be.
Yeah, I mean, this is significant because if you recall, European Commission President Ursula von der Leyen... met with Donald Trump at the Turnberry Golf Resort in Scotland back in July.
There was sort of a handshake agreement back then, but then The account of the two leaders of the deal differed and so there was some kind of concern that began to creep in and this lifts that cloud.
For example, drug producers in Europe, there was a fear they might be priced out of the US market.
This shows that, no, that's not the case.
They face 15%. In the case of the car industry, obviously, when you've got huge producers like VW and Mercedes, there was also concern there.
Now, we know that in most cases, the tariffs will go down to 15% from 27.5%. but only, it's worth pointing out, after the EU introduces legislation to eliminate tariffs on all US industrial and agricultural goods.
So, you know, there is some clarity and I think that will be welcomed by businesses.
But of course, market access was a key concern.
And so although not everyone will be happy. this does provide or remove some of the uncertainty.
The EU wanted something on wine which it didn't get.
I guess overall you'd say the US is doing better out of this, but for the EU it could have been worse.
And that has been the theme, I think, with a lot of these negotiations is that the US has come in and used kind of the weight. of the American consumer to sort of heat pressure on the governments they were negotiating with.
The question is, in the short term, it does look like wins for the United States if you want to see it in those terms.
But in the long term, there are questions.
Will the US lose out by sort of removing itself from global trade as it has existed before? for the last several decades and I think that obviously is something that will play out over years and years.
But in terms of quick wins, it does seem like the US has come out better in most of these negotiations.
Now, also happening today, Michelle, a Jackson Hole in Wyoming, a meeting.
Who's there and why do we need to know about it?
Yeah. So this is a huge conflab of central bankers.
Recently, you may recall there was that one organized by the European Central Bank in Sintra in Portugal.
Well, this is the American version. It takes place in Jackson Hole.
It is a huge deal for kind of the financial world who are kind of wondering what is happening with interest rates in America.
And the chair of the Federal Reserve, Jay Powell, will give a closely watched important speech on Friday.
Important because... Not least, it is his last as Fed chair.
His term ends next year. So this is, in some ways, you could argue legacy defining, but also it's...
But the key question that Donald Trump certainly has been pressuring and hammering him on is when will the Fed lower rates?
The markets will be looking for clues on that.
Michelle in New York, thank you very much indeed.
Now live to Emma Wall, Head of Platform Investments at Hargreaves Lansdowne, who's with us on World Business Report.
I guess a lot of discussions at Jackson Hall are pretty technical, but this whole business of Jay Powell, will he lower rates and who replaces him, that's big news for the market.
It is indeed, as we have seen from the communication methods of the current government.
President of the United States, by which I mean social media, any kind of pressure from the White House, even though actually legally it's not his position to force people J-PAL to go does cause market jitters and actually the fixed income to bond market over the last 12 months has been really volatile, far more than we would expect from asset class that we typically think of as sort of safer than equities or stocks.
So the rumor mill will be rife. What I would say is even if Jay Powell is replaced or when he is because he is due to be replaced next year.
This is a very democratic process and it's a data-driven process as well.
So just because J-PAL does get replaced with somebody who perhaps is more sympathetic to Donald Trump's views doesn't necessarily mean we'll get aggressive and successive interest rate cuts as well.
So it is important, but it's not everything.
China is threatening to boycott Nvidia today.
Why? Well, it's because China is being told it might not be able to get the very best chips from Nvidia.
What I think is really interesting here is how actually, again, you know, President Trump and the US government is getting involved in, you know, In technology stocks, in AI stocks, we saw earlier this week the potential for the US government to be taking a stake in. in Intel.
And the way that we think about this when we think about emerging markets, you know, companies which are listed in China, for example, as an analyst, we don't think it's good when a government gets involved in private markets.
And that's private companies. And that's typically one of the reasons why Chinese stocks are rated at lower governance levels than, say, the US stocks.
So the US government's starting to get involved in private markets and in tech stocks and in the huge business of AI and chips. is something that's concerning not just for China, understandably, because they want the best of the best, but also really actually for the free market in general.
Stay with us Emma. Now this month on World Business Report we are taking a closer look at the economic future of Africa.
Tariff is a word we've heard plenty of. One issue is that the use of tariffs and other trade barriers that prevent countries in Africa trading with each other as much as they'd like to.
The African Continental Free Trade Area is a continent wide free trade agreement signed by 49 of the 54 countries on the continent. aiming to create a single market for goods and services in Africa, boosting trade and economic integration.
I've been talking to its Secretary General, Wamkele Mene.
The problems are beyond the border measures, the non-tariff barriers that have existed since the end of colonialism. that have actually led to the fragmentation of the African market.
This is evident in the lack of integration in the movement of persons, for example.
We have fragmentation in terms of our infrastructure that is not appropriately interoperable from trade corridor to trade corridor to support intra-Africa trade. we trade more with the rest of the world than intra-Africa.
So the idea of a free trade area creating a single market in Africa is to reverse all of that.
Big things that's happening over the next 15, 25 years is an enormous explosion in the population.
African countries which will present all kinds of challenges but also offer all sorts of economic opportunities.
Just to underscore the point, half of the population of Liberia is below the age of 30.
This is replicated across many African countries, probably not to the same degree, but certainly the face of the African continent are young people.
By the year 2050, one in four people in the world will be African.
And so this has advantages, of course, as some refer to it as the youth dividend, but it also has risks.
If we do not move fast enough for our economy to keep pace with the population growth of Africa, to ensure that trade contributes to Africa's overall economic competitiveness and economic activity. to create jobs, innovation.
We are already seeing very positive signs, by the way, in the digital economy, for example, agri-tech. in health tech, we have got to do more.
And that is why we have the protocol on women and youth in trade, as well as a protocol on digital trade.
Are you concerned about the uncertainty of African countries trading with the US in the immediate or even long-term future?
I am deeply concerned about the trade measures that have been announced by the United States.
Countries that were over the last 25 years beneficiaries of AGOA overnight have lost market access into the U.S., And if you take a country like Lesotho, for example, 54% tariffs certainly is going to have an immediate devastating impact on jobs in Lesotho.
However, what this does is to compel us to reflect on what is it that we as Africans have got to do to overcome our own challenges.
We've got to build a domestic market that will enable countries such as Lesotho or Angola or Madagascar or South Africa to have a domestic market in the AFCFTA, a market of 1.4 billion people with a combined GDP of $3.4 trillion.
Is it going to happen overnight? Absolutely not.
It can take up to 10 years to build supply chain networks, to develop market know-how, to ensure that you meet the standards of access into the new market.
So I think even in the middle, of this crisis, there is an opportunity, and that opportunity is for us to pivot, build a domestic market so that those goods that were going to the United States can find market access here in Africa.
Is it a challenge for you to persuade African governments that African countries are not in competition with each other?
I think the global externalities actually underscore the point. that if we do not work together, if we don't build a domestic market in Africa, then we will forever be on the periphery of the global economy.
I was thinking about protectionist measures in sectors like agriculture, which are so hardwired into the way...
You're trying to unpick all of that thinking, aren't you? one of the highest tariffs amongst African countries is on agricultural products, almost 45%.
And yet we were facing and continue, I would argue, to face a food insecurity crisis.
Africa is a net food importer. Over $50 billion of maize, rice, soya that we import. from the rest of the world.
But if you look at countries such as Zimbabwe, Ethiopia, Malawi, Uganda, countries that actually do have By way of example, Zimbabwe has over 200,000 metric tons of grains. per year.
Similarly, Ethiopia year on year over the last few years has had a surplus on maize.
Now, what prohibits Africa's ability to feed herself are the trade rules that are very, very restrictive. and they're beyond the border measures that restrict the ability to trade in basic agricultural products.
This is the number one challenge that we must confront in respect of agricultural production and value addition of agricultural products That was Juan Calimeno from the African Continental Free Trade Area.
Now, one country in Africa facing significant economic challenges is Mauritania.
This state in the northwest, rich in mineral resources, especially iron and ore.
Also one of the poorest countries in the world, though, with more than half the population in poverty.
One way the government is using to try and rectify that is by launching a stock exchange.
But as the governor of the Central Bank of Mauritania...
Dr Mohamed Lamine Debbie has been telling me there are challenges with that.
This project has been in preparation for more than decades. but it was mostly on hold.
When I was appointed from three years ago, I started these projects.
It took me two years to set the legal framework.
And we launched the IT platform with LSEG, with the London Stock Exchange.
And now we are at some weeks from the constitution of the stock market society.
And what are you hoping to achieve for Mauritania by having this partnership with the stock exchange in Casablanca?
So as you know, Casablanca has its stock market since almost a century.
So we need the experience. They have a school for stock market techniques.
So we will send to them some of our stuff to be trained.
And also, we use the same electronic platform.
So we have the benefit to start lately. So we benefit from the advances in electronic platforms.
How many companies will be listed? So we expect to introduce...
The first IPO, around 11 to 20 companies.
And do you have an idea as to how big you want it to become?
Is there a number of companies that you think would be ideal?
So I think the study showed that it's developing day after day.
The initial study expects around 50 companies.
And what will the benefits be to Mauritania, do you think, of having it? many benefits we expect to deepen the financial markets And we expect also to draw capital inflows from neighbour countries and then the other world.
There's a lot of focus at the moment about trying to foster more trade between African nations as the economies of...
African nations grow with the population growth we're expecting in the next 20, 30 years.
Yes, we think that there are many opportunities in Africa and in our neighbours who are Mauritania is surrounded by some optimal currency zones, the zone of the franc CFA.
And we have also many regional organizations. organizations of trade and we now experience many platforms of cross-border trades.
That was Dr Mohamed Lamine Debbie, the Governor of the Central Bank of Mauritania.
And this is World Business Report with Andrew Peach from the BBC World Service.
This is Jacob Goldstein from What's Your Problem?
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Sofa start at just $6.99, making it the perfect time to upgrade your space.
Anibase pet-friendly, stain-resistant, and interchangeable slipcovers are made with high-performance fabric built for real life.
You'll love the cloud-like comfort of hypoallergenic high-resilience foam that never needs fluffing.
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The effect of artificial intelligence on jobs and productivity has been talked about at length, but what is the effect on our minds?
Mustafa Suleiman, head of AI at Microsoft, says he's losing sleep over the impact AI is having on our well-being. and increasing reports of what he calls AI psychosis.
Our technology editor Zoe Kleinman explained what's keeping Mr. Solomon awake at night.
So he's worried about the impact on society of seemingly conscious AI.
He goes as far as to say as we shouldn't do it.
AI should never flag itself as being conscious.
The tech companies shouldn't talk about it as being conscious or being close to consciousness.
But of course they do because it's such an engaging opportunity. isn't it?
And he believes that basically it's going to come and it's how we deal with it.
We're already seeing arising what's being called AI psychosis.
Now, this is not a clinical term, but it's being used to describe people who use chatbots and lose touch with reality.
Let me give you some examples. I'm getting a steady stream of messages from people who genuinely believe that, for example, they're the only person in the world that a particular chatbot has fallen in love with.
Or they've unlocked a secret human inside one.
Or really distressingly, sometimes they think it's trying to hurt them.
They think it's mocking them or deliberately trying to harm them.
They're all very different, the stories that they tell.
But the one thing they have in common is the genuine conviction that it's true, that it's happening.
I've been talking to Virginia Dignam, Professor in Responsible Artificial Intelligence and Director of the AI Policy Lab. at Umeå University in Sweden although today she's at an AI conference in Rwanda.
I do share these concerns, but I also am increasingly concerned about on which people are talking about the seemingly consciousness of AI, because that is somehow giving an excuse. to a misunderstanding of where this psychosis might come from.
It's not from the techniques. And like Professor Lehmann has said in his interview as well, There is no evidence or any conscience in these systems, but the more we talk also in interviews like this about the consciousness of AI, the more we are creating that impression on people.
That's interesting. AI itself doesn't have that.
So the story today is about the relationships that some humans are forming with it. what appear like real friendships, even falling in love with it.
Yes, and that worries me a lot. And that is, I believe... the result of very deliberate choices by companies, by developers, by people who are behind those chatbots, those those apps and so on to create that type of interaction.
We all know that these systems are built to maximize engagement like any social media type of system.
They keep users hooked into the conversation by being overly agreeable, by being flattering, by being reaffirming.
So creating as a kind of, I would say, a small dopamine rush because we feel appreciated and validated.
And that is not something that comes automatic in an AI system. is something that is built on it.
I get the general principle that people behind any algorithm want to make it as engaging as possible and keep people...
There wouldn't be any specific advantage that I can think of in this effect, though, would there, in making people fall in love with a chatbot?
What's the point? What is the point? One is to probably then possibly engaging then on, I don't know, some fraudulent monetary transactions.
If you are in love with someone, you might feel inclined to give whatever money that one might need.
And we know that those things are happening already.
I don't think that that is directly the reason of the very large corporations, but there is also... both need for the continuity of engagement to show how broad and how big their engagement basis is that translates directly in economic benefits.
And also, for a large part, or for some part, I think also the ego of this company is to show that, look, all these people are keeping 24 hours a day working. with our systems.
We're focusing all this month on the economic future of Africa.
You're at an AI conference in Rwanda today.
What's being talked about there? Yes, so this is a very large grassroot event in Africa, the deep learning in DABA.
It brings together all African nations. one week a year around the workshops, tutorials, courses, presentations from students, from entrepreneurs, from researchers across Africa.
It is also very interesting to see that a lot of what they are doing with AI
First, it by necessity is compute much less data than what we claim that we need to do. in order to improve AI, but they are improving these systems in very innovative and original ways That's Professor Virginia Dignam.
Emma Wall from Hargreaves Lansdowne is still with us. with me and how important will AI be in driving some of these economic developments in African countries we've been talking about, Emma?
I mean, what's really interesting about the AI revolution for emerging markets is not that similar to when we saw the take up of mobile phones.
I mean, the difference between emerging markets such as Africa versus kind of a developed market is quite often there is no legacy tech.
There's no legacy system. So while the developed world is going through a process where it has to digitize existing processes and come off legacy technology.
Actually, nations like Africa kind of leapfrog that entire middle section and go straight to the most dynamic, most innovative, newest technologies that AI allows.
Also, if you're thinking about the other end of the scale in terms of inputs, A number of the rare earth metals that actually power the chips that deliver AI are to be found in Africa.
Now, most of them are owned by China, but again, that is very much emerging market story.
Emma, thank you. Now, in less than a week, Indian exports to the US will get steep tariffs of 5%.
Trade talks are stalled. So garment manufacturers, diamond workshops, all panicking as US buyers... but buying on pause.
Here's my colleague Archana Shukla. What you hear is the whirs and hums of sewing machines.
I'm in a garment factory in the small town of Tirupur in southern India.
This town is an export powerhouse. It makes up for over a third of India's $16 billion government exports.
And for them, US is their biggest market.
So this town matters. But the Trump administration tariffs has had businesses here worried.
At the moment, everything is stuck up. Siva Subramaniam's U.S. clients, some of the big retail chains, have halted orders, fearing a 50% tariff, forcing him to cut production by half.
These products are for the Indian market and the European market.
But the US you are not making right now?
Not making right now. Margins here are razor thin.
Even at the current 25% tariff, the US market is slipping away.
Siva walked me over to show piles of finished garments, unsold and gathering dust.
It's near about 1.2 million pieces it's under hold.
A 25% tariff was already tough. Doubling it as a penalty for buying Russian oil is crushing.
A few metres away from that factory I've come to another one.
And it's much quieter here. Barely any work going on.
Machines have been covered up, they're lying idle, and many boxes have yet not been opened.
There are piles of these cloth samples still on the shelves.
US buyers have paused orders completely amidst the uncertainty on tariffs.
And these are clear signs of the effects these tariffs are already having. having on ground.
Weeks ago, these factories were scaling up production.
India was seen among the biggest beneficiaries of Trump's trade policies.
The textile industry of India is around 33 billion.
N. Therukumar, Secretary General of Tirupur's Exporters Association. tells me businesses now risk being undercut by rival Asian countries. not even viable for the retailers and down in the West in the US to absorb that So if this tariff issue of 50% is not resolved, definitely the US business will move out of India.
What's at stake is India's manufacturing ambitions and millions of jobs.
And it isn't just textiles. It's furniture, shrimps, it's diamonds.
Industries where the U.S. buys half, sometimes all of what's made here.
Hundreds of miles away at a busy workshop in Mumbai, diamonds catch the light as workers polish and set them into gold rings and bangles.
They are racing to get shipments out before the tariffs kick in.
India's $10 billion gem trade with the US is on the line, and with it, thousands of jobs.
Substantial amount of working capital is locked in.
Adil Kotwal, a second-generation jeweler and owner of Creation Jewelry, sells 70% of his designs to the U.S. this is peak period of our time you know we make money in September October in these two months I would imagine at least 3 to 4 billion dollars of exports will take place, which will not.
So that's a big loss. It takes years to build in a certain market.
So it's not that from USA you suddenly go to Europe or Australia and start selling there.
It just doesn't work that way. In a speech on India...
Independence Day last week, Prime Minister Narendra Modi called for self-reliance, even as New Delhi races to find a diplomatic fix.
But back in the factories, exporters are hoping for a deal that secures the future of their factories and the jobs of thousands working here. concerns in India about the additional tariffs being introduced by the US.
And there's more about that and also the agreement with the EU at bbc.com slash news.
Thank you for listening.
