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Hello, and welcome to World Business Report from the BBC World Service.
I'm Sam Fenwick. So yesterday, US President Donald Trump declared it Liberation Day, unveiling sweeping tariffs designed to shake up global trade and in his words, make America great again.
Our country and its taxpayers have been ripped off for more than 50 years.
But it is not going to happen anymore, it's not going to happen.
So what about today?
Maybe it's reflection day, as world leaders, businesses and consumers start to grapple with what these changes really mean.
Global markets have already started reacting with volatility in stocks, currency shifts and businesses weighing the costs of these tariffs.
Today on World Business Report we will unpack it all, the winners, the losers and where this could all lead.
First of all, let's kick things off with how the world has been reacting.
Tonight the trade war is on from the Rose Garden, the president ratcheting up a range of tariffs against trade friends and foes alike.
China 67%, so we're going to be charging a discounted reciprocal tariff of 34%.
China has repeatedly emphasised that there are no winners in trade wars or tariff wars and protectionism offers no way out.
European Union, they're very tough, very, very tough traders.
39%, we're going to charge them 20%.
So we're charging them essentially half.
President Trump's announcement of universal tariffs is a major blow to the world economy.
Japan, 46%. They would charge us 46 % and much higher for certain items like cars.
We're charging them 24%.
South Africa now faces a 30 percent tariff on any goods sent to the United States.
Indonesia, Malaysia, Cambodia.
Oh, look at Cambodia.
Ninety -seven percent.
We're going to bring it down to forty.
They made a fortune with the United States of America.
Tariff on India has been set at 27 percent, although no one is quite sure what the calculation and rationale behind the tariff numbers are.
Well US tariffs on China have now reached 54%.
This includes a 20 % tariff introduced earlier by the Trump administration to curb the flow of fentanyl and an additional 34 % imposed yesterday.
The Chinese government has described the action as unilateral bullying and said that it will respond with countermeasures.
Joining us now is Andy Gee an independent economist, he from Shanghai.
He was previously at Morgan Stanley and the World Bank and we're also joined by Wendy Cutler, Vice President of the Asia Society Policy Institute and a former US diplomat.
Thank you both for joining us.
Wendy first of all, given the scale of these tariffs, what diplomatic actions does China have beyond any further economic retaliation?
Well look, China is going to respond.
I think it's going to be cautious and will be proportional and will not limit its response just to tariffs.
It's going to continue to use the arsenal of weapons that it's developed since Trump 1 .0 to hit US companies, to restrict exports of critical minerals and to continue to impose tariffs.
At the same time, it's a bit intriguing because I think there is interest, on behalf of Beijing and Washington, to enter into some new trade negotiation.
But my sense is, with each day, as we keep adding more and more tariffs and adding more barriers and more friction to the relationship, any trade negotiation is just going to become more and more difficult.
It makes it harder to get around the table.
Might US businesses who rely on Chinese imports business, be able to somehow get them around the table get business leaders and government leaders around the table?
Well, you know, it's unclear the the degree of influence that us businesses have on this front, the Trump team, you know, told our businesses during the Trump 1 .0, stop depending on China.
And now I think there's a view of many in the administration, that businesses have had eight years to diversify their imports.
And so if they haven't done it, they need do it now, so I don't think they're going to be terribly sympathetic to calls from industry to be more conciliatory towards China.
Andy, how might you see China responding to this?
They've already sort of used some legal measures against specific companies, haven't they?
Well, I think that China has launched its end on monopoly investigation into Google and Microsoft. I think the other easy measures would be to suspend gambling licenses for US companies like SANS and WING in Macau and they certainly make a lot more money than Chinese companies do in the United States.
And the big one is Apple has I think around 100 billion dollars in sales and probably over half its profit.
and Apple alone makes more profit in China than all the Chinese companies do in the United States.
The Chinese government referred to it earlier today as unilateral bullying.
How angry is the government?
How angry are Beijing at this?
Or were they possibly expecting it to happen?
Well, I think that China is a big country, it is a rational country.
Doesn't lash out. So every response needs to be measured and not kind of try to sustain global trade to the maximum extent possible.
China is the biggest trading economy in the world.
It it has a responsibility to sustain the global trading system.
So I think that the US doesn't like global trade anymore.
So it's becoming disruptive.
I think everybody has to adapt to that.
I think that the Chinese government understands it.
But as far as, obviously there are things that China needs to take off the table that China allowed the US companies to make very big profits in China.
That is kind of a critical core for exporting super goods to the United States or low margin super goods to the United States If the US cuts off the the trade side There's no point for China to let companies u .s. Companies to make a lot of money in China and doesn't make sense anymore Do you think we've reached a point now where China is actually going to forge greater Relations with other nations around the world and who might they be?
Well, China and South Korea and Japan just had a meeting coordinating their response to these terrible challenges.
I think they're talking about a free trade agreement again.
They've been talking for two decades.
I don't know how far it ought to go.
I think that the issue is that Korea and Japan or Europe are not reliable trading partners.
In the end they depend on the United States for security aspects.
Let me bring in Wendy.
Where do you see relations with China now going?
Who are they going to be forging greater relations with over the next few years as these tariffs take hold?
Well, just to build on, there have been meetings in the past week with the trade ministers of Japan, Korea and China.
But I think efforts for economic cooperation and prospects for concluding an FTA are somewhat limited because both Japan and Korea have suffered from economic coercion from China and are also receiving a lot of dump goods from China now given its industrial overcapacity.
Xi Jinping is going to be visiting Southeast Asia, a few countries there, I think next week or in the coming days.
And I think that also is a very significant trip.
I think he's going to try and solidify economic relations with ASEAN.
And let's keep in mind as your clip earlier showed, some of the ASEAN countries got the biggest tariff increases of any countries on that list, including Cambodia and Vietnam.
Wendy Cutler, Andy G, thank you both very much. We will leave it there.
Well, markets have been hit by this, as you would expect.
Global stocks took a hit, while government bonds surged on Thursday as the sweeping tariffs pushed the world closer to the brink of a full -blown trade war.
Let's have a quick chat with Ross Mold.
He's joining us from AJ Bell.
we were having a look at the markets just before we came on air, Russ, how are they looking?
The US stock market dropped sharply on opening.
Yeah, ironically, the US stock market, the representative in some ways of the economy that President Trump is trying to help, is the stock market that's probably doing worst of all right now.
UK market down one, one and a half percent, Asian markets down between one and three percent, Europe down between two and three percent, the US down more.
And you look at the US, the stocks that are getting the biggest hits are those companies that sourced all the material from Asia.
So sports showmakers like Nike.
Nike down 11%, we were looking just before we came on air.
Retailers, technology firms like HP, HP enterprises, Dell Computer, will get a lot of silicon chips and materials from there and retailers because of fee is over worries about the wider US economy and how growth could be affected.
Yeah. So looking across them, Target were down, Amazon down, as we said, Nike down and Apple also down.
Looking at Germany and France's main indices, they fell by two and a half percent and three percent, whereas the FTSE 100 in London down by about one point five percent.
So not so bad in the UK, is that because they were only hit with a lower tariff than the rest of the European trading bloc?
I think that's a good explanation, as good explanation as any, and the US there to show that America has a trade surplus with the UK, even if the British ones argue it's the other way around.
But the UK is not as in the firing line as other countries are because of that fairly balanced trade relationship.
In addition, the UK stock market is full of a lot of very stodgy rather boring companies in some ways like utilities, tobacco companies, where demand is relatively insensitive to the economic cycles.
So, if economy goes up or down, people still use water, they still use power, they still, if they want to smoke tobacco.
And so those share prices are actually holding up quite well today.
Russ Moll, thank you very much for that explanation and coming on the programme.
You are listening to World Business Report from the BBC World Service with me, Sam Fenwick.
Asking the right questions can greatly impact your future, especially when it comes to your finances.
So if you're looking for a financial advisor you can trust, Certified Financial planner professionals are committed to acting in your best interest. That's why it's gotta be a CFP!
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So while much of the focus has been on China, some of the world's poorest nations are also feeling the impact of those sweeping US tariffs.
Countries like Cambodia, Laos, Madagascar Myanmar now face steep new duties ranging from 37 % to 50 % and these increases threaten industries like garment manufacturing and agriculture.
Ahmed Hamza is the CEO and founder of olive flow it's an olive oil export company in Tunisia now a country facing 28 % on tariffs a 28 % tariff on all its exports to us.
The US composes around 20 % of our exports and we mainly export to to American clients interested both in private label and bulk olive oil.
This year was the plan for us to have a stock available at the US as we agreed with an American distributor and push forward the sales of our own brand.
The US is a major importer of Tunisian olive oil, and Tunisia generally is a significant olive oil exporter with more than 80 % exported in bulk and 20 % in brands.
I think this new tariff significantly increases the cost of Tunisian olive oil in the US, and is severely threatening the revenues, it is definitely a major setback.
One spends years and a lot of money traveling to shows, traveling to different countries to build reputation, to build connections.
And then this happens out of the blue and then it messes everything up like, today afternoon, I have a few calls with my buyers in the US to see how we can mitigate this.
Major textile producer Bangladesh has been slapped with a 37 per cent tariff.
Here's Fazul Haq, the Managing Director of one of the country's biggest clothing manufacturing companies Plummy Fashions.
He says though that he's remaining calm.
They might not have too many places to go when you see China even has the bigger structure.
Vietnam and Cambodia also have the bigger structure.
but few other countries are being the lesser.
Like India in particular, then Pakistan and Indonesia or other competitors have the lesser duty structure than Bangladesh.
So there is a challenge.
There is a possibility, not immediately but in short term because India in particular, their supply rate is not as big as Bangladesh.
In case of the low -price government side, which normally we export in a big volume to US market, the buyers, the retailers would not increase the end price to make sure they don't buy less.
What they will do most likely they will absorb certain percentage of the taxes within themselves, I think, minimizing their cost, minimizing their profit.
India's textile industry is facing a 27 % tariff on exports to the U .S. the challenge for businesses operating on really tight margins.
Let's talk now to Panchkad Kath Agraal.
He is the chief executive of No Name Apparel.
He's in India now for us.
He makes clothing from sustainable fabrics like organic cotton and hemp.
So how much do you currently export to the US?
Thank you for having me on this call.
We currently export almost 50 % of what we do to the US with the balance going to Europe and the UK.
OK, so how do you expect these tariffs to impact the business?
Obviously, we will have a short term impact, which we are obviously seeing almost with immediate effect.
But in the long term, we remain optimistic and positive that things will pan out all right.
Because I suppose if you look at your kind of closest rival, Bangladesh, they are actually having higher tariffs than you are, 10 % more for Bangladesh exports.
So, you could, in fact, make up some market share here, and possibly grow your business?
Possibly. There was a long time when Bangladesh, Vietnam and some other countries had free trade agreements with the US where they enjoyed a 0 % custom duty, whereas we were already living with a 16 % thereabouts.
So for us, the increase is not so much of a damage as it is kind of levelling the playing field for us.
Therefore, we don't take it too negatively.
Do you know from the people that you supply what might be the outcome?
Will they expect you to reduce your prices or will they pass on the price – the extra 27 % – to US consumers?
So, it's not an extra 27%.
We already had a custom duty of approximately 16 % on various categories.
So it's an increment of just about 10 % and we are still to figure out but there is some give and take here.
So something they will pass on something we will absorb.
I don't think it's going to be a major difference for anybody at the end.
So still some negotiations to be done.
Well, thank you very much for joining us today.
Panakaj Agrawal there from No Name Apparel but there are concerns that the tariffs could put pressure on US households if businesses do pass on the extra costs to consumers.
So everyday essentials from electronics to food could see significant price hikes.
Joining us now is Kurt Bardella, former adviser to congressional Republicans.
Now, the Republican Party traditionally has championed anti -tax and anti -tariff policies.
So how are grassroots members, those people that you're speaking to, reacting to the shift in policy when it comes to tariffs and taxes?
Yeah, this is a complete 180 of what traditional Republican orthodoxy has been for the Republican party.
And yeah, there are some true, quote, conservatives who have expressed that this is economically risky.
You know, Trump's former White House chief of staff Mick Mulvaney said on News Nation on Wednesday that the administration may be over promising on terrorists and this could create a lot of economic risk.
I think a lot of Republicans behind the scenes and behind closed doors are, there's a tremendous amount of consternation over the tariffs and the impact and we're already seeing just how the markets are reacting to it and all of those shareholders who play the stock market, those are all usually Republican donors, small, big business people who have financed Republican Party for the better part of three decades now and they're not a good ROI today.
But as you say, those criticisms are still behind closed doors, aren't they?
They're not very loud voices.
Well, I think the one thing that we have seen in this time of Trump, you know, his complete takeover of the Republican party has silenced critics, and you know, anyone who has an R next to their name is incredibly hesitant to even tiptoe around criticizing him for fear that he will seek and extract political retribution against them.
His penchant for revenge and vengeance and his obsession with petty slights creates an environment in which dissent is not tolerated and would -be dissenters are afraid to speak out.
So, at what point do you think it will have to get to before people will speak out?
Well, it's one of those situations where that gets worse before it gets better, I suppose.
to the point where there is such a groundswell from their constituents, from their district, from their job creators, that are in their cities and states, that is what really needs to happen is the public sector and the private sector are going to drive a lot of the political response to this.
So, if big companies, if CEOs, if big donors of the Republican Party start speaking out and saying, hey, this is backfiring massively.
This is creating major economic challenges for our companies and for our workers.
And oh, by the way, that price tag will get passed off to consumers, it's going to take that kind of a groundswell to get, I think Republicans to start speaking out more consistently and loudly.
And will it be do you think, the price of trainers, or you know, the price of Tunisian olive oil that's going to get that kind of conversation going?
Well, it is the price of those everyday things that I think the American people generally take for granted.
Americans have become so used to buying cheap goods from foreign markets that they don't even realize when they go to a Walmart that what they're actually purchasing is a cheap good made in China, for instance.
And so when they start seeing that the grocery bill, the Target runs, the everyday things that you buy, all of a sudden are a lot more expensive.
And what you spent this month is way more than what you spent last month.
Despite the fact that you got the same stuff.
I think that will start getting people's attention.
Kurt Baldella thank you very much for joining us, Kurt's a former adviser to congressional Republicans.
Well some of those tariffs are set to take effect over the weekend and into next week, the 25 % tariff on all foreign made cars was implemented immediately.
At President Trump's press conference yesterday he brought retired car worker Brian Pannebaker onto the stage to emphasize how imported cars have contributed to losses in the u .s economy my entire life i have watched plant after plant after plant in detroit and in the metro detroit area closed donald trump's policies are going to bring product back into those underutilized plants there's going to be new investment there's going to be new plants built and in six months or a year we're going to begin to see the benefits i can't wait to see what's happening three or four years down the road well
let's talk to scott paul now he's from the alliance of american manufacturing uh scott thank you very much for joining us on the program today and is this um an excited day post liberation day for the alliance of american manufacturing well look i think some of the tariffs were long overdue um they shouldn't come as a surprise i mean this is a president who for years has indicated this is exactly what he would do and And when you look at the data, either the US trade deficit in goods, which is a trillion dollars, or for instance, with respect to automobiles, the fact that we alone absorb half
of the imported automobiles globally in the United States, it's become a crisis.
So I believe tariffs are part of the answer.
and I also believe that this is the beginning of a negotiation with trading blocks in countries around the world.
And while I may not always support this president's actions or particular utilizations of coercive economic policy, this certainly puts the United States more in a position of negotiating strength than we were before.
What about the fact that Reuters are reporting that Stellantis, they make ram trucks and Jeeps, are having to temporarily lay off 900 workers at five US facilities after the Trump announcement of the tariffs yesterday?
It's temporarily pausing production at an assembly plant in Mexico and in Canada.
Yeah, Stellantis has also announced that they're reopening a plant that had been closed in America's Heartland as well, Ford today announced that they're going to be selling a number of automobiles at employee level pricing that are built in the United States, that's going to stimulate demand.
And so this is, I will acknowledge that this is a policy that will require some adjustment, adjustment on the part of supply chains, on the part of consumers, on the part of businesses.
But let's also understand that these global companies are very agile, are very innovative, and are going to respond to the market incentives.
Well, let's bring Simon Schutz into our conversation.
He is from the German Automobile Industry Association.
And Germany is one of the biggest car makers in the world.
And it's automotive industry has already strongly criticised that 25 % tariff on imported cars into the U .S. disastrous signal for free trade.
And thanks for coming on, Simon, as you were hearing there from Scott, you've got to adjust. Well, thanks for having me on the show.
And it's also interesting to hear Scott's point of view, where I do agree is that this is a time for negotiation and that I hope that a deal can be found in the end, maybe with less tariffs, I think the less tariffs we the better for everyone.
But there's a few things I would strongly disagree.
One thing is that the German automotive industry, with its more than 2 ,000 locations in the US, employing around 140 ,000 people, is the best example of local production.
That hex existed in the USA for decades and is deeply interwoven with the US value chain.
That's for one thing.
And the other thing is, you know, we were just talking about innovation and how companies and car manufacturers are, well keeping their share in the market.
And what is happening right now I mean, for once history has shown, and it will show again that protectionism and the tariffs will only produce losers on both sides and consumers in the US will be particularly affected as they will directly feel the effects of the additional tariffs through rising inflation and the reduced product selection.
And the other thing is that tariffs of this kind also reduce the pressure for innovation on US companies, and that will weaken their international competitiveness in the medium term.
So what is happening right now will not help the US manufacturers, it will harm them.
Competition is something good.
Okay, let's go. Thank you so much Scott, there is lots of things for you to unpick there, but there is one interesting thing that were mentioned there from Simon, is that the cost of cars is going to go up for US consumers.
And as we were talking about with Kurt, you know, there's only so much the US consumer can cope with.
Well, sure, but as I said, you know, Ford today announced price cuts for a number of their made in America vehicles.
Can they afford those price cuts?
Absolutely can, can afford that, particularly if they get more market share.
But back to this larger point, You know, the United States has a uniquely open auto market.
We absorb half the world's imported cars alone in the United States.
And it is true that we have seen some investment from European and Asian automakers in the United States.
Scott, we are going to have to leave it there.
Thank you very much for listening today.
you
