Hello and welcome to World Business Report from the BBC World Service.
I'm Sam Fennick. Our top stories today, the trade war between China and the US is intensifying, with disputes now focusing on the delivery of parcels.
We'll hear from Spade's trade minister on how the EU plans to respond to Trump's tariffs and...
When I turned onto his street, which is a cul -de -sac, his house always blocked the sky and I saw sun shining through and I knew it was gone.
Hear from those affected by the Los Angeles fires and the cost of rebuilding the city.
First today, the trade war between US and China has escalated with the first major blows exchanged.
Let's have a look at the timeline so far.
On Tuesday morning, a new 10 % tariff on all Chinese goods shipped to the US comes into effect.
A few hours later, Tuesday afternoon, China retaliates with a 15 % tariff on certain American imports, including various types of coal and liquefied natural gas.
It also puts a 10 % tariff on crude oil, agriculture machinery, large displacement cars and pickup trucks.
Then on Tuesday night, the US Postal Service announces the suspension of parcel deliveries from Hong Kong and China until further notice.
That further notice came a few hours ago when the decision was reversed.
Early Wednesday morning, Beijing holds a press conference urging the US to stop politicising and suppressing Chinese companies.
We urge the US to stop politicising and instrumentalising economic and trade issues and to stop unreasonably suppressing Chinese companies.
China will also continue to take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.
That was Lin Jan, spokesman for the Ministry of Foreign Affairs.
Katya Dimitriva watched that press conference, she's the Asia economics correspondent for Bloomberg News in Hong Kong.
I asked her first of all to describe the mood for us.
It was a lot more tense than usual.
There were more reporters in the room certainly than usual because these conferences are pretty regular, sort of like the White House press briefing.
It was definitely notable that it started about 30 minutes late before we had the spokesman Lin Jian come out and start addressing reporter questions.
Let's unpick some of the things then that were discussed in the press conference.
And first up was the US Postal Service suspending parcels from Hong Kong and China.
Tell us about that.
That company holds a press conference urging the US to stop politicising and suppressing Chinese companies.
We urge the US to stop politicising and instrumentalising economic and trade issues and to stop unreasonably suppressing Chinese companies.
China will also continue to take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.
That was Lin Jian, spokesman for the Ministry of Foreign Affairs.
pairs. Katia Dimitriva watched that press conference, she's the Asia economics correspondent for Bloomberg News in Hong Kong.
I asked her first of all to describe the mood for us.
It was a lot more tense than usual.
There were more reporters in the room certainly than usual because these conferences are pretty regular, sort of like the White House press briefing.
It was definitely notable that it started about 30 minutes late before we had the spokesman Lin Jian come out and start addressing reporter questions.
Let's unpick some of the things then that were discussed in the press conference.
And first up was the US Postal Service suspending parcels from Hong Kong and China.
Tell us about that.
That completely came out of left field.
I mean, the statement that was posted on the USPS website was very brief, halting with no deadline in sight for the foreseeable future, all incoming packages.
And this really seems to be targeted at these Chinese e -commerce giants, which is Teemu and Xi 'an, which are sending millions of packages every single day around the world.
The spokesman was asked about this at the press conference.
And it was really interesting, his answer, because when he was asked about this USPS statement, which came out a few hours before the press conference.
He paused for about two minutes and looked through his papers and was just kind of didn't answer, didn't look up, didn't answer, asked to have the question repeated and then eventually answered and basically said very broadly, we don't like that the US is taking aim at Chinese companies and discriminating
against Chinese companies.
We will take steps to defend our nation's companies and then decline to elaborate.
They also talked about fentanyl, didn't they?
And he was quite strong.
He talked about how there had been cooperation between the two countries for quite a while, but that the U .S.
has now disregarded this fruitful cooperation and has added these 10 percent tariffs onto China.
The issue with fentanyl is that the U .S.
says that there are these precursor chemicals coming from China.
They're made into fentanyl in Mexico and they make their way north to the U .S.
This has been a rare area of cooperation between the two countries.
And so we saw under the Biden administration, even under the Trump administration, several moves.
Reliable. Yes. And what a contrast, right?
like talking about the US and tariffs.
And there were sort of these one word answers.
Like I can tell you, probably seven times during this press conference, we heard, because the English is translated, at the same time, we heard the answer to questions about tariffs, being well, talk to officials about that, just one line answers.
But as soon as the issue of the European Union came up, it was a very different tone.
There was a highlighting of the 50 year anniversary of diplomatic relations, there was sentiments of working collaboratively to restore order and balance in the world, especially when it comes to trade.
And there was a lot of really positive commentary there, despite the fact that this is also going to be a challenge for China and the EU going forward, because the EU, of course, many European countries are hesitant and have targeted and, you know, very closely watched as China has shipped increasingly
to European countries.
A very similar story in the US, right?
Like accusations of dumping and goods flooding the market.
Katia Dimitriva there, the Asia economics correspondent for Bloomberg News in Hong Kong.
Well, as I mentioned, the next twist in the saga came later on Wednesday when the US Parcel Service issued a statement saying that it will continue accepting international inbound mail and packages from Hong Kong and China.
Ross Mould is with us.
He's investment director at AJ Bell.
It's difficult keeping up with what's happening.
How are businesses, do you think, going to navigate this over the next few months and years?
Same as investors, I think, with extreme difficulties, Simon.
If you look at the statement from the USPS about not taking the parcels did move markets.
It's Temu's parent PDD, its shares traded down 2 % in New York as soon as the market opened today.
So investors are watching just as much as company executives.
And dare I say, of course, customers and consumers.
Well, yeah, I was going to ask you about that.
Because that is going to be an impact on the prices that people will pay for their goods in the US.
And if we're looking at US imports from China, their latest figures have been released within the last hour or so.
It's showing that actually imports from China grew by 3 % into the US.
And American exports fell, so the trade deficit rose with China from America by 6%.
Intriguingly, if you're President Trump, he will say, well, the deficit was $418 billion before I put my tariffs on in 2018.
It's now, quote, only $295 billion.
So tariffs have worked a little bit and they've reduced the deficit by a third.
And he will argue there may be short -term pain, but the President will argue there's long -term gain because Americans may look to buy American rather than China.
showing that actually imports from China grew by 3 % into the US.
And American exports fell, so the trade deficit rose with China from America by 6%.
Intriguingly, if you're President Trump, he will say, well, the deficit was $418 billion before I put my tariffs on in 2018.
It's now, quote, only $295 billion.
So tariffs have worked a little bit and they've reduced the deficit by a third.
And he will argue there may be short -term pain, but the President will argue there's long -term gain because Americans may look to buy American rather than Chinese products.
And that's his plan.
Ross, stay with us because we're going to turn to EU -China relations now.
China is the European Union's second largest trading partner just after the United States with bilateral trading reaching nearly 740 billion euros, about 770 billion US dollars in 2023.
Spain in particular has a strong relationship with China with imports from the country, including electromechanical products, vehicles and various different parts for machinery.
So what's their response to those remarks earlier from the Chinese Foreign Ministry spokesperson saying that he hopes the EU will become a reliable cooperation partner?
Carlos Cuerpo is Spain's Minister for Economy and Trade.
He joins us now. Thanks for being with us, Carlos.
First of all, what is then your response to those comments about being a reliable partner to China?
Well, hi. Thanks for the question.
Of course, the EU has been and will continue to be a reliable partner in all its trade, financial and investment relationships.
That's not only an element associated to China, but to all our external relationships.
Do you feel that you're being used as a bit of a pawn between the US and China in their arguments over trade?
Well, I think it's important that the EU will continue to follow its own roadmap.
You know, we need to remain united.
That's how we will increase our leverage at any negotiating table.
But we have a clear roadmap within the EU.
And you know the main elements of that roadmap.
One is, of course, exploit the benefits and the scale of our internal market.
Actually, just let me give you a figure that comes from an IMF study analysis, which is that if we manage to get the full potential of our internal markets in terms of goods trade, it would be equivalent to a reduction of 45 % in tariffs.
And in terms of services trade, it would be equivalent to more than 100 % reduction in tariffs.
So there is a lot for us to gain there in our own home agenda.
And of course, we need to continue to broaden the network of strategic allies.
We've done that with Mercosur.
We've done that with Mexico.
And we will continue to strengthen that relationship.
But that's independent of the fact that we still have a lot of homework to do and we need to continue to work on our own roadmap, as you said, to be a key player no matter what comes from the outside.
Because Donald Trump has said some quite hard -line things about the EU.
They don't take our cars, he says, they don't take our farm products, they take almost nothing and we take everything from them.
He says that the bloc's actions have been an atrocity.
So I wonder then how are you preparing for Donald Trump's actions towards the EU?
Well, again, as I said, we need to get ready first off by being an important player, by actually following a roadmap in terms of being more competitive, being more productive, really get to full potential of all our own capacities internally.
And then, of course, as I said, we need to keep on being a reliable partner.
we know that a trade war or escalation of protectionist measures is in no one's interest and we will work to avoid that escalation but of course and allow me to say this the EU will not be naive we want to be pragmatic and we're ready to find solutions as President von der Leyen said but of course we
will be ready to defend our companies our strategic industries if it comes to that.
But I just want to you've talked about fighting back on US tariffs but you've also talked about, as you just said, kind of reason and negotiation.
How do you do both of those?
Well, again, as I said, our first, of course, interest and our first line of action is to, of course, protect and enhance the transatlantic relationship.
That's how we want to engage with the new US administration.
And that's what we will be trying to do from the EU side.
When this is independent, of course, let's not jump ahead of any actions on the side of the U .S.
administration. Again, I think we need to have this first -hand view of entering negotiations with a constructive view ahead.
What do you make of what Canada and Mexico have done to try and avoid tariffs, enhance their border controls, in order to try and remove those tariffs that Mr.
Trump put on over the weekend?
What do you think about that?
Well, I think it's actually good news that no tariffs have been imposed.
Again, as I said, it's actually no one's interest to have this escalation of protectionist measures.
And as long as there is an agreement between actually now countries belonging to NAFTA on how they have to conduct their own trade, migration or border relationships, I think these are good news going ahead.
And again, I think it's important to really keep the discussion within the realm of finding that.
Well, I think it's actually good news that no tariffs have been imposed.
Again, as I said, it's actually no one's interest to have this escalation of protectionist measures.
And as long as there is an agreement between actually now countries belonging to NAFTA on how they have to conduct their own trade, migration or border relationships, I think these are good news going ahead.
And again, I think it's important to really keep the discussion within the realm of finding agreements and strengthening relationships.
Because the Spanish economy in particular could be significantly hit by any tariffs.
Your exports to the US accounted for about 5 % of your total exports in 2023.
well actually as you said the Spanish economy has been strengthening its relationship with the U .S.
in the in the past few years actually our bilateral trade with the U .S.
has more than doubled in the last 10 years to about 47 billion euros and Spain actually unlike other EU countries has a slight deficit with the U .S.
of about 10 billion but we also have a huge FDI so foreign direct investment bilateral stock, around 100 billion euros, both from Spain and the US and vice versa.
So again, the relationship is very integrated and has been growing for the past few years in the benefit of both sides.
So that's how we wanted to continue.
We've mentioned this word a couple of times, reliable partner.
You've mentioned it.
China have mentioned it about the EU.
What does it mean? Well, that means that we can be predictable in the way that we face of course our external relationships, be it trade, financial investments, or other key relationships with partners.
That's somehow that we know or that people know how the EU will engage in those negotiations, which is always with a constructive approach and always with the aim of reinforcing the multilateral rules -based order.
That's the EU's DNA.
And I think it's it's very easy to recognise and that makes us a reliable partner.
You were in the UK recently meeting the government over trade relations between the EU and the UK.
Those relations were severed because of Brexit five years ago.
What were those conversations like?
Is it time to reset?
And is this one of the markets that you want to try and improve because of the fear of tariffs coming from the US?
Well, as you said, I was in London actually last November.
I had the chance to meet with Chancellor Reeves.
And actually, the conversation was around how to strengthen these historical ties.
Actually, when you look at the bilateral between Spain and the UK, when you look at trade and investment integration, it's actually now worth over 200 billion euros.
So it's a key strategic relationship, the one that we have between Spain and the UK, but also between the EU and the UK, of course.
What we want is, I think, from both sides to speed up these efforts to reset our relations.
I think there is a common understanding that we need to move forward.
Is it hard to forget, though, what happened five years ago?
It was very bruising, wasn't it, for the EU and the UK in terms of trade relations?
Well, I think times have changed.
And again, as I said, we need to look forward and we need to keep on moving.
And as long as there is a common understanding that the way forward is actually, again, a reset and a strengthening or a further integration, I think that's the way that we would want to work.
And there is space and there's a lot to gain from both sides, I have to say.
Carlos Cuirpo, Spain's Minister for Economy and Trade.
Thank you very much for your time on World Business Report.
Rossmold, I just want to come to you quickly.
What about those bruises between the EU and the UK?
Do you think that they have disappeared now?
Have they gone? I think it's very, in terms of the benefits or the damage that's been done, it's very hard to tell because so much has happened in the meantime with COVID in particular and other geopolitical problems.
But no, I think there are still challenges there and that's why the UK is looking to try and negotiate its way to getting a better relationship with one of its major trading partners.
Ross Mull, thank you very much.
You are listening to World Business Report from the BBC World Service with me, Sam Fennett.
Now, the wildfires in Los Angeles may become the costliest natural disaster in U .S.
history. With thousands of homes destroyed, the fires have also highlighted a significant insurance crisis.
This issue has been developing for years, impacting California and other regions across the United States, which are prone to climate -related catastrophes like wildfires, floods and storms, as our reporter Lexi O 'Connor has been finding out.
It had a fountain in the front.
On clear days, you can see out to the ocean, and it was just a home where everybody was invited and everybody came together, and that was Grandpa's house.
Breaking news right now, another fire breaking out right now.
This one is near Altadena.
You can see the fire.
Rita Maldonado lives in the Pasadena district of Los Angeles.
Her home wasn't burned in the recent wildfires.
But on the night of the 7th of January this year, as fires raged around the city, she rushed to help her dad and stepmom evacuate.
They live a couple of miles away.
The sky and I saw sun shining through and I knew it was gone and I knew he knew.
Unfortunately, like increasing numbers of people in California, Rita's father had no insurance.
We got down from the car and he kind of just stood there and I just remember him saying, this is what I expected to see.
And of course, I wanted to just break down and cry.
But I saw him just so accepting of the situation that, you know, I had to be strong for him.
Rita's dad told her he was dropped by the provider of his fire insurance.
On top of that, he couldn't afford the rising costs of his other household premiums.
So what's going on here?
There are some 18 states in the United States that, at varying degrees of severity, are faced with insurance rates going up, as well as insurers declining to renew or write new insurance.
Dave Jones is now Director of the Climate Risk Initiative at UC Berkeley School of Law, but until 2018, he was the Insurance Commissioner for the state of California, a role that involves regulating the insurance industry and protecting consumers.
So when I left office in 2018, the California Fair Plan, which is the insurer of last resort, had 180 ,000 policies.
It's now over 455 ,000 policies.
So these are people that can't find private insurance because the private insurers have concluded that the risk of loss is too great.
And what's happening across the United States is that because of our failure to transition from fossil fuels, global temperatures are rising and they're driving more severe and extreme weather related events.
So we are marching towards an uninsurable future in the United States.
And I think the insurance industry is the proverbial canary in the coal mine with regard to the climate crisis.
And the canary is dying.
So will what's happened in Los Angeles make a bad situation even worse?
Estimates for insurance company losses go as high as $45 billion.
Lexi O 'Connor reporting there and you can hear her full report on Business Daily.
Search for Business Daily wherever you get your BBC podcasts.
Now it looks like the ambitious plan to create the world's third largest carmaker by sales is hitting a major roadblock.
Nissan and Honda, two of Japan's big automotive companies, have been in talks for months but now things seem to be falling apart.
According to reports on Wednesday, the two companies have been able to come up with an agreement.
And this is a blast for insurance company losses go as high as $45 billion.
Lexi O 'Connor reporting there and you can hear her full report on Business Daily.
Search for Business Daily wherever you get your BBC podcasts.
Now, it looks like the ambitious plan to create the world's third largest car maker by sales is hitting a major roadblock.
Nissan and Honda, two of Japan's big automotive companies, have been in talks for months but now things seem to be falling apart.
According to reports on Wednesday, the two companies have been able to come up with an agreement and this is a blow for Nissan, which has been struggling lately.
Let's talk to Andy Palmer now.
He's the former chief operating officer and long -time executive at Nissan and now is at the European electric battery startup called Inabat.
First of all, Andy, what's been the problem?
Why have they hit a roadblock?
I remember we talked about this just before Christmas, didn't we?
And you were quite confident that it would go ahead, but not so now.
No, it would appear not.
It's interesting because both companies have their own troubles.
Japan in general, but notably Nissan and Honda, have been very late to the transition to EVs.
it certainly is true of Honda, they certainly backed the hydrogen route and are not quite sure what route the Nissan followed after the departure of their long -time CEO, Carlos Ghosn.
They're a little bit lost.
Because remember, they were a world leader, I suppose, in a value car.
I mean, it wasn't a very expensive Tesla.
The Nissan Leaf was something that you could afford to buy and you used to see lots of them on the road.
The Leaf was a trailblazer, and one might argue well ahead of its time.
But it did give Nissan world leadership in terms of that transition to electric vehicles.
And then late 2014, they stopped all the development of the EVs and didn't recommence.
And consequently, now they're not able to sell into China because they don't have EVs, and they're not able to sell into the US because they don't have hybrids.
Honda overtook them.
Honda is the stronger of the two partners.
Honda are obviously concerned about a merger, and as one would expect, Honda has said that if we're going to have a merger, then Honda is going to be in control, and it will be a merger, or more like a takeover than a merger of equals, and that's what appears to us spooked our friends at Nissan.
Now, as I said to you just before Christmas, One of the interesting things of Honda and Nissan is even though both companies are, and it was always going to be difficult to satisfy the ego, if you will, of the Nissan executives.
And it appears that a merger as proposed by Honda isn't to their satisfaction, and so they've walked away.
And what happens now then, do you think?
Well, it's a big trouble because Nissan is in genuine trouble.
Nissan, even though the word Nissan means Japanese industries and it is the darling of Japan, it's not unforeseeable that they go bankrupt.
The insiders have said this could be 12 to 14 months worth of runway for them and then they're in real trouble.
So their relationship with Renault is over.
It would appear that their relationship with Honda is over.
So the next natural thing will be a predator, somebody from China, perhaps, that looks into it.
And that, of course, would be the great nightmare for Japanese industries.
So a very uncertain future ahead for Nissan.
It's a strong brand, though, isn't it?
So something you'd hope would come out of somewhere.
Yeah, it is. But basically, of course, it means that something from somewhere is almost something from outside of Japan, and that is something that Japanese industries have always struggled with, the idea that their industry is controlled by somebody that is not Japanese.
And before Toshiba went, it was kind of unheard of that a Japanese brand would go, but when Toshiba went, it was like everyone kind of took a sharp intake of breath, didn't they?
Yeah, you could say too big to fail.
But if I take you back to the relationship, the alliance, as it was called, that was born out of the collaboration with Renault.
But prior to that, it did look like the Japanese government might consider letting Nissan go.
The fact that Mitty...
Andy, I'm sorry to stop you there.
I'm sure you're very busy.
No problem at all. We could talk about this forever.
But thank you for being with us today on World Business Report.
Sauts.
