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Hello and welcome to World Business Report from the BBC World Service.
I'm Roger Hearing, and on this edition, India faces a threat of 50% tariffs on what it sells to the US.
It's over Delhi's purchase of oil from Russia, but will India ever wean itself off Russian supplies?
If government doesn't come up with any rule or official statement, Russian barristers are here to stay.
And as Donald Trump's tariff regime on countries around the world comes into effect, how will it affect global trade?
Meanwhile, the president is claiming a big win as Apple commits to an extra $100 billion of investment inside the US.
And the world's most famous investor approaches his 95th birthday in retirement, with his company not showing quite the success it used to.
We'll look at the career of Warren Buffett.
But first, in just a few hours' time, new tariffs on goods entering the United States from 69 countries will come into effect.
They range from 10% to 42%, and there are two countries who fare worst.
Brazil, which has since Wednesday been told it will have 50% tariffs on most goods, and India, which is getting 25% now and a further 25% in three weeks' time because Washington says India is buying oil from Russia.
Currently, the country gets around 40% of its oil from Russia.
Here's our business correspondent in Mumbai, Archana Shukla.
Well, India has slammed the additional tariffs, calling it unfair and unjustified.
They say they would take all steps possible to protect its national interests.
The Ministry of Foreign Affairs here in India has reiterated the stance that India is being singled out for its ties with Russia, at the same time when other countries like the European Union or even the US itself, continues to trade with Russia.
India has maintained that its purchase of Russian oil is based on market needs and on market prices, and is crucial for energy security of the 1.4 billion Indians here in India.
Achana Shukla. So can India easily put an end to its reliance on Russian oil imports?
I asked Sumit Ritulia, lead oil analyst for Kepler.
As I speak, I don't see that happening because India and Russia, they share quite a history, like from 1970s, 80s, even 1960s.
So I don't see India buying not a single barrel.
India might trim down, look for more non-Russian barrels.
Unless there is any government directive, given the economics, given the technical compatibility with Indian refiners, if government doesn't come up with any rule or official statement, Russian barrels are here to stay.
So India can't manage without the oil it gets from Russia at the moment?
India was managing before 2022. Going back to history, India imported just around 2% of its oil from Russia.
But since 2022, the things have changed geopolitically and trade routing happening.
And India is now, like India's 40% imports it from Russia.
So India can manage. But again, it's not like if you ask me, I cannot shut off tap from Russia for tomorrow.
It will take time. And it comes at a cost.
So the ball is fully on the Indian government now.
If I'm talking about refining, yeah, they can manage, but it will take time.
It's not like even a week or month, so I will be able to cut down.
Because crude barrels, what are expected to come in August, would have been placed in June, July.
So it's not like if I need to process something tomorrow, I will be buying today.
India can manage, but it will take time, like even six, seven months, whatever the government directive is.
We don't buy anything from Iran based on what the government directive is.
If they don't get the oil from Russia, where else would it come from?
As you said, they don't buy oil from Iran.
Where else would they get the oil they need?
Yeah, the best fallback option is Middle East.
Like India used to buy around 55 to 60 percent of its oil from Middle East.
Then the Russian angle came up, like the dependency on Middle East has reduced.
But given the situation, given the geopolitics, if India is not buying, they can go back to Middle East.
Even they can increase. Like India used to buy around 10 percent of its oil from Middle East.
What about the cost factor in all this? Because my understanding was that Russian oil is perhaps cheaper or it's easier to get and that going elsewhere would be more difficult.
Yeah, like as of now, Russia oil is cheaper.
So this makes sense, like why Indian refiners are pushing to buy more Russian barrels.
Again, everything comes at a cost. Like if India has to move to Middle East, Latin crude brings more freight, volatility, pricing issues.
So, yeah. And EU sanctions are also, I gather, on purchases that are linked to Russia.
So it's being pushed at both ends, isn't it?
Yeah, like it's been squeezed from both ends.
But again, like EU sanctions, to be honest, it's not directly impacting as of now.
You have time till January 2026. Sumit Rotolia there of Kepler.
Now, the other major trading partner of the U.S. facing punitive tariffs now is Brazil, with a 50% markup.
Coffee is one of the major Brazilian exports to the U.S.
It buys around a third of its supplies from the country, so the impact could be very difficult for Brazilian coffee growers.
Here's the reaction from Fabricio Andrade, who's CEO of Sancoffee, a cooperative group of coffee farmers in the state of Minas Gerais.
It's sad for us being Brazilian producers and exporters to have our product being submitted to 50% tariff in the largest coffee consuming country in the world and one of the most important destinations for Brazilian coffees.
It's bad because we'll be losing the opportunity to participate in this important market.
And there's concern at the other end of the supply chain too.
Eric Diaz is from JC Coffee Importers and imports Brazilian coffee into the US.
These tariffs are paid up front, so we have to put that money up to take the container out of the port.
And then from there on, we just have to pass it on to the consumer because it's just such a large percent that I don't think anyone can really absorb it by themselves.
So we all just kind of have to pass the buck.
And then at the end of the day, the consumer is the one that's going to pay the highest cost for it.
Eric Diaz there. Well, India and Brazil are among many countries now facing a very different trading environment with the US.
Simon Evanet is Professor of Geopolitics and Strategy at the IMD Business School in Switzerland.
He told me who is now facing tariffs from Thursday and at what level.
At midnight, what we'll see is that 66 countries are going to see their tariffs rise to levels between 15% and about 41%.
There are six tiers of countries. Around 140 or so are going to be at 10%.
The UK is one of them. These are the lucky countries. all the smart countries, depending on how you put it, all the small countries.
Then you've got a range of countries. Some have been able to negotiate down very high tariff levels.
So this would have been the case of the EU, Japan, South Korea.
Others have been less fortunate, such as Switzerland, which is in the top tier.
There's about, I think, seven countries in the top tier, between 35% and 41%, mainly Middle Eastern countries like Syria.
But Switzerland and Bosnia-Herzegovina and Serbia are all in that category as well.
Somehow they didn't close a deal. And so they are being penalized very heavily for having large trade surpluses with the United States.
We'll talk about the implications in a moment.
But a country like Switzerland and the president of Switzerland went to Washington to try to sort it out at the last minute.
It's quite significant that Switzerland, quite a big player on the international financial scene, can't get a deal.
I think there may well be special circumstances here.
The Swiss have a huge trade surplus in relative terms with the United States and it surged 56% since the last tariff level was set.
So that's why I think they went from 31% to 39%.
At least that's a large part of the reason.
The other thing is the Swiss have very little to offer in terms of being able to lower tariffs on import taxes because they've already got rid of most of them in the era of manufactured goods.
And agriculture they protect very heavily.
Liberalizing that is politically toxic for the government.
And so they're left then with very few options, perhaps the most important of which is offering to invest a lot or buy a lot from the United States.
Buying a lot is difficult to do because the Swiss people might challenge this in a referendum.
And so investing a lot was the only offer on the table.
They offered 150 billion in investments, I'm told, in April.
And this was just not enough. The trip to Washington, I doubt, will be regarded as the high point in Swiss diplomacy in the 21st century.
It was rushed. It seems that critical meetings didn't happen.
And I think there will be recriminations when the president gets home.
So, Simon, what about the implications of all this?
Because I've seen some interesting writing about this.
People saying, well, it's quite surprising that the financial system hasn't really taken fright at all this, that they don't seem to be that worried almost about this really quite radical change in the global trade architecture.
It is a radical change. And I think you're onto something here.
You may remember back in April when President Trump announced this massive increases in tariffs across the board for many countries.
Within a week, he had to suspend them because the financial markets went haywire and they took fright.
This time around, he's been a hell of a lot more artful.
They have dribbled up announcements on key trading partners concluding trade deals.
So this has given a flow of good news to the financial markets.
Critically, before he announced these last set of tariff increases for the 66 countries I talked about earlier, he also announced just before that that he had found a way to roll over the tariffs for Mexico and suspend those for another 90 days.
So he gave the markets a good news story before a bad news story.
And this has been very artfully managed.
And they've been keeping one card up their sleeve as well, which is that on the 12th of August, they have to decide whether to roll over or extend the pause on tariff increases on China.
And I think they've deliberately not announced that, just in case the financial markets went haywire, and then they have another good news story.
But media management is one thing, Simon.
Actually, the effect of this is going to be very interesting.
Is it going to change things that benefit the US economy?
One thing I think you'd be very hard-pressed to find any professional economist who thinks that the tariffs are going to revive US manufacturing and bring jobs back.
Factories now are just very different from what they were when President Trump was growing up in the 60s.
They use much more machines and robots than humans these days.
So that part of American nostalgia is not coming back.
What is going to change is the U.S. is marginalizing itself in terms of the world trading system.
And this will result in considerably reduced, I think, imports into the United States.
That, in turn, is already pushing up the prices of imported goods compared to domestically produced goods.
So in the near term, I think you will begin to see inflation pressures build up now that these tariffs have been confirmed.
And then I think you will see Also, companies further postponing investment, as we saw in the quarter two GDP figures.
So this will be a drag on U.S. growth. And this creates a situation of very slow growth, if not recession and inflation.
That's called stagflation. And no one wants to be a president during an era of stagflation.
Unfortunately, Donald Trump probably will be as he fights the midterm elections.
And that may well provide the corrective, which makes him change policy.
Simon Evanett there. Well, let's see about how the markets have been responding to all this.
And indeed, in the last few months, in fact, a new development adding to the confusion there often is around tariffs, which is that apparently Donald Trump has now suggested that it will be 100 percent tariff on chips and semiconductors imported into the US unless the companies bringing them in have also committed to build plants making them. in the United States.
So things changing all the time. Let's speak to Susan Schmidt, Portfolio Manager at Capital Exchange Resources in Chicago.
Susan, thanks for being with us. I mean, that question that I spoke to Simon about just now, are investors showing any signs of worry about what all this will do to their investment decisions?
Well, this month apparently not. Remember, this is a very different scenario than we first started talking about tariffs in April.
And we saw such huge market volatility and declines of almost 15%, 20%.
So investors are taking a very different approach over these summer months and looking at these tariffs saying, well –
Things have a way of changing. Investors have become used to that cadence of change.
And really, it's kicking the can further down the road.
Today, the markets are up. We're looking now at year-to-date returns for the S&P and the NASDAQ at 8% and 11% almost, respectively.
So investors are clearly looking through the tariffs and at the moment thinking that things are actually going to end up being OK for U.S. businesses and for these publicly traded companies and that the increased cost from the tariffs isn't going to be overwhelming for them.
Yeah. And I mean, it's small volumes at the moment, of course, because people are away because it's the summer.
It's one of those things. I suppose it might look a bit different in September or October.
It might, and it might look a bit different tomorrow with this very, so today we had the markets close up, but tomorrow with this recent news, pharma and semis are two very big industries.
Those semiconductor chips, very important, and we have been in no man's land trying to figure out where those tariffs are going to settle.
This is big announcement and big news with 100%, and that certainly will be a big topic of discussion as the markets open tomorrow.
Yeah, and it seems to be being announced almost casually.
A lot of these things are. So that must, I think, give a little bit of concern to people.
They don't quite know what's coming down the line.
But anyway, let's talk about ChatGPT. OpenAI, of course, the maker of that.
We've seen such a vast amount of investment in AI generally.
And, of course, this is very much a Microsoft investment area.
But there's early stage discussions about a stock sale that could allow employees to cash out, could actually value the company about $500 billion.
I mean, what are you reading about this?
And also this new version of ChatGPT, GPT-5, which is supposed to be coming out, well, pretty much immediately.
Pretty much immediately we'll see that new iteration come out.
And so the interesting, I think, comment here on the chat, GPT valuation, is that the company is now estimated to be valued at around $500 billion.
This is a sharp jump from the prior valuation, which was about $300 billion.
So we're seeing that increased interest in AI.
We're again looking at what AI can provide and the potential for AI there. and its development and deployment in the years to come.
And we just continue to see investors adding on to the value expected and lifting the value of those shares.
It's interesting. They really like it. Susan, thank you so much for being with us.
Susan Schmidt there of Capital Exchange Resources in Chicago.
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You're with World Business Report from the BBC World Service.
Now, the White House says Apple has promised an additional $100 billion of investment in the United States.
The tech giants already pledged to invest half a trillion dollars over the next four years.
And it comes after President Trump singled out Apple by name earlier this year, threatening to raise tariffs on its products if it didn't move iPhone manufacturing to the US.
Well, here's Apple's CEO, Tim Cook, speaking alongside President Trump just a short time ago.
Today, we're committing an additional $100 billion to the United States, bringing our total U.S. investment to $600 billion over the next four years.
As a part of this, we're launching Apple's American Manufacturing Program.
It will spur even more production right here in America for critical components used in Apple products all around the world.
And we're thrilled to announce that we've already signed new agreements with 10 companies across America to do just that.
That was Tim Cook, CEO of Apple. Let's talk about all this to our U.S. tech correspondent, Lily Jamali.
Lily, thanks for being with us here on World Business Report.
Is this a major investment? I mean, Donald Trump is saying it is.
It's a huge change. It's showing effectively that Apple is putting its money back into America rather than necessarily, I suppose, investing it in China or India.
Well, yeah, certainly Apple is hoping it will come off as significant in the eyes of one person, and that is U.S.
President Donald Trump. You know, I was thinking about the vision that Trump had laid out a couple of months ago and his commerce secretary as well of American workers screwing iPhones together in places like Duluth, Minnesota or Omaha, Nebraska.
I don't think that's what we're looking at here because that is just very expensive.
It could triple or even quadruple the cost of an iPhone, for example.
But I do think what we're seeing here is an attempt to please this president. going from a $500 billion commitment that has now been expanded to $600 billion.
And one of the specifics, Tim Cook dressed up in his finest suit today, talking about how every single new iPhone and Apple Watch will contain covered glass made in the state of Kentucky.
So there you have what sounds like a concession.
So at least some components, key components in that case, will be made here in America.
But the glass that you're talking about, I mean, it's a good, you know, it's a thing that obviously Americans will want and will help.
But, I mean, this is extraordinary amounts of money that we're talking about.
Now, it must be wider than that. It must be something pretty big actually going to be built.
Yeah. And I think when we talk about the numbers, they're just we're being bombarded by numbers.
Let's be very open about that. Just in the last half hour, Tim Cook tweeted out a barrage of data, 450,000 jobs with suppliers and partners to be created.
He noted manufacturing would be taking place at 50%.
79 factories across the country. Fundamentally, you know, we have to understand that some of these investments were already in the works.
So projects in Texas, for example, had been announced even before the announcement that we referenced a moment ago in February.
We're also talking about things that a lot of these tech companies are doing, data centers, growing capacity for AI in places like Nevada and Arizona.
So I think this is a, you know, this is a pretty political moment in Silicon Valley.
And here you have yet another tech CEO standing side by side with Donald Trump, trying to make sure he stays on the right side of this president.
But you said, you know, it doesn't look like we're going to see iPhones being assembled in Tennessee or Wyoming or wherever it would be.
But does that mean there's going to be a bit of an end to Apple and other companies like big investment in, we'll say, India in the future, where you would actually put the places to manufacture stuff?
Are they going to be under pressure to move almost everything to the U.S.?
? I don't think so. You know, I think if we look at the discussions around tariffs these last couple of months and some of the things Tim Cook has said on the earnings calls these last couple of quarters, it's pretty clear.
You know, remember, Trump wanted everything to be produced in the U.S.
Instead, what Apple did was they said, OK, iPhones bound for the U.S. will now be made not in China, but in India.
And there you see India now being a target of Donald Trump's with his tariff war.
We see other products like AirPods and MacBooks and so on being moved from China to Vietnam if those products, again, are bound for the U.S.
But the bulk of this stuff is still being made in China, Apple products sent around the world.
That is still the hub. Lily, thank you so much for being with us.
Lily Jamali there, our U.S. tech correspondent.
Now, one of the world's best-known and most revered investors, Warren Buffett, is moving into his final lap just a few months before he's to hand over control of his company and a couple of weeks before he turns 95.
Here he is speaking at Berkshire Hathaway's annual meeting back in May where he announced his retirement.
There's no question that trade can be an act of war.
And I think it's led to bad things. Just the attitudes it's brought out.
In the United States, I mean, we should be looking to trade with the rest of the world and we should do what we do best and they should do what they do best.
Warren Buffett speaking there. Well, Buffett's net wealth is estimated around $160 billion.
He's, according to some, at least the fifth richest man in the world.
But the prowess of his company, Berkshire Hathaway, is not what it was.
Its shares have underperformed the wider market by one of the biggest margins in decades.
So who is the man known as the Sage of Omaha, and does his buy-and-hold, value-driven strategy of the last six decades still hold?
Joining me is Lawrence Cunningham, director of the Weinberg Centers for Corporate Governance and author of the essays of Warren Buffett, Lessons for Corporate America.
Lawrence, thanks for being with us. I mean, first of all, for those who don't know, for those who aren't perhaps aficionados of investment and who does it, what sort of man is Warren Buffett?
He's a middle of the road, practically minded person, as that quote you just heard him utter makes pretty clear.
He's a real salt of the earth, sensible, thoughtful guy who has been a spectacular investor and also a great manager.
Yeah, and he comes over, as you say, as being very practical.
And right back in the beginning, we're saying this is six decades he's been doing this.
I think if I got the story right, he just kind of looked at the way that investment was and said, I can do it better, but not with any grand strategy, just that kind of buy and hold, really, idea.
And it worked. It worked, yeah, and he focuses on value versus price.
That's something a lot of people overlook.
He says there's a big difference in many cases for a stock between its value and the price you can buy it for.
Sometimes the price is higher than the value.
You should avoid that. Sometimes the price is lower, and often...
Very much lower. And he focused that was his framework.
And and he focused on those cases where he thought he could buy a stock at a deep price discount from its value and then hold it for a long time.
And eventually the price will catch up. Uh, to its value.
That's been the, you know, it's not a, not a master stroke, but it was, it was certainly was a little different, uh, than what, you know, used to happen on wall street.
And, you know, he taught millions of people that basic fundamental approach and it's worked for a lot of others too.
Yeah, and lots of people came to sort of sit at his feet, at least metaphorically, and find out how he got it right.
But what's interesting, Lawrence, is in recent times, it hasn't looked quite so good.
I mean, there are various things. He did quite a lot with SoftBank, Japanese investor, didn't go that well.
And according to, I think it's the Financial Times saying that actually...
He isn't overperforming the wider market, underperforming it quite a lot at the moment.
So is it just hard for his philosophy now to ride the current stormy world of international commerce?
Well, yeah, there are two things. One, for Berkshire in particular, his company in particular, it has gotten so big, almost a trillion dollars in market cap, not quite, but getting close.
So that for him to move that needle requires deploying such huge amounts of capital, tens or hundreds of billions.
He just doesn't find those opportunities where the price value discrepancy is so strong. anymore for him, for his company.
And the second thing is that markets have gotten a lot more efficient in this so that those opportunities to find deeply discounted prices are fewer, are scarcer.
So when he was first starting out in the 60s and 70s, there were a lot of opportunities like that.
There were fewer in the 80s and 90s. There are fewer now.
So it's a lot harder to practice what he has preached when you're huge the way he is.
And it's harder for the rest of us, too, just to find those opportunities.
But I think the basic philosophy still will work.
It's just a little harder to find the opportunities.
I mean, I hardly dare ask this, because he is a man, obviously, of enormous reputation, but he's 95, or going to be 95.
I mean, shouldn't he have left a long while back?
Is this a case of someone just hanging on that bit too long, really?
A lot of, you know, it's a fair question or observation.
I think, you know, he loves his job. He loves doing, you know, this is his life's work.
It's his curation. And I think a big part for him, you know, I think if he had stepped back earlier, you know, I think he'd have passed on sooner.
So oddly enough, I think it's been healthier for him and for his company for him to stick around.
And the reason he's stepping back now, I think, has a lot to do with the fact that his number two, his best friend and partner, Charlie Munger, passed away.
Now, I guess it's two years ago. And I think that's taken a lot of the fun out of the sales for him.
Yeah. And just very briefly, is he a man who who finds it perhaps hard to to not do it anymore?
Yes. I don't know if it's workaholic, but he's passionate, and he thinks investing all the time.
All his reading is business reading. He doesn't read steamy novels.
He reads annual reports. That's how he gets it right, I guess.
Lawrence, thank you so much for being with us.
Lawrence Cunningham there talking about Warren Buffett, the sage of Omaha.
That's it from World Business Report.
