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Hello and welcome to World Business Report here on the BBC World Service.
I'm Rahul Tannen. We're going to take you to South Korea and we'll also take you to the Netherlands.
Look at how political change there will affect both those economies but a new program and the new tariff is in place.
Last week in front of a crowd of steel workers in Pennsylvania, Donald Trump said that he'd put a 50 percent tariff on imports of steel and aluminium.
We are going to be imposing a 25 percent increase, we're going to bring it from 25 percent to 50 percent the tariffs on steel into the States of America which will even further secure the steel industry in the United States.
Nobody's going to get around that.
So what has happened on Tuesday hit with the latest is our North of America business correspondent Michelle Fleury.
You may recall that last Friday Donald Trump during a rally at a US Steel plant in Pennsylvania where he campaigned during the election run he announced that he was going to double American tax on steel and aluminium imports from 25 percent to 50 percent.
Now he has signed that executive order making it official and that goes into effect from tomorrow.
We know that the UK has an exemption that's going to remain at 25 percent other countries don't but do you see this as a negotiating point now that people will come and say look okay to strike a deal with us and we'll reduce these tariffs now.
And the backdrop to all of this, as you rightly point out, is that there are currently legal challenges to some of his other duties, those liberation day tariffs as they were called, also some of the reciprocal tariffs so that sort of making its way through the courts and could be struck down.
At the same time you've got Donald Trump's team continuing to push for trade deals notably with the EU but also with India and other countries and in fact they confirmed that they have sort given countries until tomorrow to put in their best offer, this is all as the deadline rushes, remember, for that pause in 90 -day tariffs which is due to expire on July 8th.
So there is this kind of pressure ramping up and I think it's perhaps no coincidence that you've now got these tariffs going into place.
And the fact that they are done under something called Section 232 which is a kind of national security umbrella means that the president has more latitude.
That's significant because as I said some of his other duties right now face legal challenges and those were done under different statutes Let's bring in Flavio Volpe now as president of the automotive parts manufacturers Association a prominent figure in the Canadian automotive and Manufacturing industries as well.
Canada Flavio is the biggest supplier of steel to the u .s So this increase in tariffs and 25 to 50%.
What sort of impact could it have on the Canadian economy?
Well, it's going to dampen demand, of course, for steel producers here and the first round of tariffs caused for hundreds of layoffs but putting thousands of workers in precarious employment.
But the other side of this coin is that these tariffs are just consumption taxes on American customers.
And while Canada supplies about a quarter of all the steel used by the U .S., that steel is used by U .S. automaking and U .S. infrastructure builders.
And so in addition to the steel, about 60 percent of the aluminium consumed by the U .S. comes from Canada, from Quebec.
and so in Canada's specific case the one hedge we do have that others might not is they're absolutely dependent on our capacity in that capacity the blast furnaces and the smelters additional ones in the u .s. would take years to come online and billions of dollars oh yeah let's I want you to have a listen to this Flavio if you don't mind Philip Bell is president of the Washington DC based Steel Manufacturers Association.
I've been speaking to him.
It is the largest Steel Industry Association in North America.
I believe that the signal that the President is trying to send is that our steel trading partners need to be very serious about their trading relationship with the United States.
It is not an entitlement to sell your imported steel here.
It's a privilege and I think that President Trump is sending a clear signal that you need to understand and appreciate that privilege.
Also keep in mind the 232 tariffs have been around for seven years, they're not new.
Many steel end users have had time to adjust their procurement strategies and supply chains to get used to having tariffs on steel and they've been upheld legally by the US Supreme Court.
You have a quarter of your steel in the US that is imported, about that number.
This is gonna be a problem for car it's going to be a problem for many businesses who are going to see their costs go up rapidly?
Well, as a result of the first round of 232 tariffs during the first Trump administration, over 20 billion dollars has been invested to upgrade and modernize and expand domestic steel making capacity, so we feel that through our domestic steel producers we will be able to meet any demand requirements that come up as a result of this.
In terms of being able to meet that demand, yes that could happen over time, but that could take years.
Businesses that we talk to say it's not going to happen quickly enough.
Well a lot of these new projects started as far back as 2020 and many of them are slated to come online starting in the third and fourth quarter of this year.
Automotive -grade steel, long products that are used in construction, structural steel and plate that's used in infrastructure.
So we think that we will be in good shape.
Also keep in mind as we speak many countries are lined up to negotiate with the administration on what their tariff regimes will look like.
How many jobs do you think these tariffs are going to create within the US steel industry over the next few years?
I think it's going to create thousands of direct steelmaking jobs and thousand more of indirect jobs involved in the construction, in the engineering and in the process optimisation side of our industry.
Unlike many other regions of the world, the United States has a very efficient steel industry.
The problem is, though, let's be honest about this.
Let's take the example of US steel.
You say it's an industry people want to invest in but you needed a Japanese company to come in and save the most famous steel company in the US?
Well, there's no doubt that US Steel has a lot of name recognition, and it's considered an iconic company.
Also, there's no doubt that Nippon Steel is the fourth largest steelmaker in the world with healthy balance sheets, and very good steel making technology.
And anyone who believes in free markets, and we certainly do believe in that in the United States, feel like that was a situation where that company appears to be going to the highest bidder, an ally of the US, and a company that can acquire it without any antitrust concerns.
But if you believe in free markets, it is also true that other countries can produce steel more cheaply than the US, can't they?
China can. They can, but it's not based on free market principles.
Often, steel produced in China is highly subsidised, most of it is state -owned, and then they're all kind of circumvention and invasion schemes that China deals in to get their steel into our country.
Phillip Belder, president of the Washington D .C.-based Steel Manufacturers Association, Flavio, still with us.
He has a point there.
It is Donald Trump's job to protect, you know, steel workers' jobs in the U .S. We know that it's been difficult in the Rust Belt.
So you must understand to some extent what he's trying to do here.
Flavio? Sure. He sure he makes a lot of points.
They don't all reconcile with each other, but some of them are valid.
When he talks about protecting steel jobs and he talks about iconic companies, General Motors is an iconic company, Ford is an iconic company.
Those companies are suffering under the higher cost of steel.
It isn't just from tariffs on imports.
What we saw in 2018, when he said that 232 tariffs first came in, was that the price of imported steel went up 25%.
and all the domestic producers increased their price by 25 % so that they could just meet the price that the market could bear, so the profit took.
When he says that they invested $20 billion, $20 billion sounds like a lot of money, but you're not building picnic tables, you're building furnace capacity, and it definitely doesn't get them anywhere close to building local demand.
It can be absolutely true everything he says about China.
It's true for us, it's true for Europeans, it's true for the Japanese and the Koreans but we're not the enemy.
The cost of Canadian steel is higher than American steel.
Can I ask you though, we've seen with the UK that these new tariffs don't apply to them because they've got a trade deal in place.
So isn't that a clear signal to Mark Carney to say look, go and strike a deal with Donald Trump and some of these tariffs will go away.
It's as simple as that.
Well, it isn't an isn't.
You know, sometimes to ears like mine, it sounds like a protection racket disguised as foreign policy.
The UK got an extra 25 percent on top of their zero.
So playing nice with President Trump hasn't exactly come at no cost. And yes, the Canadian government and the U .S. government are involved in very serious high -level negotiations, for the removal of all sectoral tariffs in Canada in exchange for something material for the U .S. Hopefully we can find a win -win.
That might be joint defense spending, it might be access to critical minerals of which we have allowed and they have done, or access to the oil and gas products they need to wean themselves off of China.
Last time, seven years ago, when we got these tariffs, Canada and Mexico negotiated their out of it with the new North American Free Trade Agreement the USMCA.
I anticipate that our solution will be maybe bilateral at the very least continental and it's on the table but in the interim it's still a very messy way to do relations with your closest partner.
Let's see what happens there now.
Thank you as always Flavio for joining us here on the program.
Let's bring in Ross Gerber, president of Gerber Kawasaki Wealth, an investment based in Los Angeles.
Ross, what do you make now of these further tariffs that the Trump administration have put in place?
A negotiating tool?
Do you think they'll be here for some period of time?
You know, obviously we can't predict what Trump's going to do because there's just so much uncertainty every day based off basically his whims. You know, this whole steel debate is really kind of crazy because really the largest producers stealing the world is China.
And so, you know, all these tariffs and started hurting our allies and, you know, really not creating any more jobs in America is just really a self defeating policy to be, you know, frank.
Right, have a listen to this for us.
Ross, you know Elon Musk quite well, don't you?
He's now called Donald Trump's big beautiful tax bill a disgusting abomination.
And we had this reaction from the White House press secretary.
The president already knows where Elon Musk stood on this bill.
It doesn't change the president's opinion This is one big beautiful bill and he's sticking to it What have you made of Elon Musk's comments now as soon as he's let's left government as that the big bro man suddenly finished Yeah, it's clear and I think it started when Trump fired or didn't appoint Isaacman to NASA who's one of Elon's best friends and was part of this whole Elon coming in thing So, it was like the minute that Elon left the White House, the White House took its first swipe at him.
But any reasonable person reading this bill would say the same thing.
I mean, only a complete moron would think that this is actually good for America.
You know, running trillions of dollars of deficits when we have so much debt and we have this opportunity, this window to really kind of whittle down the deficits in the United States with a strong economy and good policies.
But instead what we're getting is just doubling down on even worse policies and tax cuts to enrich the same people have done So well in this country while hurting many of the middle and lower income people in America so so these are regressive policies, you know, this is what a lot of these people voted for so, you know That is the point that you have to say I know I know you strong terms to describe the people who supported up a lot Of the Republican Party supported it as well.
That's why it's got through I know that you're somebody who you know, you've had a keen interest in Tesla.
You've held those shares as well, haven't you now, the fact that Elon Musk has walked away from the government, but the fact that he may be about to fall out with the president of the United States, what could that mean for his companies?
Well, fortunately, Trump was already pretty transparent about how much he was gonna hurt Tesla.
While Elon was there, which is even more insulting about the whole situation that Elon didn't actually do anything to help Tesla when they were friendly.
And now when that it's turning south I can't see this being beneficial for Elon or Tesla in any way And this is what I feared from the beginning because you know Elon has never really worked for anybody else and and nor has Trump and the two egos Certainly can't last in a room together for too long and I was surprised that lasted as long as it did But now it gets interesting because Trump is very vindictive just like Elon and now you've got two very powerful people that will soon Be facing off I think and you know, once again I don't think any of this works out well for Tesla because the bottom
line is people need to want to buy Tesla products or Use this Tesla cab and Tesla's one of the most disliked companies in the world thing Well, yes an interesting time for the company in terms of you know Tesla Well, you'll have looked at where a lot of those raw materials come in will these steel tariffs affect it in any way Tesla's, you know, like all cars use a certain amount of steel So all tariffs on steel will hurt, you know by bringing prices higher for everybody So, yeah, it does.
But I don't think it's as detrimental to a company like Tesla as it is to more GM and Ford, which are also American companies.
And so, you know, tariffs are taxes.
None of it's good for America.
I don't understand why anybody thinks this is good for anything.
You know, these are policies from a different generation from long ago and they didn't work 100 years ago.
I don't know why they think they work today.
Well, they did work.
Some people would say they worked at some point the market doesn't seem to mind them too much. The Dow is up again today.
No, no. The Dow is in the market saying that none of these tariffs are really going to last, that's what's happening.
When we started off, the market was down 20%.
The minute, you know, Trump really hit with all these tariffs.
And then as the market realized this was just bluffing, you know, to try to get deals with people, and then, you know, obviously him backing off many of these tariffs right away.
It became very apparent that this is just a negotiating strategy at best, and at worst, just you know self damaging the global economy.
But the markets are saying this is all going to go away soon.
Ross as always, thanks very much for joining us on the programme, Ross Gerber there.
Let us move to Asia now and South Korea supporters of the liberal opposition candidate Lee Jae -min have been celebrating his victory in the presidential elections.
There we go. Sounds of some of the celebrations.
Mr Lee was greeted by crowds of cheering supporters at his victory rally.
The first mission that you have granted me to overcome the insurrection and not to threaten The civilian with the weapons that shouldn't be used against the people.
Let's go live to Seoul now and speak to Professor Seum Gulhong, he's a public administration professor at Seoul's Kukmin University.
Thanks so much for joining us, Professor.
Oh, you're welcome.
Ah, quite a lot of economic challenges facing the new president.
We have the OECD figures out today, this showed that, you know, South Korea's growth rate is continuing to slow down.
Yeah, that's correct.
That's kind of a structural problem because we have a very low rate of birth, actually the lowest in the world and that was the basic point.
And also there are so many problems from inside and outside of the country.
Just before you are talking about the steel that the tariffs on steel from the Trump administration and that also would become problematic in Korea as well.
How do you see the new president trying to deal with Donald Trump?
I know there's been a series of negotiations already between South Korea and the US.
How is he gonna get that deal that so many countries are looking for?
Well, actually I don't know.
We will do our best and we have very capable bureaucrats and we have very you know kind of serious guys who have been engaging and talking with the Trump administration and also we have very strong business people and very bright business people who are working on this issue already for several months.
So the issue in front of President Lee was to gather all this information and all the points that the United States government raised and also we, I mean he has to consider that There are several issues, not only the economic issues, the tariff issues, but also some where we are kind of a US -Korea alliance and also the security issues as well.
Yeah, that is a huge issue, the security issues and whether or not South Korea...
Do you think that President Trump could make South Korea pay for some of the security help that the US gives?
Yeah, he always told that kind of issue.
Actually, Korea has been paying the biggest portion of the cost of the American troops in and outside of the United States territory, like Europe and Japan.
But South Korea has been the biggest, is paying the biggest portion of the cost. But he always emphasized that, you know, more than 10 times or even more than that have to be paid by South Korea.
So there must be a strong demand for increasing, not only paying the cost of the American troops, But also maybe, as Victor Cha has explained the other day, that he might raise the issue of the withdrawal of American troops from South Korea and linking that issue with Taiwan and Taiwanese trade issues.
Yeah. Let's see what happens on that particular issue, Professor.
But yeah, definitely interesting times facing South Korea.
will they be having to pay more for that US security?
Will he be able to strike a new deal with President Trump?
Well, there are many other countries who are there in Washington trying to negotiate deals at the moment.
That was Professor Sung Gul Hong, who is joining us live from Seoul this morning people that waking up with a new president now in charge.
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You're with World Business Report from the BBC World Service.
We were talking about an election that has been completed there.
Let's head to another country now, which is about to hold elections because the Dutch government has collapsed after Geert Wilders withdrew his far -right party from the governing coalition following a row over proposed legislation to restrict migration.
Prime Minister Dick Shuff confirmed he was stepping down on Tuesday and is expected to offer the resignation of the Cabinet to King Willem -Alexander before the end of the day.
In recent months, the Cabinet has worked hard to implement this, but if one party lacks the will to continue, you cannot move forward together.
In the Council of Ministers we discussed the situation that has arisen and concluded that With the departure of the PVV, there is insufficient support for this cabinet in the lower house.
Of course instability, never good for businesses – and some business owners say the lack of a functioning government in the Netherlands is affecting their ability to do business because many key issues are not being addressed.
Let's look at some of them, with Ingrid Thiessen, who is chair of the Confederation of Industry and Employers, one of the largest business organisations in the Netherlands.
The fall of the Dutch government means that the major problems of the Netherlands still remain unsolved.
What we really hope is that we have a stable cabinet in the next government that can really take decisive action because what we have seen with this government is that they were not able to tackle the major issues.
You talked there about challenges that businesses face that haven't been tackled.
What would you put at the top of the agenda for the next Dutch government?
Is it tariffs, the problems that causes or are there more internal factors inside the Netherlands?
Yes, I must say that the internal problems in the Netherlands are, well when you asked me a priority, there are internal problems that are even I think hindering our economy more than than the whole trade war and tariffs issues.
So for example, we have way too high nitrogen emissions and it's quite a unique problem in the Netherlands But the nitrogen emissions in our country are so high that they hinder our economy So nitrogen is an emission that comes from farming.
It's an environmental issue so it's it's very bad for the nature and therefore there has been a court ruling that Forced the government to drastically cut nitrogen emissions and as long as we don't do that new permits cannot be issued to companies.
And that brings investments, for example, in new factories to a standstill.
So that is really damaging for our economy.
What would you like to see happen there?
Is it about changing those targets changing the law, withdrawing that law?
No, we have to adjust the law a bit.
But the main issue is that we really have to cut the nitrogen emissions drastically.
So therefore, there has to be innovation when it comes to farmers, probably also we will not be able to continue all the farmers that we have in our in our country.
So it is politically very sensitive subject but it has to be solved.
And another priority for business in the Netherlands is that our electricity costs are way too high.
So there we also need a government that takes action to make them lower.
There are clearly a huge series of challenges that that businesses are facing and businesses that talk to you are facing.
We go back to that original question though.
The problem is there will be uncertainty for at least a year.
So in that period, the problems that you have so eloquently described are not going to be tackled, are they?
I'm still hopeful when it comes to the electricity costs, especially since they hinder really investments in our country, especially also investments from companies in becoming sustainable.
And what I see there are also factories are already closing down because of the high electricity cost. So what I see is across Parliament that every political party sees that this is an issue that has to be solved.
On the nitrogen issue, this is so sensitive.
This is really going to be a problem, and I'm really, really worried about that, because it also hinders investments in our country.
A final thoughts from you.
The Freedom Party came to power, didn't they?
One of the reasons was tackling the problems that some people in the Netherlands say are there when it comes to immigration as a business.
Do you need immigration in the country?
Is there enough people to work and do those jobs?
Or is it an issue that needs to be tightened up on?
Well, we agree with the majority of political parties that say that we have to get more of a grip on migration.
But then again, of course, our economy, our companies, our businesses, we need immigrants.
There's a war on talent in the world.
So especially for our tech companies, we need absolutely people from outside the Netherlands and outside Europe.
Ingrid Tyson there with her thoughts on the challenges facing the Dutch economy.
Let's end with this.
There are further signs that the US economy is not failing as well as it has been.
With the rise in the number of redundancies in April, the softening of the jobs market tallies with the consumer surveys reflecting a fall in confidence.
On Tuesday, the Organization for Economic Co -operation and Development raised down its forecast for US economic growth from 2 .2 % to 1 .6%.
We'll be back with Business Matters later.
