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Hello and welcome to World Business Report from the BBC World Service.
I am Busi Adibaya. Coming up... Indian exporters are now facing 50% tariffs on goods going into the US.
How much pressure will that put on businesses and jobs?
We hear from some of those caught in the crossfire.
Also Europe's car makers are warning strict green targets could cost jobs unless the rules are eased.
And in the US, Cracker Barrel has restored its famous old-timer logo. after customers rejected a redesign.
Well, let's get started right away. And from today.
Indian exporters face 50% tariffs on most goods going to the United States.
Washington says its punishment for New Delhi's continued purchases of Russian oil arguing that money helps fund Moscow's war in Ukraine.
While pharma and electronics items are not included, a large share of India's exports will be hit.
I've been speaking to my colleague Davina Gupta in Delhi.
It's been a difficult day for Indian exporters because We are talking about nearly two-third of Indian exports, which experts say is around $55 billion worth. which will be hit with these 50% tariffs.
These are harshest ever tariffs that these businesses because America remains a lucrative country. market for them.
US was India's largest trading partner Last year.
So we're talking about businesses which are into textile or garments. leather like shoes and bags, shrimps, automobiles, components.
And we're also talking about gems and jewellery.
For these businesses, it's been quite difficult to figure out what to do next.
Now I've been speaking to some of these small manufacturers and they say that They are afraid there could be job cuts if these tariffs prolong.
They would also look at a scenario where they have to wind down eventually. because they won't be able to keep up with the competition and who is that competition?
We're looking at, say, for example, in the textile sector, garments coming from Bangladesh and Vietnam which have lower tariffs. to enter the American market.
And for Indian companies, I'll have to pay 50% from here on.
So it makes them virtually uncompetitive.
They would be quite costly and they know there'll be. a repercussion from there on.
To deal with it. though India's Prime Minister Narendra Modi has announced some... tax reforms.
There are also talks of giving some subsidies to these exporters.
But it will be very little and not enough for most of them is what they have told us.
They say that they need to diversify their markets to other international locations, which cannot be done in short term.
In one word, BC, short-term pain for most of them.
Let's look beyond India. What's the global picture like?
Could this tariff war push India closer to Other partners like China, for instance.
Well, India is looking at a realignment of its geopolitical partners.
India and China have been locked in tensions because there was a clash at the Himalayan border. and in 2020, and because of which soldiers on both sides were killed.
And from there, these relations have been frosty.
But now we're seeing a thaw in those relations.
India's prime minister is going to visit China for the Shanghai Cooperation Organization. summit later this week it's his first visit in seven years China's foreign minister was in India recently as well.
And both sides have talked about mutual trade. and also talked about how to resolve their border issues.
Now, this comes in the backdrop of both these countries being threatened. by the U.S. administration. around tariffs.
So they're trying to find common ground over here.
But it won't be easy because China has investments in India's neighbour Pakistan and they have had a close to conflict situation in May itself, where Pakistan was using Chinese made jets.
So until and unless those Geopolitical issues are resolved.
India is quite wary of going full out with its friendship with China.
But it is a welcome step and India hopes to benefit from this regional alliance too. get the US back on negotiating table.
The BBC's Davina Gupta in Delhi there. Now let's hear from one of those directly caught in this crossfire.
Vishwanshu Agarwal is the director of a major garment exporter in India.
Customers are now, you know, with this 50% tariff, especially US customers, only US customers are not willing to sort of, they can't absorb these kind of margins in our industry.
And they are definitely looking for alternatives so orders haven't been coming in lately. and things are not good, orders are drying up, and things are not very good at the moment.
What we are doing currently being slightly larger and this is impacting us a little more.
We are offering some discounts to the customers to sort of navigate through these tough times.
We believe eventually that this, we hope that these tariffs don't continue at least the second 25%.
And I think in the next five, six months, if you can absorb these losses, then we can. move forward from there.
Well, let's bring in Sona Javeri Kadri, who's founder and CEO of Diaspora Spice Company.
Which source is Spice? in India and exports them mainly to the US and the UK.
Many thanks for joining us, Sanaa. How are you feeling today as the tariffs kick in?
Frankly, I'm exhausted. We've been navigating this since March and, you know, I will wake up tomorrow to maybe a $50,000 tariff bill to pay.
So Pretty, pretty exhausted. I can only imagine because, I mean, in $50,000, like you mentioned, that's huge.
So how hard? will it be to absorb these costs before passing them to the customers?
For the past six months, we've been absorbing it, but ultimately we're a small company and by our most conservative projections, these tariffs are going to cost us half a million to three fourths of 750K. which is just not something that we can withstand, even if it's just for a few months.
And so we have made the decision that as of next week, we will have to pass on the cost to the customer.
And... It's heartbreaking for me, but ultimately I work with 140 regenerative farmers across India and...
The last thing I want to do is squeeze them on cost for their harvest.
And so... Yeah, we've made the tough decision to pass it on to customers.
How difficult would it be? Aren't you worried that, you know, juggling those calculations might lead to loss of some of your customers?
Absolutely. It is going to shrink and slow down our growth significantly.
You know, whilst I source from India and I'm of Indian origin, I am an American and I run an American business and Ultimately, this is both going to cause the slowdown of an American business's growth and provide a much more expensive product to the American customers.
So I'm going to be hitting the road over the next few months to the EU and growing further in the UK, looking at Australia.
I just, I have to de-risk my market, you know, And talking about the risk in farmers as well are involved.
So what impact? will this have on them in India?
Yeah, so the 140 farmer families that we work with, They probably have in turn totally about 5,000 farm workers that we work with. and that we're trying to pay above a living wage to if we are not able to grow or be profitable at the rate that we're currently seeing things decline, we would have to pull back our purchase orders for next year's harvest and We are paying our farmers 4x the commodity price and so they really depend on us for that cash.
As of now, I'm predicting that we will stagnate, so we won't grow next year.
So they won't earn less but they won't earn more.
But if things continue, you know, Once we increase prices, we'll really see how elastic or inelastic our demand is. and my harvest will have to shrink accordingly.
Will your business move elsewhere to competitive markets? end of the day.
Yeah, I mean, we launched in the UK a few months ago and we're so grateful that we did because that market is continuing to grow and yeah.
I'm an American business owner with young kids, so my desire to move elsewhere is very low, but I'm really left with no choice.
Sana Javari Kadri, founder and CEO of Desperate Spice Company.
Many thanks for speaking with us on World Business Report.
Now, at the heart of this rift between Washington and New Delhi is India's purchase of Russian oil and the United States' argues that trade supports Moscow's war in Ukraine.
What does this mean for India's energy security?
Anup Wadhawan is a former Commerce Secretary to the Government of India and he told the BBC the expected for India to stop using Russian oil is unfair.
Then why should we turn it off? The West will implement sanctions on their own terms.
Europe has to import gas from Russia. They will continue to import.
America needs to buy some things from the Russians, fertilizer and whatever else.
They'll continue to buy it. Why should only a developing country with a per capita income of $2,500 have to face the crunch of unilateral sanctions. implemented in the most unreasonable manner.
Narendra Taneja is Head of Energy at the India Section of the BRICS Business Council.
We import roughly 88% of our total requirement of oil, which is roughly 5.5 million barrels a day.
So which means that much of the oil that we consume every day is imported.
And since we are a developing economy and oil is central to Indian economy, We are extremely sensitive to the price of oil at the same time.
So therefore, every dollar matters. Every dollar that we spend on importing crude oil.
So if a country, any country that offers us more attractive economic terms, or discounts we go for it is russia the only country offering the best terms Well, if you look at the history till 2022, that was before the Ukraine crisis started,
We were hardly importing any oil from Russia.
A bulk of oil, in fact, was sourced from the Gulf. the Middle Eastern countries.
But then we saw a majority of oil producers from the Gulf countries, like Saudi Arabia, Kuwait, Iraq, Abu Dhabi, and all these countries got very busy selling oil to the western part of the world. because they had imposed sanctions against Russia and they stopped importing oil from Russia.
So then Indian refineries, they started looking for additional sources.
When you look at the global supply system, global sources, we find that Russia offers very attractive terms.
So that's why our refiners have decided to have been going there and buying oil from them.
And are Indian refiners still buying Russian oil as we speak?
Well there are no sanctions by India against Russia.
There are sanctions imposed by Western countries for the reasons they know the best.
There are no United Nations sanctions. Those are kind of more unilateral sanctions by some countries in the West.
Good luck to them. As long as Russian oil exporters continue to offer good price attractive terms, Indian refinement refiners will buy from there if they stop giving it. and they will not buy from them.
If the American oil exporter, they start giving equally good or attractive terms as Russia, they will go and buy more from America.
We buy oil from America too. But it's all about economics.
If Britain can offer better, France can offer better, or any other country... even China or any North Korea, any country, if they offer better, more attractive economic terms.
Our refiners will go away from them because there is no politics in it.
What about the small businesses now, those manufacturers who are being caught? in this crossfire.
I mean, 50% tariff to the US is a lot. You know, it's taken a toll on their businesses.
Does this make it harder for India to sustain this strategy?
I would likely to see a double down to Russian oil because the stakes are obviously so high at the moment.
Well, there are two points here. Number one is that India is a sovereign country and Are we telling any country in the world, don't buy your oil or for their products or any other commodity for country X or country Y?
You are a sovereign, you can do whatever you feel like doing.
So if, for instance, The US is telling India, don't buy oil from Russia for whatever reasons.
And it's the same US. until recently was actually encouraging India to buy oil from Russia. because India has been buying oil from Russia.
The result was that despite the Western sanction, the result was... the oil prices were kind of well within the limits.
Otherwise, had India not started buying oil from Russia in 2022, 23, 24, oil prices would have gone $150 per barrel.
And who would have been the worst victim of that?
American consumer because they consume the maximum oil in the world, the biggest consumer of oil in the world.
So India actually protected American consumer.
India protected President Trump's voters.
So they should, instead of thanking India, they are trying to punish India, which is extremely unfortunate and, of course, is illegal.
But in America, they think they are big military power.
They are big economic power. They give a damn to law.
That's the United States of America and President Trump.
Narindra Taneja, Head of Energy at the India Section of the BRICS Business Council.
You're with World Business Report from the BBC World Service.
Well, let's bring in Ross Mould, Investment Director at AJ Bell.
Ross, let's start with the Federal Reserve. is threatening to sue Donald Trump over what she calls his... his illegal attempt to remove her with her lawyer insisting that the president actually has no authority to do so.
How are markets reading this clash today?
Hello, BC. They're continuing to watch it with great interest, and the dollar has lost... ground consistently during the second Trump presidency and investors have started to perhaps diversify their share portfolios away a little bit from America towards more emerging markets or Europe So they're definitely watching this and it is giving some investors pause for thought, if not necessarily today.
Now let's talk about NVIDIA now with markets are bracing for its latest earnings.
With a chip maker now worth over $4 trillion, can one company really swing the direction of the entire world? higher US stock market there?
It will certainly have a huge impact on sentiment in the very short term, at least, and certainly the gains made in Nvidia. and the other members of the Magnificent Seven, like Amazon or Apple or Meta, Microsoft and Alphabet.
They've got a huge influence. They've been a big percentage of earnings growth for the US stock market, a big percentage of stock market gains. and the massive $400 billion spending they're doing between them on AI this year in servers and data centres.
It's probably moving the dial a little bit in terms of GDP as well.
So it's going to be a hugely important test for native sentiment and also wider market enthusiasm for technology stocks.
Ross, let's turn to Pharma now. Eli Lilly is freezing sales of its weight loss drug, Monjaro.
Given how much excitement has been prized into obesity drugs, how big a blow?
Could this actually be for the sector and investor sentiment?
I assume it's a short-term phenomenon. They've put their prices up considerably in the United Kingdom by up to 170%. not affecting the National Health Service.
Retailers are able to get their own discounts.
It's private buyers. who I believe are nine-tenths of the total consumption here in the UK. who may be affected and they're the ones who've been scrambling for supply ahead of this price increase.
I can only assume that Eli Lilly are looking to manage inventory and stock. and also perhaps keep some supply back after the price increases go through, Day One say.
We'll see how that plays out in the coming days.
Many thanks, Ross Mould, Investment Director at AJ Bell.
Well, let's talk about Europe's car industry now, which says the EU's green transition plan risks backfiring.
And the plan is meant to cut emissions with steep sea altitude. targets by 2030 and a ban on new petrol and diesel cars. by 2035 but suppliers and manufacturers warn the targets are too rigid.
Matthias Zink, president of the European Association of Automotive Suppliers, shares his thoughts.
Well, on the one hand, we see that the sales of e-mobility or electric cars is lagging behind expectation?
Are we seeing lacking end customer acceptance?
We see a lot of trouble in the automotive industry, and that holds true for the car makers, for the OEMs. end of the suppliers, finally resulting in more and more and bigger and bigger announcements on job losses as we see the realization of the immobility being stuck in the middle actually and that's exactly why we spoke up or about to speak up and addressed as well this common letter with the car makers.
In your statement, some of the things you've called for includes tax breaks. and subsidies, how would that actually help drivers to make the switch to cleaner cars?
Yeah, I guess actually it's more about stable frameworks, regulatory conditions.
If you look at it now, we're seeing The regulation for 2035, the ban of technologies, including the combustion technology, And we see subsidy schemes come and go.
But what we're really missing is a... as stock taking of the current situation, and then a more holistic and more pragmatic approach for the whole of Europe.
And do you see Europe's dependence on Asia for battery or for batteries rather as part of the problem?
That's one of the problems, actually. we right now, at least right now, force ourselves as Europe into pure battery electric cars.
I guess it's easy to forecast that nearly 100% of of the battery supply will come from China since they have a very thorough supply chain, starting with the raw materials, with the mining, with the technology, with the assembly, that's one of the major concerns.
Yeah, but it's not only the battery or the dependency there, I guess we have a lot of other dependencies as well on magnets, on cost structures and that's things we have to openly talk about. to address that together as industry and policymakers. and then redefining this roadmap towards green.
But why shouldn't companies invest instead?
They do, but they lack competitiveness. First of all, we are lacking raw materials here in Europe. um we are we are having way too high energy prices here we have high labor costs, that's a pretty complicated setup we have. and a lot of different influencing factors we have to address.
And some of these challenges you've mentioned will take time, I suppose.
So how long do you think it would take before...
Europe would be ready to make this transition.
Well, it's not easy to scale that. On the other side, if you take the current... finish line 2035.
It's definitely too early in terms of realization, availability. um and and framework so And it's a combination of two things.
We actually defining or are banning technologies like combustion or are we starting to even talk down the hybrid technology.
So we'll be putting everything on the battery electric car for 2035.
What I definitely can say, that will fail.
Whether then 2040, 2045 is the right date, only to say what I would do, I would definitely run a technical competition not only battery electric vehicles i would i would again even call for for thin fuels and hydrogen I would probably keep up the targets, but I would open up a technological fair competition and this is what we're not having today.
But do you not see that as a threat to the industry as a whole?
Yes and no. If it's communicated wrongly, if it's...
Continuously communicate black and white or as binary as we do, either combustion or electric. then we will run into a problem if we are more smart and more pragmatic.
I guess then we stand a chance to properly address that to the industry.
Mathias Zink, President of the European Association of Automotive Suppliers there.
And in March. The Commission agreed to give automakers extra time to meet CO2 emission reduction targets. initially set for 2025.
Members of von der Leyen's centre-right grouping have also called for for the EU to withdraw its 2035 ban on combustion engines.
Now listen to this. So Cracker Barrel's iconic logo is the latest victim of my generation's war on beauty.
My point is millennials can't resist taking anything interesting and sucking the life out of it until it has all the charm of a week old head of lettuce.
Here's the deal. We don't mess with grandma's stuff.
We don't mess with grandma's stuff. It's just easy as nuts as that.
As a mamaw and someone moving into the freshman class of the old people, I'm learning some things.
I don't like people to mess with my stuff.
Who had issue with this? Who wanted this change?
Not me or anybody I know. It's just, this is completely out of hand.
Bring back the regular cracker barrel. We don't want this sterilized nonsense.
It's not Cracker Barrel. There's nothing.
Nothing. The soul is gone. So did you think people online would actually care so much about a logo for a restaurant? and shop chain while US company Cracker Barrel changes its logo but has now changed it back to the original after a backlash like we just heard there.
The image of a man known as the old-timer will remain, the companies said yesterday. and a social media post.
Well, Molly McClure is a marketing expert based in Bern, and she joins us from Texas in the U.S., Molly, many thanks for joining us.
Why does Cracker Barrel seem to mean so much to Americans?
Thank you so much for having me. So let me try and paint a picture for you.
Every spring break when I was growing up, we would road trip from my parents in Michigan to my grandparents in Florida.
And without fail, we would always stop at a Cracker Barrel.
I love the rocking chairs. I love the food.
I love getting lost in the country store looking for trinkets.
It was tradition. It was a memory. And that's what a heritage brand is.
Cracker Barrel was founded in 1969. And the man on the logo that they removed, it's really important to note, he was the uncle of the founder.
His name is Uncle Herschel. So when they strip that that logo down to just bare font in a yellow background, they stripped all the memories from when I was a child growing up, along with many other stories of Americans that looked to Cracker Barrel as that ritual and that staple.
So, I mean, you're talking about wiping the memories there but...
Many would ask, I mean, what's the correlation with the logo and the food?
What did they actually do wrong here? They took the soul away from the brand, if you ask me.
I think maybe the best analogy to describe it is for people that don't live in the United States is take a look at something like an Oktoberfest in Germany.
It would be like if they removed the lederhosen, the traditional leather shorts with the suspenders and the steins. and they replaced it with modern uniforms and skinny aluminum cans of beer.
Maybe the beer still flows, but you've ripped the entire soul of octopuses.
So have they now got it right by, you know, reversing to the old logo?
Yes, I think that they are spot on to go back.
And it's a heritage brand. You can modernize a heritage brand But you have to do it in the right way.
You have to bring your customers along for the journey. and you have to pay homage during every single step of the modernization to the original brand and the original story, and that's where they failed.
They didn't bring people along. If they need any marketing help, they can give me a call.
But heritage brand, you have to be very careful with.
Have you dealt with issues like this in the past?
Luckily, I've never been part of a rebrand with this much of a controversy.
Any rebrand that I've ever been a part of, it always starts with the customer.
They have 8 million people in their rewards program. a simple focus group or some conversations with customers before they went live and made all these changes. this would have stopped any sort of a rebranding based on the backlash.
You just... You have to start with your target audience and your customer has to be number one.
Customers are always right. right, Molly.
Thank you so much, Molly McLaurin, marketing expert in Texas.
Thanks for joining us on World Business Report.
And that said. On this edition of World Business Report, Roger Hereman will be back much later.
