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And this is Andrew Peach with World Business Report from the BBC World Service.
Thanks for being with us.
Today, the US and Japan do a deal which sees Donald Trump significantly significantly cut his threatened tariffs on Japanese goods.
Two former bankers convicted of manipulating interest rates after the global financial crisis in 2008 have their convictions quashed in the UK.
And a gift from the government of Malaysia to help with the cost of living.
The cost of living in Malaysia is relatively low compared to the US.
So for, you know, $24, you can buy quite a bit of groceries that could last like a family about maybe half a week to one week.
First, the US and Japan strike a trade deal under which Donald Trump significantly cuts his threatened 25 % import taxes on Japanese goods.
I just signed the largest trade deal in history.
I think maybe the largest deal in history with Japan.
And that was done with Japan.
They had their top people here and we worked on it long and hard and it's a great deal for everybody.
Well, this brings relief to Japan's car industry.
We'll focus on that in a moment or two.
Here's our business correspondent in Singapore, Sorenjana Tiwari.
The announcement of a deal between the US and Japan ignited a rally in stocks, with Japan's benchmark index, the Nikkei, climbing more than 3 % to its highest point since July last year.
Shares in automakers surged in response, with Toyota up by more than 13 % and Honda and Nissan rising too.
The optimism extended to shares of South Korean car makers like Hyundai, too, with the Japan deal fuelling optimism that Seoul might be able to clinch a similar agreement.
I've been talking to Ray Fuji from Lec Consulting in Tokyo.
I'm actually not surprised.
I think Japan was eager to come to the agreement as soon as possible.
So I'm sure they used every channel possible to negotiate with the U .S. to come to the agreement.
And they knew that it's not going to, you know, the tariff is not going to go away.
So the question is, you know, where they can actually settle.
And I think they settle down on 15 percent from U .S. perspective.
Yes, they threatened Japan with 25 percent tariff.
But, you know, the current administration, their purpose is not to put the tariff on the Japanese imports.
their purpose is to make a deal and make a deal that looks good to and somehow advantageous for the US.
So this is a story we're telling almost every day now.
Japan's delighted because the tariff is not as bad as it might have been, even though it's much worse than it was before.
What's the US getting here?
U .S. Well, the current administration can emphasize that they make it.
They made a deal. You know, the Trump president, Trump clearly promised the American people that, you know, they're going to they're going to make a deal with their countries.
And Japan is, you know, quite honestly, it's one of the closest allies to the U .S. And, you know, they knew that they can come to the agreement.
And then I think they can now say, I told you so.
Do we have any details, though?
We've got the headline number.
The tariff rate is lower than it might have been, lower than the 25 % that have been threatened.
With most of the arrangements the U .S. has come to, we've got a bit more specific detail about individual sectors that were controversial.
Well, the auto and parts, it's going to be 15 % tariff.
That's actually 25 % threatened by U .S. but it's actually cut by half so it's 12 .5 but there is always 2 .5 % tariff before so with the 2 .5 % plus 12 .5 % it's now 15 % which is lower than 25 % but which is much higher than before.
Steel and aluminium it's unchanged I think US put a very high tariff on the Japanese import import of steel and aluminum.
And I think that's going to continue.
Agriculture, it's unchanged.
But I think Japan agrees with the U .S. that they are going to increase the import of U .S. rice.
Other importing goods, it's 15 % compared to 25%, again, you know, 25 % threatened.
It's much lower. But, you know, compared to, you know, before the Trump administration, it's much higher.
One consequence of the election result was the prime minister being able to say, yes, we've lost both houses of parliament now, but I still must stay on.
Look, we've got this trade deal to conclude with the US.
Now that's done, his future looks very uncertain.
His future is very uncertain.
And if he comes back and say, well, this is a great deal that we made with U .S., well, this is not a great deal from a Japanese corporate perspective.
So, I mean, I'm an executive secretary of a Japan Association of Corporate Executives, and we actually had a U .S. mission to meet with some of the think tanks and current administration.
administration. And we clearly had the position that the tariff is not going to do any good for both Japan and U .S. So if the prime minister comes back and say, this is a great deal that we made.
Well, this is not a great deal for Japan at all.
And this is not even close.
This is not going to work as a positive news in Japan that the current prime minister and its cabinet will face a very difficult time explaining this is the best they could have done that's very food sheet from let consulting in tokyo this is felipe munoz senior analyst at automotive data firm jeto dynamics felipe thank you for being with us we talk a lot about the pressures on the japanese auto industry what are they well uh japan thanks for having me here japan is is a market that doesn't grow grow anymore.
Actually, it's becoming smaller and smaller.
So, this is one of the reasons why most of the Japanese car makers are so strong outside Japan and they have a strong footprint in markets such as the US.
So, whatever happens in the US, in terms of trade with Japan, it's going to have an impact on the economy of Japan.
So, a deal like this is It's more than welcome by the Japanese industry.
Right. And is there a concern about the Japanese auto industry just because it was so very strong in the past, that it's a comparative thing?
Well, yeah. Japan, the Japanese car industry, has been leading the global production of cars for years, until last year when China outperformed it.
And this industry is an essential part of the Japanese economy, partly because of the trade with the U .S. A big part of the exports of cars from Japan is going to the U .S. There are six Japanese car makers operating in the U .S. for a long time, and all of them have production, I would say, well, most of them have a production site in the U .S. So it's not only about imports from coming from Japan, but they also have a big presence with local production in the U .S. So they cannot afford losing a market like this or becoming less competitive in the U .S. Right.
Japanese carmaker shares went up off the back of this news.
It's certainly less bad than it might have been.
And of course, if you're making a car in the U .S., you've still got to get the steel and pay tariffs on that and whatever.
So actually, the Japanese manufacturers might be doing rather well out of this.
Well, look, I mean, the initial impact or the initial reaction is positive because, of course, when you get a 15 percent instead of a 25 or 27 .5 percent, it depends on what exactly we're talking about.
But when you get a 15 percent tariff, well, those are good news.
Of course, the ideal would be zero tariffs, but we know that under this administration that's not going to happen in the U .S. And Japan is not only a big importer of cars, but as I said before, it's a key local maker in the U .S. So the policy that is being designed in Washington needs to address this reality in which they better not fight too much with Japan because Japan, however, has a lot of investment in the U .S. and at the same time, Japan needs the US.
Its industry needs it, especially in a market that doesn't grow anymore and doesn't have a potential inside.
Felipe, thank you very much indeed for that.
Live now to Ross Mould, Investment Director at AJ Bell.
Ross, the Nikkei was up off the back of all of this as well.
Was that just an initial bit of joy or might it be sustained?
Well, we'll see. But I think, again, the message is very clear.
Not great, but it could have been an awful lot worse, given that the initial 2nd of April tariff proposal from President Trump was a lot higher.
So I think it's a matter of relative expectations.
The market priced in a lot of bad news in April has started to gain, and now again we're getting these deals.
I think this is the sixth deal that America has struck.
It's not the hundred that President Trump promised by July, but it's the sixth one.
So that's progress.
It's not as bad as expected, and therefore, yes, we are seeing a relief rally, not just in Japan, but ongoing gains in Europe, the UK and America as well in terms of share prices.
And we've still got a week and a half before the 1st of August so who knows how many more deals there might be.
Yeah we already had Indonesia, the Philippines, Vietnam, China, the UK and now Japan so I'm sure that other countries will be looking to scramble past that deadline try and get some reduced tariffs through but also again President Trump can sell this as a win he's got some tariffs on to try and raise some revenue and he's also driven a hard deal so that Japan has promised on the face of it, hundreds of billions of dollars of direct investment into America in strategic industries such as semiconductors, silicon chips, steel, AI, and even liquefied natural gas.
More with Ross in a second or two.
First, the UK Supreme Court has quashed the convictions of two former city traders who were jailed for manipulating the interest rates used for loans between banks.
This is the culmination of a 10 -year battle by Tom Hayes and Carlo Palumbo, who argued they were victims of a series of miscarriages of justice.
The pair were among 37 people prosecuted in Britain and the US between 2015 and 2019 on fraud charges.
Nine were jailed. The judges said the original trials had been unfair.
I've just been talking to our financial investigations correspondent, Andy Verity, and started by observing that this all began around the time of the global financial crisis.
That's right. The credit crunch was on and cash was scarce.
No one was lending.
and actually banks wouldn't tell the truth about how much they were really having to pay to borrow funds on the wholesale money markets because they were afraid it would make them look weak and vulnerable like they were running out of cash.
So all the banks were collectively doing something called low -balling, massively understating the cost of borrowing cash, putting in lower interest rates publicly than they were really paying.
Now, the interesting thing about that is the guy who blew the whistle on it is a Barclays trader called Peter Johnson who ended up being one of the very people who was prosecuted for manipulating LIBOR rates.
But actually he was the whistleblower.
And then you had other traders who came along later.
So what then happened is in 2012, there was all this suppressed public anger around the world, really, but especially in the UK towards the banks that no senior bankers seem to have been held accountable.
The worst that had happened was Sir Fred Goodwin of RBS losing his knighthood and James Crosby of HBOS.
Likewise, no one had been to prison.
So when Barclays was fined £290 million for manipulating interest rates in 2012, you had this explosion of suppressed public rage and politicians in Westminster demanding that bankers be jailed, condemning something they didn't really fully understand.
Let's hear from Carlo Palumbo, one of the people whose conviction was quashed today.
And all of a sudden you think like you exist in a different world where you try to speak to the world.
then you can't because they speak a different language language of emotions that are unrelated to anything that's real and and now for me this is the beginning of trying to see if that if that rupture can be healed somehow and and trying to go back to a world where you can actually talk to people and not just being seen as the monster by a system that can only construct and deal with monsters one of the things that's really interesting about this case andy is how how the authorities went after traders rather than governments or central banks, even though they were all involved.
Well, that's right.
And in fact, what the governments and central banks were involved in was much bigger than anything the traders were accused of.
You can measure it, actually.
The maximum change in the LIBOR average of the cost of borrowing cash that could have been obtained by the traders was one tenth of one hundredth of one percent.
So tiny. Whereas the orders from central banks and government in the financial crisis were 400 times the size.
Now, I know for sure, because I've seen the transcript, the Federal Bureau of Investigation was told all about the interest rate rigging ordered from the top and decided not to investigate it.
It's awkward to pursue central banks and governments.
Instead, they went after traders.
But the thing is that what the traders were doing was actually really just normal commercial practice approved of and encouraged by their bosses.
So when these people were prosecuted for it, like Carlo Palumbo, they had this strange, surreal experience of being accused of things which they didn't really understand why they were wrong and then going to jail.
So it's been psychologically torturous for them as well as just an incredible injustice that they fought for 10 years to overturn.
The other thing that the Supreme Court said today was something's going wrong with the criminal appeal system in the UK because they applied five times to the Court of Appeal and each time the Court of Appeal blocked the path to the Supreme Court.
When it finally got there, the Supreme Court agreed with their defence that the case against them was misconceived But that could have happened years earlier.
So there were 19 convictions in total in the US and the UK.
What are the broader implications now of the fact that these convictions are being quashed one by one?
Well, we've just had two convictions quashed so far in the UK.
There's another seven people who were jailed for supposedly manipulating interest rates.
One of the implications is that they're bound to go to their lawyers now and see if they can get their convictions quashed too.
But more importantly, perhaps, there've been calls from David Davis, John McDonnell, Andrew Tyree, who oversaw an inquiry into this back in 2012 when Parliament arguably was misled about it by central banks, to have a proper inquiry into it that will get to the bottom of what's gone wrong here, what's gone wrong, what's been covered up about what the authorities did during the financial crisis, and also what's gone wrong with the criminal justice system ever since then.
It seems as if the traders have been the victims victims of a series of miscarriages of justice and a cover -up.
So this isn't over in terms of legal proceedings in the UK and elsewhere.
What about in terms of how financial institutions operate?
Well, the banks, strangely enough, have paid $9 billion of fines for something which the criminal courts are now saying wasn't even wrong at all, what the traders' money back.
But I think that the Financial Conduct Authority, the Serious Fraud Office and the traders too wouldn't actually regard that as a just outcome.
I think what the senior politicians are saying is they need to get to the bottom of what's gone wrong here.
An international cover up followed by a whole series of miscarriages of justice.
We've delved into this at the BBC and exposed a lot of this scandal before it reached court.
And you can hear that in a Radio 4 series called The Lowball Tapes, which you can get hold of on BBC Sounds.
The Lowball Tapes. That lays out all the evidence we've exposed.
And that's our financial investigations correspondent, Andy Verity.
This is World Business Report with Andrew Peach here on the BBC World Service.
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This is Ross Mole from AJ Bell is with me.
Now, Nigeria's economy is 30 % bigger than we thought before.
How so, Ross? Well, the Nigerians have looked at their economy.
They've rebased the data forwards 10 years, and they've also done more digging and sought to be more inclusive, So they've got better numbers on the digital economy, on pensions, on the gig economy and labour practices, with the result that they think their economy is indeed one third bigger than they imagined previously.
It also shows that the country is a lot less reliant on oil, which is probably a good thing.
but it also has the magic effect of decreasing the debt -to -GDP ratio back to the government's target of 40%.
So it'll be very interesting to see if any other countries decide to review their numbers as well, given that we are seeing a lot of pressure on those debt -to -GDP ratios because debt continues to go up.
Yes, I was going to ask you what the impact was.
So good news on that front.
Does it do anything else to the economy itself?
No, not for the economy particularly.
It probably raises some questions over the value of some of these statistics upon which policy makers, governments, central banks and financial markets all rely.
The UK, its own Office for National Statistics, is having difficulty right now gathering what it views as reliable employment and unemployment data.
So that's something for financial markets to chew over.
Maybe that's why Sir John Cooperthwaite, when he took over as the Governor of Hong Kong in the 1960s, the advice he gave to anybody looking to run an economy was the first thing to do was to abolish the Office for National Statistics.
Let's talk about Apple and Google, who might have to change the way they work and operate their mobile services, at least in the UK?
Yeah, this is the UK regulator looking at competition and whether these companies have got particularly dominant positions in terms of things like app stores, operating systems, browsers, and whether they are wittingly or unwittingly stifling competition.
Classic case of successful companies.
In the end, they always face the challenge of either competition, customer disaffection, and if they don't work, then the regulator will come for you and try and perhaps make sure that you make a little bit less money.
both companies understandably pushing back on this apple saying there'll be privacy problems for customers alphabet saying that it's an open source code so so what's the problem here so we'll see what happens but the uk regulator i mean these companies have faced fines before in europe interesting to see whether the uk goes down the fines route or not but if so that might upset somebody called president trump who let's face it has been very keen to defend american companies from regulatory pressure in the uk and europe next we're going to malaysia where the The government has announced a one -off
cash giveaway for all adults in a bid to ease growing concerns about the rising cost of living.
The Prime Minister, Anwar Ibrahim, said the one -off payment of 100 ringgit, about $24, would be given to everyone over the age of 18 from the end of next month.
Also, there's going to be a subsidy for the cost of fuel.
Doris Liu is a Malaysian economist and assistant manager for Research Institute for Democracy and Affairs.
As of now, cost of living has always been a key issue in Malaysia.
And especially for the lower income people, they have been repeatedly getting subsidies from the government in the past. And, you know, there's also been like subsidies locally, either from petrol subsidies or even electricity subsidies and stuff like that.
So the low income people have been, you know, constantly getting help and assistance from the government.
So I don't think this is like a new issue we are facing.
Okay, and the idea of being given a one -off payment of $24 sounds unusual in most parts of the world as a way of trying to deal with this.
What can you buy for $24 in Malaysia?
Actually, the cost of living in Malaysia is relatively low compared to the US.
So I would say that for $24, you can buy quite a bit of groceries that could last like a family about maybe half a week to one week, depending on what is the size of the family, et cetera.
But this 100 ringgit or $24 is not just like cash hand out.
It's for shopping in a low -cost grocery shop for essential items. So that's what it's aiming for.
And if it would make a significant dent in your week's shopping, I can see it'd be pretty welcome.
It is welcome. To be honest, for the consumers, for the majority of Malaysians, This 100 ringgit is a good thing, right?
It's like increase the purchasing power, enlightens the wallet.
I think the question here is not about whether the consumers are happy with it because obviously we are.
I think the question is whether like this is the right time for the governments to introduce such stimulus considering that our inflation this month and last month has been one of the lowest since the pandemic, which means that cost of living is not really so much of an issue currently.
And secondly, I mean, the government injecting money, they have to spend a huge amount of money in order to give everyone that 100 ringgit.
So it's more on the government's fiscal profile.
There's a little bit more concern here.
I mean, I suppose the criticism of this kind of thing would be, yes, it's welcome.
It's a very expensive way of doing it and it doesn't really fix anything.
It doesn't really fix anything in the economy or it doesn't really change anything in the long term.
You can't keep doing it.
Yes. In fact, this is concerning because the Malaysian people are low income and immediate income are used to receiving subsidy.
Not just for this RM100.
Every year, depending on the income group, people receive anywhere between RM600 to RM1 ,200 of subsidy every year going into their account.
And this is an additional money.
looks like a handout for people to buy the grocery and definitely unsustainable.
So in the short term, there might be a small spike in consumer demand, but in the longer term, it's not going to shift any of the consumer consumption pattern ahead.
This is Doris Lee with me from Malaysia.
Let's go to South Africa next, where the competition tribunal has approved Can I Plus' bid to make a 35 billion rand or 2 billion dollar takeover for the TV broadcaster multi -choice This could reshape Africa's media landscape.
Whether it reshaves it enough to take on the global giants like Netflix, I'm not sure.
Let's talk to Tambe Abenson, founder and publisher of Akaroko, media platform providing coverage of African film, television and streaming markets Tambe, thank you for being with us What is Can I Plus up to here?
Well, you know, South Africa's competition tribunal, as you just said, has approved Canal Blue's acquisition of MultiChoice, which is the largest paid TV operator across Africa, not just South Africa, by the way, and the parent company of Showmax, which has long been Netflix's competitor on the continent.
So this gives Canal Blue legal clearance to move forward with full control, pending some final sort of formalities with licensing separation and meeting some local ownership rules.
They will have control of the company.
And by extension, I believe they will essentially be the access point for streaming, television and possibly even cinema across the continent going forward. Is the genesis of this a focus on French -speaking parts of Africa?
Well, Kanoplo has long dominated French -speaking African pay TV markets, satellite streaming, et cetera.
And they don't really have much of a footprint in English -speaking Africa.
That has been multi -choice's domain.
Netflix has been eating away at that.
But as we know that Netflix has obviously pulled back a little bit, at least they've been cautious and had sort of a more South Africa -focused presence with a measured presence in Nigeria and Kenya.
So now this is essentially Canal Plus saying that we want some.
Maxine Sada, the CEO of Canal Plus, has already made this very clear that Africa overall is going to be sort of core to their global expansion.
And the acquisition of the largest pay -to -reoperator on the continent, which primarily has served English -language territories for much of its existence, was very much a part of that plan.
I am. Canal Plus already owns several production companies, leading production companies in certain Francophone African countries in Rwanda, in Senegal, in Cote d 'Ivoire, and then one in an English speaking country, which is Nigeria.
So they've got quite a lot of TV infrastructure already rooted in the French speaking parts of the continent.
There's clearly huge growth potential in Africa, but how are they going to take on Netflix and the other global giants?
Well, Netflix is already sort of a third lap, but Netflix is already, we can say, sort of caved in in a way.
I mean, like I said, Netflix has held most of its focus has been in South Africa with a measured presence, limited presence in Nigeria and Kenya in terms of local sort of original content production.
And very recently in the last month, Netflix signed a bundling agreement with Canoplo to make its content available in Francophone African countries because Netflix has really no penetration in Francophone African countries.
And instead of having to build from the ground up, essentially, and face similar infrastructural challenges that they've faced across much of the continent where they actually have real operations, They essentially have sort of handed the keys to Canopolo and say, OK, here you go.
You distribute our content.
The infrastructure is everything.
Thank you very much indeed for joining us, Tambaya.
I really appreciate it.
Tambaya Benson with me on World Business Report.
There's much more about the stories we've been talking about.
BBC .com slash news is where to go online.
From me, Andrew Peach and the team, thanks for listening to the programme.
