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Hello, welcome to World Business Report here on the BBC World Service.
My My name's Ed Butler.
On today's edition, one day after Donald Trump has offered trade deals to some and punished other countries with higher tariffs, we're assessing the winners and losers of what we've been seeing from Europe to Canada to East Asia.
And we're asking what it could mean for the future.
As to what it means for the global economy, it will mean less efficient production.
It will mean higher inflation and will probably mean lower demand.
mind. Plus, if you're one of the nearly 1 billion workers around the world who work remotely these days, tell me, when do you really tend to clock off at the end of the working week?
You got me. Hang on, it's ten past three.
Are you working from home?
Well, technically, no. Some people do stay till five.
Some people don't. We will be asking that question forensically later in the show.
First up, though, The US job market has slowed sharply, we've discovered today.
In the last month, the figures show that just 73 ,000 jobs were added to the US economy, and job creation generally has been substantially weaker than had been previously estimated.
In fact, it's virtually ground to a halt by some people's reckoning.
An economist called these the worst job numbers since the Covid pandemic.
epidemic. Congressional Democrats say this is evidence that President Donald Trump's trade policy is crashing the U .S. economy.
Chuck Schumer is the Democrat leader in the U .S. Senate.
It is disturbing to say, but the chickens are coming home to roost on Donald Trump's destructive trade war.
And the American people are paying the price.
You sow chaos, Donald Trump, you reap chaos.
And that's what the president is finding out this morning.
Donald Trump's chaotic tariffs are already bleeding our economy of good -paying jobs.
Well, in response to these latest figures, the president has lashed out angrily at the very body that publishes the statistics.
Mr. Trump has summarily fired the commissioner of the U .S. Bureau of Labor Statistics.
Her name is Erica McEntarfer, and she's accusing her, the Biden -appointed official, of rigging the numbers to make him look bad.
We can look at that in a moment, but perhaps we should begin by looking at these numbers in more detail.
Nancy Vanden Houten is the lead US economist at Oxford Economics.
She focuses on the US labour market.
it. Hi, Nancy. These figures, they are bad, but how bad are they in your view?
Well, first, thanks for having me on at the end of this hectic day.
The employment figures were quite soft and a lot weaker than expected.
The gain in jobs we saw in July did come in below expectations, but really the eye -popping aspect of the report was the huge downward revisions to employment growth that we saw for May and June.
Revisions to this data is are typical.
But these were, you know, particularly large.
So they the picture we're getting is of a much slower pace of job creation than we previously thought.
Yeah, I mean, just on that downward revision, of course, the President, I guess, is using that as evidence to suggest that there's something has has gone terribly wrong in this Labour Bureau of Statistics.
How do you account, I mean, how is it, I suppose, in general terms, without commenting on that, how is it that the Bureau of Statistics can revise so dramatically what it had previously published about what was going on in the labour market?
I think the answer to that is pretty straightforward. The Bureau of Labour Statistics surveys a large number of employers each month about the number of people that are working for their businesses.
And sometimes with the first pass of interviews, there's not a very high response rate, but then they're interviewed two more times after that and generally get more responses and can give us a more accurate estimate.
So I think that that explains a lot of what we saw in terms of these big downward revisions.
So you're saying there is no evidence for suggesting that there would have been any deliberate manipulation or indeed just incompetence on the part of the Labour Bureau?
Right. I don't think either of those things are true.
The fact that we get revisions to the data, and sometimes large revisions, makes it hard to have a firm grasp of what's going on in the labor market based on one month's data, but that's why we and Federal Reserve officials say you can never rely on one month of data.
I mean, you have to look at a lot of different indicators over a period of time.
So how do you read the drop then?
What's going on exactly, do you think?
Well, I think that, you know, you were mentioning earlier, you know, tariffs.
I don't know that we can draw a straight line from the president's tariff policies to what we saw in the job status today.
But one thing we do know from a lot of anecdotal evidence is that not so much the tariffs, but the uncertainty about where they would settle.
uh caused a lot of you know businesses to put their hiring plans on hold uh so i think that that's part of it okay you know one thing also to point out is is that while we're seeing slower job growth we're also seeing fewer workers wanting jobs um and that's uh largely a function of a big reversal of immigration flows uh foreign -born workers made a huge contribution to labor force growth over the past few years but that's turning around so we have a scenario where there's slower job growth but also fewer people wanting jobs and that's one reason why we've yet to see any big rise in the unemployment
rate okay interesting thank you nancy vandenhouten there of oxford economics let me turn to chris low now chief economist uh for fhn financial in new york chris our regular markets guest as well tell me about the reaction to these figures that we've seen on the markets today?
Well, the most profound reaction was in the bond market.
Yesterday, the bond market had the odds of a September rate cut at about 40 percent.
September, of course, is the next Fed meeting.
Immediately after this report was released, within an hour or so, those odds climbed closer to 90 percent.
And in addition, the number of quarter point cuts What's expected this year has risen.
Yesterday, thinking fewer than two, now thinking could be three.
Right. And so you're talking about the bond market there, which is effectively, of course, the guys buying and selling government bonds, the cost of US debt.
When these yields change dramatically, that is adding substantially to the cost of government borrowing.
improving. That's exactly right.
So with the reaction in the market today, the borrowing costs did go down.
Interest rates lower effectively across the board. And that is the mirror of what happened in the stock market.
Stocks up, I'm sorry, stocks down sharply today.
You know, basically, I think if you want to boil down traders' reaction in a nutshell, the equity folks saying, my goodness, these numbers look downright recessionary.
The bond people thinking, well, that should get the Fed moving to lower interest rates.
Right. Now, speaking of the Fed, we heard about the sacking of the Bureau Chief for the Labour Bureau, another departure today.
This is not obviously for the same reasons, but the US Federal Reserve Governor Adriana Kugler has said she will be resigning from her position effective next week.
So she's one of the rate setters, right, within the Federal Reserve.
I mean, what does that signify, do you think?
Well, quite a bit, in fact.
Dr. Kugler has posted her resignation letter on the Fed's website, and I have read it.
She didn't offer a reason, but we do know she missed the Fed meeting this week for personal reasons.
The other unusual aspect of this resignation is it's effective on August 8th, so effectively a week from now.
As far as what it means from a policy perspective, Dr. Kugler was one of those on the Fed who is a permanent voter, has been pretty strongly opposed to rate cuts all year.
But maybe more important than that, it gives President Trump his first opportunity in his second term to appoint a Fed governor.
And that's important because he must eventually choose a Fed chair from among the governors.
So whoever fills that seat is likely his top candidate to take Jay Powell's seat next summer.
One to watch closely, clearly.
Chris Lowe, thank you very much indeed.
Now, let's switch to the issue of tariffs, which, of course, we've been discussing a lot this week.
And we're going to look at Canada now.
The trade rift between Canada and the US has been deepening, it seems. President Donald Trump has hiked tariffs on some Canadian goods up as high as 35 % this week.
Earlier, I spoke to Laura Jones.
She's President and CEO of the Business Council of British Columbia, one of the key states in Canada.
And I asked her what she thought about the announcement.
I don't think anyone is shocked about what's happening today.
I think it was clear that this was coming and Canadians have gotten good at bracing themselves.
But there's a lot of concern.
And this has been going on since January.
If there's one thing businesses hate, it's uncertainty.
And this, of course, continues the ongoing uncertainty.
I should say that about 90 % of the value of goods going into the U .S. are actually not affected by this because they're compliant with the U .S.-Mexico free trade agreement.
But that doesn't provide a ton of comfort because we've got some really really serious problems with some of the goods that are outside of that.
Which goods are they?
Just remind us. So steel and aluminum right now are facing 50 % tariffs.
We've also got softwood, which is a really, really important export for Canada.
They're under even more stress and pressure now as those tariffs look like they may be going up.
Now, I suppose there are different reactions that could come from your Prime Minister.
He says says Canada must be its own best customer, it must diversify.
Is that realistic? Is there anywhere else you can go with these products?
Well, I think most Canadians right now are very supportive of the idea that we need more diversity in our export markets, but the reality is that three -quarters of our exports go to the U .S. They are our biggest trading partner, and, of course, our economic fortunes are very closely tied to the state of the U .S. economy.
So it's very troubling to see how far the relationship has deteriorated in such a relatively short period of time.
I mean, it feels like decades since January, but really that's just six months ago.
President Trump has linked some of these tariff measures to Canada's position on Palestine, hasn't it?
Is there a sense among you, your members, that you're quietly nudging the prime minister and going, please don't recognise Palestine, just don't annoy Donald Trump any further.
We need a deal here.
Well, the ballot box question for Canadians in the last election was clearly who is in the best position to sit across from Trump and negotiate.
So I think that Canadians are really rooting for Carney to succeed in this.
However, I think there is an emerging concern that maybe the relationship between the two may be deteriorating a bit too early to say for sure.
But for Canadians, that relationship is under a microscope.
People are watching it very, very carefully.
What do you want from the government then in the short term?
Is there relief that you think is realistic, is viable?
Can Canadians themselves pull together and mitigate the pain here?
Well, Canadians have been doing a lot.
Many just ordinary Canadians have taken matters into their own hands, canceling vacations.
And the data supports this as well, that fewer Canadians are traveling to the U .S. They're buying Canadians.
So they're trying to send a message to the Americans that, listen, it's not you, the people that we're upset with, but this policy is really hurtful to us.
So we have to kind of take a stand in any way we can.
And I think that that's having some impact.
But ideally, we just get to a much better place with all of this soon.
And the big trade agreement that the US, Canada and Mexico have needs to be negotiated and renewed by next year.
So I think that's the one that people are really watching and wanting our leaders to do everything we can to kind of steer a careful, credible way forward to a better place.
Laura Jones of the Business Council of British Columbia here on World Business Report from the BBC World Service.
Well, of course, many countries around the world are today taking stock of what the latest terms of US trade will mean for them.
In a dramatic announcement, a number of Southeast Asian countries have suddenly discovered after the official deadline passed that they would be getting a lower tariff rate for their imports to the US than some had feared.
Joining me to discuss the situation for Asia, I'm delighted to welcome Daniel Crittenbrink.
He's a partner at the Asia Group, but he was also under the Biden administration, the US Assistant Secretary of State for East Asian and Pacific Affairs.
Hello, sir. Tell us, firstly, what you make of these deals.
A big cut. We've got Malaysia, Thailand, Cambodia, Indonesia and Vietnam all set at either 19 or 20 percent tariff rates.
some of them were up at like in the 30s, weren't they, or even higher.
So I guess an important relief for those concerned.
Well, I think so. And look, this has been an extraordinarily volatile and uncertain period.
And I think many of America's trading partners across Asia have really been unnerved by this uncertainty and this sense that they were almost being attacked by their partners in Washington.
And yet today, I think most of our trading partners in Asia probably do feel a real sense of relief.
As you mentioned, most of our Southeast Asian partners have concluded deals with reciprocal tariff rates of between 19 and 20 percent, which is a pretty substantial reduction for most of them.
And then, of course, in Northeast Asia, the Japanese and the Koreans were able to secure deals at an even lower rate of 15 percent.
And most significantly in those deals, they got got 15 % on their auto tariffs, which they saw as a real victory.
Yeah, but it's a strange pass, isn't it, that we've come to that 15, 18, 19, 20 % seems like a low figure, given when just six months ago.
It's shocking, actually.
If you had said that six months ago, people would have thought you were crazy that somehow 15 % to 20 % tariffs would be a victory.
And yet in this brave new world in in which we find ourselves, it's seen as a real relief.
But of course, you know, if you take policymakers in Hanoi, they'd much rather be facing 20 percent rather than 46 percent.
I guess one other point, Ed, almost every negotiator we've talked to has said that it's the relative tariff rate compared to their competitors and their other partners.
That's the most important factor.
And because most countries have settled in that sort of 15 to 20 percent rate, I think most partners are also pleased by that outcome because they're no worse off than their other their competitors.
Right. Yeah. And let's face it, there isn't much prospect of a lot of their exports rapidly becoming U .S. made.
Therefore, they're always they just the consumer is going to have to pay this price.
Very true. The bigger mission here is China.
Where do you think we're at with the negotiations, which is still ongoing about where the dust will settle with the U .S.- China relationship?
True, Ed. Well, you're right to point to China as really being on a completely separate track.
And it is quite interesting compared to the partners we just talked about across Northeast Asia and Southeast Asia, all of whom adopted really a conciliatory path and didn't engage in any retaliation.
The Chinese adopted a very different stance towards the United States and really have been quite confrontational, engaging in sort of a tit for tat competition in responding to any tariff or other punitive measures coming out of Washington.
And I still think the way I would describe the state of U .S.-China ties and the U .S.-China trade talks would be that of a fragile truce.
You know, we saw this extraordinary tariff war earlier in the spring between the U .S. and China that resulted in 145 percent and 125 percent tariff rates, then devolved into a supply chain war where China was cutting off the supply of rare earths and the U .S. was cutting off various technologies.
I think, you know, coming out of the Stockholm talks that we saw that just concluded, the U .S. and China are now talking to one another.
There is this uneasy or fragile truce in place.
And our understanding is most of the conversation in Stockholm was about how do we extend this truce even further and keep tariff levels at a somewhat lower level?
There's been some attempt to talk about the structural issues between the two sides, but that's, of course, much more difficult.
OK, Daniel Krutermink, thank you very much indeed for that.
So to summarise, we have many countries with some kind of temporary stay on the highest tariff rates, but a new global benchmark of 10, 15 or 20 % rates on pretty much all imports heading to the US.
So where does the last 24 hours leave the global economy?
It's something I've been speaking to the veteran economist and businessman Mohammed El -Aryan about.
I began by asking him what he made of the bond market response to the US labour figures that we've been discussing.
how serious a signal was that of future economic turmoil?
So I think it's a strong signal about what the market is expecting now in September from the Federal Reserve.
There is now a higher probability of a 25 basis points cut.
And there's chatter in the marketplace that if we get another weak labour report, we may well not be discussing not 25 basis point cuts, but 50 basis point cuts.
So, yes, the bond market is looking at the data.
It is starting to put pressure on the Fed to cut.
And the move in rates, importantly, goes counter to the thing that people are really worried about, which is the ability of the marketplace to digest a tremendous amount of high debt and high deficits.
Right. High debt and high deficits are kind of hoving back into view then, now that this trade turmoil seems to be at least clarifying itself?
I'm not sure how clarifying itself it is.
The only thing that's clarity in my view is confirmation now that we have transitioned from a multi -decade trajectory of lower and lower tariffs and more uniform tariffs across countries to an environment characterized by higher, less uniform and more volatile tariffs.
I think that is the only clarity.
There's a lot of question marks on, is this a destination?
Or is this yet another stop on a longer, unpredictable journey for tariffs?
And finally, one of the biggest questions is who's going to pay for those tariffs?
Is it going to be the exporter, the importer, or the consumer?
So there's lots of questions still about the tariff regime.
We've been debating, haven't we, who the winners are here.
Obviously, Republicans, some of them are claiming Trump has won at least short term because he's won big concessions from lots of global economies in terms of preferential trade terms. I think purely in terms of bilateral, President Trump is winning.
And this was illustrated most vividly by the EU agreement.
In fact, there's a lot of discussion now within Europe as what made us so weak?
Why did we have such a weak hand?
So the general view is that President Trump used the size and influence of the US economy to get better outcomes.
As to what it means for the global economy, it will mean less efficient production, because cross -country supply chains are going to be more uncertain.
It will mean higher inflation and will probably mean lower demand.
Do you see that as perilous for the global economy?
on me? I don't see it as perilous.
What I view more as perilous is the uncertainty about the tariff regime.
If you tell me, and me being companies, what the tariff rate is going to be, I can plan.
I can make decisions.
I may have to rewire my supply chains, but at least I can make a decision.
If, however, you tell me that the tariff levels are going to change every few months, then I will wait and see.
I will not invest in new factories in any long -term commitment till I get clarity.
So the danger for the global economy comes from the uncertainty and the resulting wait -and -see attitude.
US companies in particular are becoming more cautious about who they hire and how many people they hire.
You think that the real pain is still to come?
Is that what you're saying?
I think what we're going to see is increasing dispersion, increasing differences.
You're going to see this between rich households that are doing just fine and less well -off households that are suffering.
You'll see it between tech companies that are going from strength to strength and manufacturing companies that are having a lot more difficulties.
And finally, you can see it between the US and Europe.
The US will be powered by the diffusion of significant innovations that promise productivity increases, whereas Europe, unfortunately, doesn't have the enabling conditions for such diffusion.
So I think what we are certainly going to see is more dispersion.
At what level of total output?
That's going to be decided by the stability of the tariff regime and also the ability of the bond market to absorb a lot of government debt.
it. Mohamed El -Erian, President of Queens College, Cambridge.
It wasn't that long ago when billions of us found ourselves having to work from home during the COVID pandemic.
Today, lots of people around the world have returned to the office.
But figures show that approximately 28 % of the global workforce, that's roughly 930 million people, still work remotely, at least some of the time.
Now, new research in the UK suggests that if you simply close the laptop and knock off at about 3pm on a Friday, well, you're not alone.
Broadband traffic figures show that 8%, an 8 % dip between 3pm and 5pm on a Friday in the UK.
The BBC's Paddy O 'Connell has been to a park in London to find out what's going on.
It had just gone 3pm when I arrived in this park and what struck me was how many people are on a screen.
Whether they're working or not in this beautiful park where it's recently rained, people are all staring at a screen.
Green. Now the people who weren't sitting on this bench told me that I'd caught them out because one of them regularly works from the park or cafe.
You got me. Hang on, it's ten past three, are you working from home?
Well technically no. Technically I don't work on Fridays, like it's more Monday, Thursday, nine to five and then Fridays it's like till one.
But do you think people are knocking off early?
Yeah, I honestly think it depends on the person.
Some people do stay till five, Some people don't.
Is it a problem? I think if you get the work done and you're on top of your deadlines, then no. I think if you don't, then yes.
There's a survey that says that broadband use drops by 8 % after 3 on a Friday.
They're putting this down to people who are knocking off early, and I'm wondering if you think that's happening.
I'm certainly more productive at home than I am in the office, I find, so I prefer it myself.
But I can see in some jobs maybe that people would maybe take the mickey.
Would you be surprised that some people knock off early?
I wouldn't be surprised.
by any chance are you working from home now with your dog?
I'm just about to go home to work but I will be working till about eight o 'clock tonight yes so if you were to take a work email here would that be working from home whilst throwing a ball for the Spaniel?
no I wouldn't consider that working I'm leaving the park now and I think really what I should do is go and work from the pub in order to complete this report to the fullest possible standards so join me in the future for part two Part two, which hasn't yet come.
Paddy O 'Connell there.
One final piece of news for you.
Tesla has been ordered to pay $329 million to the family of a deceased woman and an injured survivor after it was found liable for the 2019 fatal crash of an autonomous car.
Elon Musk says the company will appeal the decision.
That's it for today's World Business Report.
