Canada and the EU could team up over tariffs

Summary

Marketplace Morning Report: Canada and the EU Unite Against U.S. Tariffs & Spain’s Olive Industry Battles Deadly Bacterium

February 12, 2025 | Host: Liana Byrne | Source: BBC World Service

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Introduction

In today's episode of the Marketplace Morning Report, host Liana Byrne explores two significant global issues impacting economies and industries worldwide. The first segment delves into the strategic alliance between Canada and the European Union (EU) in response to the United States' recent tariff hikes on steel and aluminum imports. The second segment highlights a burgeoning agricultural crisis in Spain, where a lethal bacterium threatens the country's pivotal olive industry.

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Canada and the EU: Countering U.S. Tariff Measures

Escalating Trade Tensions

The report begins with mounting fears of an escalating trade war. On Monday, President Donald Trump signed an executive order raising tariffs on imported steel and aluminum from 10% to 25%, effective March 12, 2025. This move removes all previous exemptions that were instituted during the Biden administration.

Canada’s Strategic Response

Canada’s Prime Minister Justin Trudeau, who is currently in Paris attending the AI Summit, is scheduled to engage in talks with European leaders in Brussels. Trudeau emphasized Canada's commitment to countering the tariff threat, highlighting the potential negative impacts on both American and Canadian economies.

Justin Trudeau [00:42]:
"We will be working with the American administration over the coming weeks to highlight the negative impacts on Americans and Canadians of these unacceptable tariffs. But we'll also be working with our international partners and friends. And if it comes to that, our responsibilities response, of course, will be firm and clear."

Expert Analysis from Christophe Bondi

Christophe Bondi, a former senior counsel to Canada on international trade law and now a partner at Steptoe LLP in London, provides deeper insight into the anticipated strategies of Canada and the EU.

Christophe Bondi [01:18]:
"They’re going to, in the first place, be talking about how to take better advantage of the CETA, the Canada EU Trade Agreement, which came into force in 2017 and has already seen a 60% increase in trade between the EU and Canada. It's now 160 billion of bilateral trade between the two parties. So how to deepen that in the context of a United States that is acting in a capricious and protectionist manner."

Bondi elaborates that Canada and the EU will likely focus on enhancing their existing trade framework under the Canada-EU Trade Agreement (CETA). The agreement has significantly boosted bilateral trade, and both parties aim to leverage this momentum to mitigate the adverse effects of the U.S. tariffs.

Christophe Bondi [02:05]:
"They’ll be discussing security cooperation and I think more generally with the retreat of the US from its traditional role as kind of an international leader... how the EU, Canada, and other like-minded countries can step into that breach and try to keep upholding the value of international law and the value of international institutions and multilateral cooperation."

Bondi also draws parallels to the previous administration's tariff strategies, noting that Canada's legal challenge to U.S. tariffs led to their withdrawal, suggesting similar diplomatic engagements may be forthcoming.

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Financial Markets: Steady Amid Uncertainty

As Canada and the EU navigate the trade tensions, financial markets remain cautiously steady. Investors are awaiting critical U.S. inflation data and remarks from Federal Reserve Chair Jerome Powell regarding potential interest rate cuts.

• Stocks and the Dollar: Holding firm amidst the anticipation.
• Treasury Yields: Rising yields have caused a decline in gold prices from their recent highs.
• Asian Markets: Notably, Alibaba shares surged following news of a potential AI collaboration with Apple, indicating positive investor sentiment in the tech sector.

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Spain’s Olive Industry Under Siege by Deadly Bacterium

Emerging Threat: Zillella fastidiosa

Transitioning to agricultural concerns, the report highlights a severe threat to Spain’s olive industry from Zillella fastidiosa—a deadly and elusive bacterium. Spain, the world's largest producer of olive oil, is already grappling with production slashes due to prolonged drought conditions. The introduction of Zillella threatens to exacerbate this crisis.

Field Report from Cordoba

BBC’s Linda Presley reports from Cordoba, Spain, where Dr. Landa and her team are at the forefront of battling the bacterium.

Linda Presley [03:53]:
"Dr. Landa and her team keep a collection of deadly strains of the Zillella microbe."

Understanding Zillella

Zillella spreads through insect vectors that transfer the bacteria from one tree to another, leading to the slow death of olive trees by clogging their water-absorption vessels. Originating from ornamental coffee plants in Latin America, the bacterium has wreaked havoc in Southern Italy, claiming over 20 million olive trees, and has now been detected in parts of Spain.

Dr. Landa [04:58]:
"It's considered one of the most dangerous quarantine pathogens... In Andalusia, we have over 1.6 million olive hectares. So you can imagine the concern of the olive industry."

Farmers in affected regions have shown desperate measures to prevent the removal of infected trees, underscoring the bacterium's devastating impact.

Dr. Landa [04:46]:
"I was completely astonished. So it was like being in a field of atomic war or whatever, because all the trees were completely died and drying."

Research and Mitigation Efforts

Dr. Landa’s team is working tirelessly in a secure greenhouse to study various olive varieties infected with Zillella. Their research focuses on developing resistant olive varieties and exploring biological controls, such as viruses that can infect and neutralize the bacterium.

Dr. Landa [05:58]:
"We have some collaborators in the project that are searching for viruses that can infect the bacterium."

Despite the grim scenario, Dr. Landa remains cautiously optimistic, citing improved monitoring and heightened farmer awareness as key factors in containing the spread.

Dr. Landa [06:00]:
"I don't think that is a matter of when. I will be optimistic. Now, we are more prepared than before. I think farmers now are aware of what can be the problem."

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Conclusion

Today's Marketplace Morning Report underscores the intricate web of global trade dynamics and environmental challenges. As Canada and the EU bolster their alliance against U.S. tariffs, the implications for international trade and economic policies are profound. Concurrently, Spain’s olive industry battles a formidable biological threat, highlighting the critical need for innovation and international cooperation in agricultural sustainability.

Key Takeaways:

• Trade Alliance Strength: Canada and the EU are poised to enhance their trade relations under CETA to counteract U.S. tariffs.
• Economic Vigilance: Financial markets remain stable but watchful as key economic indicators loom.
• Agricultural Crisis: Spain’s olive industry faces a severe threat from Zillella fastidiosa, prompting urgent research and preventive measures.
• Global Cooperation: Both segments highlight the importance of international partnerships in addressing multifaceted global challenges.

Stay informed with Marketplace Morning Report for comprehensive insights into the latest business and economic developments worldwide.

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This summary was crafted based on the February 12, 2025 episode of the Marketplace Morning Report from the BBC World Service.

Transcript

[Liana Byrne]

Steely resolve, Canada and the EU could team up to hit back at Trump's tariffs. Live in the UK this is the Marketplace Morning Report from the BBC World Service. I'm Liana Byrne. Good morning. We start with fears of an escalating trade war. On Monday, President Trump signed an executive order raising tariffs on imported steel and aluminium from 10% to 25%, removing all previous exemptions brought in during the Biden administration. The changes take effect from March 12. And now Canada's Prime Minister Justin Trudeau, who's in Paris for the AI summit, will be holding talks with European leaders in Brussels. He's warned they would work together to counter the tariff threat.

[Justin Trudeau]

We will be working with the American administration over the coming weeks to highlight the negative impacts on Americans and Canadians of these unacceptable tariffs. But we'll also be working with our international partners and friends. And if it comes to that, our responsibilities response, of course, will be firm and clear.

[Liana Byrne]

Christophe Bondi is a former senior counsel to Canada on international trade law and now partner at the global firm Steptoe LLP in London. He says the two sides will likely try to strengthen their own trading relationship first.

[Christophe Bondi]

Well, I think they're going to in the first place be talking about how to take better advantage of the CETA, the Canada EU Trade Agreement, which came into force in 2017 and has already seen a 60% increase in trade between the EU and Canada. It's now 160 billion of bilateral trade between the two parties. So how to deepen that in the context of a United States that is acting in a capricious and protectionist manner. So that's one of the things they'll be discussing. They'll be discussing security cooperation and I think more generally with the retreat of the US from its traditional role as kind of an international leader and kind of engaged its retreat from engagement in multilateral institutions that we've seen how, you know, the eu, Canada and other like minded countries can, can step into that breach and try to keep upholding the value of international law and the value of international institutions and multilateral cooperation. You know, we've seen this movie before. The major action of the US Administration under the, the first Trump administration was to tariffs on steel and aluminum. And Canada brought a challenge to the WTO about that and those measures were withdrawn. Trump has come out with the same thing this time, but also, you know, it's going to be imposed only in 30 days. The engagement between Canada and the United States is deep and broad. So one can assume that there is engagement on every possible level to demonstrate that this is really something that's going to harm the us. This is something that is going to make things more expensive for American consumers. American business business.

[Liana Byrne]

That was Christophe Bondi from Steptoe llp. Now let's do the numbers. Markets are steady as investors wait for US inflation data and Fed chair Jerome Powell's next comments on rate cuts. Stocks and the dollar are holding firm, but rising treasury yields have knocked gold from record highs. And in Asia, Alibaba shares jumped and reports of an AI deal with Apple. It's all of harvest season in Spain, the world's largest producer of olive oil. But after years of drought slashing production and driving up prices, a new threat is worry farmers. Zelia fastidiosa is a deadly and hard to detect bacteria that's killed millions of olive trees in Southern Italy. The BBC's Linda Presley has been in Cordioba, Spain, investigating.

[Dr. Landa]

It's a biosecurity facility, a quarantine level 2 facility.

[Linda Presley]

Dr. Landa and her team keep a collection of deadly strains of the Zillella microbe.

[Dr. Landa]

It's considered one of the most dangerous quarantine pathogens. This is due to the huge number of diseases that can cause in crops such as olives, almonds, grapevines. In Andalusia, we have over 1.6 million olive hectares. So you can imagine the concern of the olive industry.

[Linda Presley]

Salella kills slowly, clogging the vessels through which a plant absorbs water. And the only way it spreads is through insect vectors. They feed on an infected tree, then carry the microbes to the next tree they land on. It's believed Zillella first arrived in Europe in ornamental coffee plants from Latin America. Dr. Landa remembers her first sight of the havoc wreaked by the killer bacterium when she visited Southern Italy in 2014.

[Dr. Landa]

I was completely astonished. So it was like being in a field of atomic war or whatever, because all the trees were completely died and drying. So all the puglia, all the area is affected.

[Linda Presley]

Farmers were distraught, chaining themselves to their ancient diseased trees to prevent the environmental authorities from removing them. The only way to counter Zilela. Italy's lost more than 20 million olive trees to Zillella, and it's been detected in parts of Spain too, although not yet in Andalusia, which is why Dr. Landa's research is critical. In a large secured industrial greenhouse, she keeps plant material that her team's infected with Xillella, including 11 varieties of olives. There's still so much that's mysterious about the bacteria. Part of the end game would be to develop olive varieties resistant to Xillella. And then there are efforts to attack Xilla itself.

[Dr. Landa]

We have some collaborators in the project that are searching for viruses that can infect the bacterium.

[Linda Presley]

So is it a question of when, not if? In terms of the olives in southern Spain?

[Dr. Landa]

I don't think that is a matter of when. I will be optimistic. Now. We are more prepared than before. We know exactly how to monitor our territory. I think farmers now are aware of what can be the problem.

[Liana Byrne]

That was Linda Presley there in Cordoba, Spain. And I'm Liana Byrne with the Marketplace Morning Report from the BBC World Service.