The tariff tit for tat continues

Summary

Marketplace Morning Report: "The Tariff Tit for Tat Continues"

Release Date: April 11, 2025
Host: Will Bain, Marketplace
Reporter Contributions: Russ Mould (A.J. Bell, London), Jelena Sokolova (Morningstar), David Kan (BBC World Service)

---

1. Escalation of US-China Tariffs

Timestamp: [00:01]
Host Will Bain opens the episode by highlighting the ongoing trade tensions between the United States and China. China has recently announced a significant increase in tariffs on imported U.S. goods, raising them to 125%, in response to the U.S. steepening its tariffs. Bain remarks, “This was the latest twist in what's been a week of breakneck bends for global investors, government finances and of course, our savings, investment and potentially prices too. A lot.”

2. Analysis of Tariff Impact

Timestamp: [00:54]
Russ Mould, Investment Director at A.J. Bell, assesses the implications of China’s tariff hike. He states, “Once you get to tariffs of 84% or 125%, you're more or less killing things off anyway.” Mould suggests that while the tariff increase may not significantly alter market sentiment due to already high rates, it underscores the intensifying dispute between the U.S. and China, the world's two leading economic superpowers.

3. Bond Market Developments

Timestamp: [01:18]
The discussion shifts to the bond markets, a major talking point from the previous Thursday. Both U.S. and U.K. government borrowing costs have seen a slight uptick. Mould explains, “The Bank of England postponed a planned sale of long dated 10 and 30 year UK gilts and elected to try and sell some shorter dated maturities to try and perhaps calm the markets.” This move aims to reduce market uncertainty and manage interest costs amid volatile government debt markets.

4. Investment Perspectives and Future Scenarios

Timestamp: [02:02]
When asked about investment strategies, Mould outlines three primary scenarios investors should consider:

1. Trade Deals Successfully Finalized: Returning to a familiar economic status quo.
2. Trade Deals Fail to Materialize: Increased friction with shifting goal posts causing confusion.
3. Economic Paradigm Shift: Indicators such as the S&P 500 peaking and governments grappling with debt and deficits.

Mould emphasizes, “Investors will be trying to work out over time which one's which, because that will shape how they allocate their portfolios between countries and asset classes.”

5. Global Market Performance Overview

Timestamp: [02:44]
Bain provides a snapshot of recent global market movements:

• Asia: Hang Seng in Hong Kong rose by just over 1%, while Tokyo's Nikkei fell nearly 3%.
• Europe: Major indices in Frankfurt, Paris, and London declined between 0.5% to 1%.

Additionally, Prada's stock saw an uptick following its acquisition of Versace in a deal exceeding $1 billion. Jelena Sokolova from Morningstar comments, “The luxury sector has dipped into a slowdown or a downturn in 2024 already. Versace was one of the lower performers in these circumstances,” indicating strategic consolidation in the luxury market amid challenging conditions.

6. South Korea’s Labor Shortage and Shift to Automation

Timestamp: [03:50 - 05:39]
The report delves into South Korea's looming labor shortage, projected to require an additional 890,000 workers by 2032 to sustain a 2% economic growth target. In response, business owners are increasingly adopting automation solutions. David Kan from the BBC World Service visits Seoul 24, an unmanned bar founded by Sang Nae Kim.

Highlights from Sang Nae Kim:

• Operational Efficiency: “The income is so much more than using a person in order to operate a bar of this scale and profit. I'll need 12 to 15 staff, but I only used two people.”
• Cultural Shifts: “People don't want to work anymore. I can't find anyone. Even if I find someone who's willing to work, they don't want to do anything dirty.”
• Future Outlook: “I still think this will be a long term trend. The culture will continue and the new generation will grow up and continue with their culture. They want to be left alone.”

Patrons of Seoul 24 express appreciation for the self-service model, noting the absence of pressure from staff and longer operational hours. However, concerns persist regarding job losses, with almost half of South Korea’s jobs at risk of automation within the next two decades.

7. Closing Remarks

Timestamp: [06:30]
Will Bain concludes the report by summarizing the key developments and their potential implications on global markets and economies. He emphasizes the persistent uncertainty in government debt markets and the significant shifts in international trade dynamics.

---

This episode of Marketplace Morning Report provides a comprehensive overview of the escalating trade tensions between the U.S. and China, their ramifications on global financial markets, and the strategic responses by governments and businesses. Additionally, it sheds light on the socio-economic challenges faced by South Korea, highlighting the broader implications of automation in addressing labor shortages.

---

Notable Quotes:

• Russ Mould: “Once you get to tariffs of 84% or 125%, you're more or less killing things off anyway.” [00:54]
• Russ Mould: “Investors will be trying to work out over time which one's which, because that will shape how they allocate their portfolios between countries and asset classes.” [02:08]
• Sang Nae Kim: “People don't want to work anymore. I can't find anyone.” [05:14]

Transcript

[Will Bain]

Another day, another rise in import tariffs between the United States and China. Live from the BBC World Service, this is the Marketplace Morning Report. I'm Will Bain. Thanks as always for your company. Yes. In the past hour or so, China has announced it will once again respond to steepening U.S. tariffs on its goods by ramping up its own taxes on imported U.S. products to 125%. It was the latest twist in what's been a week of breakneck bends for global investors, government finances and of course, our savings, investment and potentially prices too. A lot. Then to try and round up with Russ Mould, investment director at the UK Investment Managers, A.J. bell here in London. Russ, morning.

[Russ Mould]

Good day. Will.

[Will Bain]

Yet another twist then in what's been a particularly twisting and turning week, does this fundamentally shift much, this move in Chinese tariffs, given that at the rates that they were already at, I think.

[Russ Mould]

That'S a fair call. I mean, once you get to tariffs of 84% or 125%, you're more or less killing things off anyway. So you could go from 100 to 500%. I don't think it would make much difference fundamentally in terms of sentiment for financial markets. What it does show is that the temperature of the dispute between the world's two leading economic superpowers, America and China, is getting hotter and hotter. And that's probably what they don't want to see.

[Will Bain]

Well, that's the thing, isn't it? Now a lot to take stock of and a lot to look ahead to bonds. That was one of the big talking points of Thursday around the world and particularly in the U.S. wasn't it? That cost of government borrowing, where governments go to buy and sell their debt. Where are we with that? As we come to the end of.

[Russ Mould]

The week, that again has just ticked up a little bit in the US and again in the UK So everybody's on edge. Intriguing. The bank of England postponed a planned sale of long dated 10 and 30 year UK guilts and elected to try and sell some shorter dated maturities to try and perhaps calm the markets, stop them worrying about future supply and also try and keep its interest costs down. So there is still considerable uncertainty in the government debt markets right now.

[Will Bain]

So what do you think from an investment perspective? And our listeners should be sort of watching out for keeping their eyes on.

[Russ Mould]

I mean, there are a range of possible scenarios, but if you're looking at it from the investment perspective, investors will be asking themselves. There are maybe three main possibilities. First, trade deals get done and we kind of go back to vaguely where we were second. Deals don't get done. There's more friction. The goal posts get changed, everybody's confused. The third one is actually the world's already changed. The S&P 500 already peaked. The American government, like the British one, is wrestling with debt and deficits. Those are your three main possible scenarios, and I think investors will be trying to work out over time which one's which, because that will shape how they allocate their portfolios between countries and asset classes.

[Will Bain]

Russ Mould, investment director at the UK Investment platform. AJ Bell, thanks so much for your time as always. Well, let's check in on those numbers now. So markets in Asia had actually closed prior to that announcement from Beijing, with the Hang Seng in Hong Kong up just over a percent. And another fall on Tokyo's Nikkei of almost 3%. In Europe right now, indices in Frankfurt, Paris and London all down around the 0.5% to 1% range. Shares in the luxury brand Prada were up on Friday after it agreed to buy a rival fashion house, Versace, in a deal worth more than $1 billion. It's buying the brand from the US luxury group Capri holdings in a move that will unite two of the biggest names in Italian fashion. Jelena Sokolova is a senior equity analyst and at Morningstar.

[Jelena Sokolova]

Yeah, it's both the current state of the brand and current market situation because luxury has basically dipped into a slowdown or a downturn in 2024 already. Now the situation remains uncertain and Versace brand was the one that was kind of one of the lower performer in this circumstances.

[Will Bain]

Yelena Sokolova of Morningstar there. Now, South Korea has a problem. It's facing a labor shortage after decades of low birth rates. By 2032, it's estimated it will need more 890,000 additional workers to maintain an economic growth goal of 2%. And some business owners are turning to automation to try and solve their staffing issues. The BBC's David Kan has been to an automated bar in the capital Seoul.

[David Kan]

Meet Sang Nae Kim. He's the founder and creator of an unmanned bar, Seoul 24, which just means 24 hour alcohol. I met up with him at his bar where he started by showing me how everything works here.

[Sang Nae Kim]

These are wine dispensers. You just pick up a glass from here and pour yourself as much as you want. Over here are beer fridges. You grab the bottles you want and pay over there at the kiosk. The income is so much more than using a person in order to operate a bar of this scale and profit. I'll need 12 to 15 staff, but I only used two people. It's incomparable. 30% of the income usually gets used on wages which I'm not paying.

[David Kan]

The unmanned bar was packed full without a single empty table. But it wasn't a matter of choice for the bar's founders. It wasn't just high wages, but also the changing perception of low skill, low wage work.

[Sang Nae Kim]

People don't want to work anymore. I can't find anyone. Even if I find someone who's willing to work, they don't want to do anything dirty.

[David Kan]

Despite his rather critical views towards the younger generation, he trusts that they will be the ones that keep the unmanned businesses going.

[Sang Nae Kim]

I still think this will be a long term trend. The culture will continue and the new generation will grow up and continue with their culture. They want to be left alone.

[David Kan]

That feeling of being undisturbed appears to be one of the biggest benefits of unmanned stores. Here are some of the patrons I spoke to at the Unmanned bar.

[Patron]

There are people who have a hard time when a staff sticks to them. I'm that type of person and I prefer to pick what I want without someone pressuring me to rush.

[David Kan]

And I personally love self service because sometimes you just don't want to talk to somebody. Happy customers here. But some concerns remain. Loss of jobs is one and almost half of jobs in South Korea are expected to be at risk of being replaced with automation in the next 20 years. But with number of unmanned convenience stores growing by 15 fold in the last five years alone, and with no signs of the growth stopping, it appears that unmanned stores are here to stay. I'm the BBC's David Kent for Marketplace.

[Will Bain]

And I'm Will Bain. Thanks so much for listening to the Marketplace Morning Report from the BBC World Service.

[Janeli Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host Janeli Espinal, and each week I ask experts important money questions like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially Inclined wherever you get your podcasts.