Tit-for-tat tariffs fuel trade war fears

Summary

Marketplace Morning Report: Tit-for-Tat Tariffs Fuel Trade War Fears

Release Date: March 3, 2025
Host: Liana Byrne
Producer: Marketplace, BBC World Service

In this episode of Marketplace Morning Report, host Liana Byrne delves into the escalating trade tensions between the United States and China, exploring the broader implications for global trade and economic markets. The episode also touches on significant developments in the cryptocurrency market, the booming adult toy sector, and regulatory actions concerning data protection in the UK.

Escalating US-China Trade Tensions

The morning report opens with an analysis of the ongoing trade disputes between the world's two largest economies. Liana Byrne sets the stage by referencing Newton's third law of motion, illustrating the reciprocal nature of the tariffs being imposed:

Liana Byrne [01:22]: "China says it's ready to hit back with its own tariffs when new US import duties take effect on Tuesday. And this tit-for-tat escalation is raising fears of an all-out trade war between the world's two largest economies."

China's Retaliatory Measures

China has announced its readiness to retaliate against the new US import duties scheduled to take effect, targeting American agricultural and food products. This move threatens key exports such as soybeans, beef, pork, wheat, and corn—the same sectors previously hit by Beijing's 25% tariffs in 2018 in response to President Trump's tariffs on Chinese goods.

Liana Byrne [01:58]: "China's state-run Global Times newspaper said the countermeasures will likely target U.S. agricultural and food products. China remains the biggest market for US agriculture products even after Beijing slapped tariffs of up to 25% on soybeans, beef, pork, wheat, and corn in retaliation for duties on Chinese goods imposed by President Trump."

Despite these tensions, analysts suggest that Beijing still aims to avoid a full-scale trade war, hoping instead to negotiate a truce. However, as of the report's release, no agreement has been reached.

Impact on Canada and Mexico

The trade tensions extend beyond China, affecting North American neighbors Canada and Mexico, which are also bracing for potential new tariffs.

Liana Byrne [02:34]: "And it's not just China. Mexico and Canada are also bracing for new tariffs starting tomorrow. But will they actually come into force?"

Kellyanne Shaw, a partner at Washington D.C. firm Hogan Lavelle and former deputy assistant to the President for International Economic Affairs under the Trump administration, provides insight into the situation:

Kellyanne Shaw [02:53]: "What the president has asked from both Canada and Mexico is for a reduction in the number of fentanyl-related deaths, and that's something that can't necessarily play out overnight. It will be something that will play out over a series of months, if not years. And so to the extent that Canada and Mexico have done enough to at least warrant a suspension, I think that it is very likely that we may see that."

Shaw emphasizes the complexity of meeting the administration's demands, suggesting that substantial time will be needed before any suspension of tariffs could occur.

Cryptocurrency Market Volatility

Shifting gears to financial markets, the report highlights significant movements in the cryptocurrency sector following a strategic decision by the US government.

Liana Byrne [03:15]: "Cryptocurrency values have surged after Donald Trump announced the creation of a new US Strategic reserve of five digital currencies. This comes just days after Bitcoin, one of the most volatile assets, fell below $80,000 last week for the first time since November."

This strategic reserve aims to stabilize the cryptocurrency market, which has seen fluctuations, including Bitcoin's recent dip. Additionally, traditional defense stocks like BAE Systems saw a record 19% increase as European nations commit to higher military spending, signaling robust investor confidence in the defense sector.

UK Data Protection Crackdown on Social Media

A significant portion of the episode is dedicated to the UK's intensified scrutiny of social media platforms concerning children's data protection. The Information Commissioner's Office (ICO) is investigating how platforms like TikTok handle children's data, alongside examining age verification measures on Reddit and Imgur.

Zoe Kleinman [04:21]: "The Information Commissioner's office wants to ensure that three social media platforms are adhering both to the UK's data protection laws and the children's code. This is a set of design standards for online platforms which aims to protect children in the UK."

TikTok is currently contesting a hefty fine of over $16 million imposed in 2023 for misusing children's data. The ICO's focus is on how these platforms recommend content to minors, raising concerns about their algorithms' impact on young users.

Sam Grouet [04:43]: "These systems, our hypothesis is, feed on the data of the user and when that user is a child, extra care is required to keep that child safe."

The investigation underscores the UK's commitment to safeguarding children's online experiences and could lead to significant regulatory actions if breaches are found.

The Rise of Adult Consumers in the Toy Market

Transitioning to consumer goods, the report examines a fascinating trend in the global toy market: a surge in adults purchasing toys for personal use.

Sam Grouet [05:19]: "For decades, toys were for children, but that's changing. One in five toys and games is now bought by adults for themselves. It's reflected in toy stores like this one in western Canada."

Laura, a store manager in western Canada, shares her observations:

Laura [05:31]: "We're definitely known for having a really large selection of Lego, which is kind of more targeted towards adults nowadays."

Approximately 40% of sales at Laura's store are attributed to adult consumers purchasing high-end collectibles, such as exclusive Lego sets priced around $500.

Laura [05:46]: "I do strongly feel Lego is more targeted towards adults now than it has ever been before. And right now, targeting the adults who have the money, who can spend $500 on a collector set, it sells."

Market research from Circana supports this shift, indicating that last year, consumers aged over 12 spent $1.5 billion on toys. This trend is partly driven by declining birth rates in some countries, pushing the industry to adapt by appealing to adult collectors.

Zoe Kleinman [06:05]: "It's actually the 18 plus the adults that are really driving that and it's definitely something that the industry has wanted to jump on, particularly given in some countries declining birth rates."

Melissa Simonds of Sukana's report highlights changing parental spending habits:

Zoe Kleinman [06:22]: "For a lot of parents who have told us that they've reduced their spending on toys for their younger children, particularly girls, they're actually increasing their spend on beauty products, on clothing and on fashion at the same time."

Social media platforms, especially TikTok, play a significant role in this trend by promoting toys to new markets through extensive content related to plushies and soft toys.

Sam Grouet [06:34]: "With 132 million TikTok posts and counting relating to plushies or soft toys, Jumbo."

Raven, a 25-year-old YouTube creator known as FroggyCrossing, explains the psychological comfort toys provide amid modern stressors:

Laura [06:47]: "I have finally bought the breathing otter plushie which I've been seeing all over my TikTok. I have so many soft toys, all kinds of different brands. I have ones that you can find in stores, I have ones that are made in limited numbers by individual artists. I just absolutely love them."

Raven [07:07]: "I definitely think there's aspects, whether it's conscious or unconscious, where we just want something tactile, we want something away from a screen and even something as simple as a plushie, a soft toy can, can offer that."

Overall, the adult toy market accounts for an estimated one-third of global toy sales, with significant growth driven by consumers over 18 seeking comfort and nostalgia in collectibles and soft toys.

Conclusion

The episode concludes with a summary of the multifaceted economic landscape, from high-stakes international trade negotiations to evolving consumer behavior in the toy industry. Liana Byrne wraps up by encouraging listeners to stay informed through Marketplace's comprehensive coverage.

Liana Byrne [07:48]: "And that's it from the Marketplace Morning Report from the BBC World Service. I'm Liana Byrne. Have a great day, and thanks so much for listening."

Key Takeaways

• US-China Trade Tensions: The imposition of new US tariffs and China's retaliatory measures heighten fears of a prolonged trade war, affecting key sectors like agriculture.

• Broader Trade Implications: Potential tariffs on Canada and Mexico hinge on multifaceted policy changes, including reductions in fentanyl-related deaths.

• Cryptocurrency Volatility: The establishment of a US strategic reserve aims to stabilize cryptocurrency markets amidst significant volatility.

• Data Protection Scrutiny: The UK's ICO is intensifying its oversight of social media platforms to protect children's data, with significant fines on the table.

• Adult Consumer Shift in Toy Market: A notable increase in adults purchasing toys for personal use is reshaping the global toy industry, driven by factors like social media influence and a desire for tactile comfort.

This comprehensive report provides listeners with a nuanced understanding of current economic challenges and emerging market trends, ensuring they are well-prepared to navigate the complexities of the global economy.

Transcript

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[Liana Byrne]

China says you slap tariffs on us, we'll slap tariffs on you live from the UK this is the Marketplace Morning Report from the BBC World Service. I'm Liana Byrne. Good morning. Newton's third law of motion states that for every action there's an equal and opposite reaction. And that's pretty much what we're seeing in global trade right now. China says it's ready to hit back with its own tariffs when new US Import duties take effect on Tuesday. And and this tit for tat escalation is raising fears of an all out trade war between the world's two largest economies. The BBC's Laura Bicker reports from Beijing.

[Intuit TurboTax]

China's state run global Times newspaper said the countermeasures will likely target U.S. agricultural and food products. China remains the biggest market for US Agriculture products even after Beijing slapped tariffs of up to 25% on soybeans, beef, pork, wheat and corn in 2018 in retaliation for duties on Chinese goods imposed by President Trump. Analysts believe Beijing still hopes to avoid an all out trade war and negotiate a truce with the Trump administration. But so far there has been no sign of a deal between the two economic giants.

[Liana Byrne]

Laura Bicker there. And it's not just China. Mexico and Canada are also bracing for new tariffs starting tomorrow. But will they actually come into force? Kellyanne Shaw is partner at Washington, D.C. firm Hogan Lavelle and was deputy assistant to the President for International Economic affairs in the previous Trump administration.

[Kellyanne Shaw]

What the president has asked from both Canada and Mexico is for a reduction in the number of fentanyl related deaths, and that's something that can't necessarily play out overnight. It will be something that will play out over a series of months, if not years. And so to the extent that Canada and Mexico have done enough to at least warrant a suspension, I think that it is very likely that we may see that.

[Liana Byrne]

That was lawyer and international trade advisor Kelly Ann Shaw. Now let's do the numbers. Cryptocurrency values have surged after Donald Trump announced the creation of a new US Strategic reserve of five digital currencies. This comes just days after bitcoin, one of the most volatile assets, fell below $80,000 last week for the first time since November, the weapons and fighter jet manufacturer BAE Systems hit a record high, jumping by 19% as the defence sector got a boost after European countries pledged to increase military spending. And over in Hong Kong, shares of the Chinese bubble tea giant Meesher Ice Cream and tea soared 40% as they debuted on the stock exchange. Now Britain's data protection watchdog is investigating how TikTok handles children's data. The UK's Information Commissioner's Office says it will also examine age verification measures on Reddit and the image sharing site iManager. TikTok is already challenging a UK fine of more than $16 million handed down in 2023 for misusing children's data. The BBC's Zoe Kleinman has more.

[Zoe Kleinman]

The Information Commissioner's office wants to ensure that three social media platforms are adhering both to the UK's data protection laws and the children's code. This is a set of design standards for online platforms which aims to protect children. In the UK. The commissioner, John Edwards, said he was interested in TikTok's use of children's data to recommend them more content.

[Sam Grouet]

These systems, our hypothesis is feed on the data of the user and when that user is a child, extra care is required to keep that child safe.

[Zoe Kleinman]

The ICO can enforce fines if it finds there's been a breach of UK laws.

[Liana Byrne]

Zoe Kleinman reporting. Now, toys are usually marketed at children, but whether they're collectibles, miniatures or soft toys, many adults were gifted or bought products for themselves at the end of last year. According to market research firm Circana. It's helping to keep the global toy market alive. The BBC's Sam Grouet has more.

[Sam Grouet]

For decades, toys were for children, but that's changing. One in five toys and games is now bought by adults for themselves. It's reflected in toy stores like this one in western Canada.

[Laura]

We're definitely known for things like having a really large selection of Lego which is kind of more targeted towards adults nowadays.

[Sam Grouet]

Laura is the manager here and says around 40% of their sales are bought by adults for themselves.

[Laura]

I do strongly feel Lego is more targeted towards adults now than it has ever been before. And right now, targeting the adults who have the money, who can spend $500 on a collector set, it saves them.

[Sam Grouet]

Last year Kidalts, an industry term for those aged over 12, spent $1.5 billion on toys.

[Zoe Kleinman]

It's actually the 18 plus the adults that are really driving that and it's definitely something that the industry has wanted to jump on, particularly given in some countries declining birth rates.

[Sam Grouet]

Melissa Simonds led Sukana's report which suggests that kids are buying fewer toys than ever before.

[Zoe Kleinman]

For a lot of parents who have told us that they've reduced their spending on toys for their younger children, particularly girls, they're actually increasing their spend on beauty products, on clothing and on fashion at the same time.

[Sam Grouet]

But while social media has pushed skincare to children, it's introduced toys to new markets too. With 132 million TikTok posts and counting relating to plushies or soft toys, Jumbo.

[Laura]

Snuggle dragons have arrived for pre order. I have finally bought the breathing otter plushie which I've been seeing all over my TikTok. I have so many soft toys, all kinds of different brands. I have ones that you can find in stores, I have ones that are like made in limited numbers by individual artists. I just absolutely love them.

[Sam Grouet]

For Raven, a 25 year old YouTube creator known as FroggyCrossing to her over a million YouTube subscribers. In an era of economic stress, political upheaval and digital overload, toys offer comfort.

[Laura]

I definitely think there's aspects, whether it's conscious or unconscious, where we just want something tactile, we want something away from a screen and even something as simple as a plushie, a soft toy can, can offer that.

[Sam Grouet]

From plushies to Lego, it's estimated a third of global toy sales are by kid alts buying for themselves, with over 18s driving the growth. From Vancouver, I'm the BBC Sam Grohe for Marketplace.

[Liana Byrne]

And that's it from the Marketplace Morning Report from the BBC World Service. I'm Liana Byrne. Have a great day, and thanks so much for listening.

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