Trump tariffs: Next up, steel and aluminum

Summary

Marketplace Morning Report Summary

Episode Title: Trump Tariffs: Next Up, Steel and Aluminum
Release Date: February 10, 2025
Host: Liana Byrne
Source: Marketplace via BBC World Service

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1. Escalation of U.S. Trade Tensions

Timestamp: [00:33]

The episode opens with Liana Byrne addressing the latest developments in the ongoing trade tensions involving the United States. President Donald Trump announced a 25% import tax on all steel and aluminum entering the U.S. from key trading partners, including China, Canada, and Mexico. This move marks a significant escalation, potentially impacting some of the largest suppliers in the global market.

2. Asian Market Reactions

Timestamp: [01:03]
Reporter: Suranjana Tiwari, BBC Singapore

Suranjana Tiwari reports from Singapore, highlighting the adverse reactions from Asian markets. The announcement of new tariffs has unsettled producers of steel and aluminum in the region, particularly in Japan, South Korea, Taiwan, Australia, and Vietnam, which are major exporters to the U.S. This development threatens to disrupt the $100 billion annual import of steel and aluminum into the U.S.

Key insights from Tiwari include:

• Market Volatility: "Markets are likely to be on edge and volatile in response to these kinds of announcements."
• Historical Context: References to Trump's previous tariffs and subsequent duty-free exemptions during his first term, as well as Biden’s duty-free quota arrangements with the UK, EU, and Japan, indicate uncertainty about the future of these agreements.

3. Impact on U.S.-China Trade Relations

Timestamp: [02:03]
Expert: Pamela Koch Hamilton, Director General of the International Trade Center

Pamela Koch Hamilton discusses the broader implications of tariff increases on U.S.-China trade relations:

• Trade Diversion: "Tariffs change trade flows... countries will begin to shift in a way their relationship or their commitment with respect to the US Market."
• Export Decline: Since 2018, China's exports and growth in exports to the U.S. have significantly declined due to previous tariffs.
• Projection: A 10 percentage point increase in tariffs on Chinese imports, coupled with symmetric retaliation, could reduce U.S.-China trade by 34% by 2029.

4. Economic Indicators and Currency Fluctuations

Timestamp: [03:25]

Liana Byrne presents the latest economic data influenced by the new tariffs:

• Currency Depreciation: The Canadian dollar, euro, and Australian dollar have all experienced declines.
• China’s Economic Metrics: Consumer inflation in China reached a five-month high at 0.5%, while weak factory activity maintains deflationary pressures.

Additionally, geopolitical developments are influencing energy security in Europe:

• Baltic Nations’ Energy Independence: Latvia, Lithuania, and Estonia have officially disconnected from Russia's power grid, a significant step towards full integration with the European Union. Latvia’s Energy Minister, Kasper Smelnus, emphasizes the importance of energy system stability and independence.

Quote:

"This was one main goal and I think now at the moment, nobody have questions why we did it or why we have done it." — Kasper Smelnus, Latvia's Energy Minister [04:15]

5. The Rapid Evolution of Artificial Intelligence

Timestamp: [04:36]
Speaker: Tanjua Randri, Managing Director at Amazon Web Services

The discussion shifts to the burgeoning field of artificial intelligence (AI) and its regulation:

• Adoption Rates: Nearly 3 million businesses in Europe adopted AI last year, signaling a significant acceleration in its integration.
• Economic Impact: AI is projected to contribute $433 billion to Europe’s GDP by 2030, surpassing the impact of mobile phone adoption in the 2000s.
• Business Transformation: AI is described as "probably the most transformative technology we have come across since the cloud," with startups leading innovation and large enterprises gradually increasing their adoption.

Quote:

"We are at a very pivotal time actually right now that AI is probably the most transformative technology we have come across since the cloud." — Tanjua Randri, Amazon Web Services [05:00]

6. Unusual Incident Affecting Entertainment

Timestamp: [06:41]

In a lighter yet concerning news item, Canadian rock star Bryan Adams had to cancel his concert in Australia due to a massive fatberg blocking a nearby sewer. Perth’s water officials feared potential sewage problems at the venue, illustrating the unexpected ways infrastructure issues can impact major events.

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Conclusion

This episode of the Marketplace Morning Report provides a comprehensive overview of significant global economic developments, from escalating U.S. tariffs affecting international trade dynamics to the transformative rise of artificial intelligence in Europe. Additionally, it touches on geopolitical shifts in energy security and unexpected challenges in the entertainment industry. The discussions highlight the interconnectedness of global markets and the multifaceted impacts of policy decisions, technological advancements, and infrastructural integrity on the global economy.

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Note: Advertisements and promotional content have been omitted in accordance with summarization guidelines.

Transcript

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[Liana Byrne]

Tariffs shakes global Markets hello, this is the Marketplace Morning Report and we're live from the BBC World Service. I'm Liana Byrne. Good morning. Now, in the latest escalation in this ongoing ramping up of trade tensions, President Trump says he will announce a 25 import tax on all steel and aluminium entering the U.S. china, Canada and Mexico. Some of the biggest suppliers could be hit hard. The BBC Suranjana Tiwari is in Singapore and gave us this update on the reaction in Asia.

[Suranjana Tiwari]

Markets in Asia not liking the sound of further tariffs, especially on steel and aluminium. Many producers of those metals are in the region. Japan, South Korea, Taiwan are Asia's biggest exporters of steel to the U.S. australia and Vietnam on that list as well. In total, the U.S. imports more than $100 billion of steel and aluminium combined annually. Some well known companies saw their shares down in trade today. We'll have to see whether this is a big bang policy that will then be scaled down. We have been here before. During his first term, Trump imposed 25% tariffs on steel and 10% on aluminium, but later granted several trading partners duty free exemptions. Biden later negotiated duty free quota arrangements with Britain, the EU and jap. It's not clear what will happen to those, but what is clear is that markets are likely to be on edge and volatile in response to these kinds of announcements.

[Liana Byrne]

Sir and Jana Tiwari there now. Last week the US slapped an extra 10% tariff on Chinese imports and China hit back with tariffs on U.S. fuel, agricultural machinery and some cars from the U.S. those measures kicked in yesterday. Pamela Koch Hamilton is the Director General of the International Trade center, an agency of the United nations and she says tariffs change trade flows.

[Pamela Koch Hamilton]

Since 2018, the China exports and China growth of exports to the US Fell significantly and now they are actually in a position where they are less dependent on the US market than they were in 2018 because of the tariffs at the time. And so the issue of trade diversion can also have a very strong impact on the future. This can be true also for countries like Mexico and Canada. And so what may happen is countries will begin to shift in a way their relationship or their commitment with respect to the US Market. One of our statistics have shown that we ran in ITC is that a 10 percentage point increase in tariffs charged on imports from China with a symmetric retaliation could decrease China US trade by 34% by 2029.

[Liana Byrne]

That was Pamela Co Hamilton from the International Trade Center. Now let's do the numbers. Those fresh tariffs are shaking global currencies. The Canadian dollar dropped in the euro and the Australian dollar also took a hit. Meanwhile, China's consumer inflation hit a five month high at 0.5%. But weak factory activity is keeping deflationary pressures in place. Okay. Three Baltic nations, Latvia, Lithuania and Estonia have officially cut ties with Russia's power grid. On Sunday they disconnected from the system, marking a major step in their plan to fully integrate with the European Union and strengthen energy security. This was the last remaining link to Russia for the three countries which regained independence after the Soviet Union collapsed in the early 1990s. Here's Latvia's energy Minister, Kasper Smelnus.

[Kasper Smelnus]

So it's a long process. We make a huge investment in our grid systems, interconnections. Of course now is the new challenges because now the system is in our hands because of energy system stability, independence and energy safety. This was one main goal and I think now at the moment, nobody have questions why we did it or why we have done it.

[Liana Byrne]

That was Kasper Smellness, Latvia's Energy minister. Artificial intelligence. We talk a lot about it and it's evolving faster than ever. And right now world leaders and tech bosses are meeting in Paris to figure out how to regulate AI. Tanjua Randri is Managing director at Amazon Web Services, which is an early pioneer in AI and she says it's already changing how we work and communicate.

[Tanjua Randri]

If you look at where we are currently, it's early days in the AI world as you know, but the adoption that we are seeing on AI is growing very rapidly and particularly with this new report that we've published. What we are actually seeing is nearly 3 million businesses in Europe adopted AI just last year. So significant acceleration, big enthusiasm because of the benefits of AI, primarily associated with revenue and productivity growth. But of course innovation and products to market startups are really leading the way. So we see startups in fact embracing this technology to develop new products and integrating it into their core processes. Large enterprises slightly behind I would say on that. And in fact we'd love to see them accelerate even further. We are at a very pivotal time actually right now that AI is probably the most transformative technology we have come across since the cloud. And as you know, we pioneered the cloud. I think some of us would even say possibly since the Internet. And if you look at the impact, actually, the growth rate surpasses the uptake of mobile phones in the 2000. Businesses are saving time, money, resources by reinventing their processes in a way that allows them to drive productivity. Right. And if you add up the value of what we think a near total AI adoption in Europe could do by 2030, you are talking about $433 billion of value to the region's GDP by 2030. So it is a much more transformative impact on businesses.

[Liana Byrne]

That was Tanjua Randri from Amazon Web Services. And finally, the Canadian rock star Bryan Adams had to canc his concert in Australia yesterday because of a massive fatberg blocking a nearby sewer. Perth's water officials were concerned that sewage might cause problems with toilets at the venue. Not a great image. I'm Liana Byrne with the Marketplace Morning Report from the BBC World Service.

[David]

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