The Battle For Car Finance Compensation

Summary

Newscast – The Battle For Car Finance Compensation
Episode Date: August 1, 2025
Host: Adam Fleming
Featured Experts: Theo Leggett (BBC International Correspondent), Helen Katz (Political Correspondent)

Episode Overview

This episode of Newscast dives into two complex financial news stories: the UK Supreme Court’s critical ruling on car finance compensation, and the latest developments in Donald Trump’s US trade tariffs. The show features sharp analysis by BBC experts, aiming to demystify these economic issues for listeners. The episode’s tone remains conversational and informed, making nuanced finance and legal topics digestible without sacrificing detail.

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Main Story 1: The Supreme Court’s Car Finance Compensation Ruling

Key Segment: [02:45]–[19:51]

Background & Key Allegations

• Car Finance Practices Under Scrutiny:
  • Car dealers, in partnership with lenders, routinely set their own interest rates on car loans, earning higher commissions the more interest they charged consumers.
  • This practice—called "discretionary commission arrangements"—was widespread until regulators banned it in 2021.
• Regulatory and Legal Reactions:
  • The Financial Conduct Authority (FCA) took time to investigate, only banning the practice after years of mounting pressure from consumer advocates ([06:29]–[07:36]).
  • Initial court rulings favored consumers, raising the spectre of mass compensation claims and serious financial risks for lenders.

Supreme Court Ruling: What Happened?

• Crucial Decision Timing:
  • The Supreme Court released its ruling unusually late—at 4:30 pm on Friday—to minimize immediate market disruption ([15:15]).
• What Did the Court Decide?
  • The Supreme Court narrowed the grounds for compensation:
    • Simply not disclosing a commission arrangement to the consumer does not automatically entitle them to compensation.
    • Dealers are not "fiduciaries" and don't owe a selfless duty of loyalty to customers ([09:29]).
    • Compensation still possible in "egregious" cases (e.g., extremely high commissions, misrepresentation of the finance deal):

      “In one of the three cases we saw, the court upheld the car buyer's claim because the commission arrangements in that case were deeply unfair...”
      —Theo Leggett ([10:25])

• Impact on Claims:
  • Only millions, not tens of millions, of customers could now potentially claim redress ([11:42]).

Economic & Political Ramifications

• Treasury’s Nightmare Scenario Averted:
  • Treasury feared a wave of compensation (up to £30–50 billion) could destabilize lenders and make the UK less attractive to investors ([11:53]).
  • “...the Treasury was so concerned about that that it did actually try to intervene in the Supreme Court case earlier this year...”
    —Helen Katz ([11:53])
• Now, potential liability is much reduced but could still run to several billion pounds ([13:58]).

Next Steps: What Should Affected Consumers Do?

• Wait and See:
  • FCA has hinted it may introduce a compensation/redress scheme—details expected Monday ([16:22]).
  • Consumers should wait for further guidance rather than signing up with claims management firms, which often charge high fees ([19:41]).
  • “...sit tight, wait and see if you think you might have had one of these arrangements, don't sort of rush off and sign up to something. Just wait and see for a bit.”
    —Helen Katz ([19:41])

Memorable Quotes

• “If you are as old as I am and you used to watch Minder ... used car dealers had the customer's interest front and foremost. But ... the car dealer was a businessman who would naturally be acting in his own interests.”
  —Theo Leggett ([09:29])
• “This was not just a story about lots of people being affected ... it was about a sort of systemic risk to the entire British economy, at least as far as the Treasury saw it.”
  —Adam Fleming ([13:45])

---

Main Story 2: Donald Trump’s “Liberation Day #3” – The New Tariff Regime

Key Segment: [20:37]–[32:43]

What’s Happening?

• As of August 1, 2025, Donald Trump’s administration imposed a complex new schedule of import tariffs, with different rates for dozens of countries ([21:21]).
• Countries scrambled to negotiate exemptions or reduced rates, creating an uneven international playing field.

Key Details:

• Tariff “Bingo Card”:
  • Rates now range from 10% (UK, Falkland Islands) to 41% (Syria), with the US leveraging tariffs as direct tools for foreign policy ([23:01]).
  • Some countries—like Canada and Brazil—were targeted for political rather than purely economic reasons ([25:54]).
• Why the Patchwork of Rates?
  • Countries able to offer economic concessions or political support have scored better deals; those at odds with US positions have been hit harder. “Donald Trump is ... weaponizing tariffs as a tool of foreign policy.” —Darshini David ([25:54])

Economic and Political Impact

• Not as Severe as Feared:
  • The actual tariffs, while higher, are less aggressive than many feared. Early market response has been muted compared to earlier tariff announcements ([27:44]).
• Impact on Consumers:
  • Companies are expected to absorb much of the initial cost, but “sticker shock” on store shelves will eventually hit US consumers, likely around the next election cycle ([30:29]).
  • “It takes months. And ... Americans now say they're not that bothered about tariffs. However, they're going to notice this sometime next year just ahead of the midterms.”
    —Darshini David ([30:45])

The “New World” of Global Trade

• A New Era of Uncertainty:
  • The baseline US import tariff has jumped from 2% to as high as 17%.
  • Negotiations and adjustments are ongoing; the situation remains fluid, and further changes are likely—even for countries that have recently secured deals ([31:19], [32:23]).
  • “The new world is uncertainty.”
    —Adam Fleming ([31:19])

Memorable Quotes

• “...using trade policy, weaponizing tariffs as a tool of foreign policy to try and get what he wants in other areas.”
  —Darshini David ([25:54])
• “This is a new page when it comes to global trade, when it comes to America's approach... we're not going back to the world that used to exist.”
  —Darshini David ([31:38])

---

Noteworthy Timestamps

• [04:52] – Theo Leggett explains the core accusations against car finance companies.
• [07:36] – Discussion of FCA’s delayed response and regulatory challenges.
• [09:29] – Supreme Court ruling’s direct consumer impact explained by Theo Leggett.
• [11:53] – Treasury’s concerns and rejected intervention summarized by Helen Katz.
• [15:15] – Why the Supreme Court issued its ruling after markets closed.
• [16:22] – FCA statement: redress scheme update expected Monday morning.
• [19:41] – Helen Katz’s practical advice for affected car finance customers.
• [22:24] – Tariff rate breakdown and country-by-country analysis.
• [25:54] – Trade policy as a tool of foreign policy: US relations with Canada, India.
• [27:44] – Why market reaction is more muted this time.
• [30:29] – “Sticker shock” and likely timings for consumer impact.
• [31:38] – “The new world is uncertainty”: global trade now redefined.

---

Key Takeaways for Listeners

• Car Owners: If you bought a car on finance before 2021, don’t rush to claim compensation—wait for the FCA’s scheme details next week.
• UK Economy: The Supreme Court’s decision averts the spectre of mass bank payouts and systemic risk, providing market stability.
• International Trade: The US tariff regime proves volatile and highly politicized; the global trade environment is now unpredictably dynamic.
• General Advice: Whether buying a car on finance today or navigating rising import tariffs, pay close attention to the fine print and hold off on hasty decisions in uncertain times.

---

Tone & Style

The episode maintains the signature Newscast blend of light wit and informed analysis. Examples include playful references to “Minder” (the TV show), “bingo cards” for tariffs, and “sticker shock” in supermarkets, while grounding the conversation in detailed, expert-backed explanations.

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In summary:
This episode offers vital clarity on the Supreme Court’s car finance ruling and the global ripple effects of US tariff policy, providing practical context and measured advice amid fast-moving financial developments.

Transcript

[Adam Fleming]

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[Ray Winstone]

News hello, it's Ray Winstone. I'm here to tell you about my podcast on BBC Radio 4, History's Toughest Heroes. I've got stories about the pioneers, the rebels, the outcasts who define tough.

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And that was the first time that anybody ever ran a car up that fast with no tires on. It almost feels like your eyeballs are going to come out of your head.

[Ray Winstone]

Tough enough for you? Subscribe to History's Toughest Heroes wherever you get your podcast.

[Darshini David]

BBC Sounds Music Radio Podcasts hello, this.

[Adam Fleming]

Is the last episode of Newscast in the Newscast studio for a little while because from Monday we're going to be doing shows and at the Edinburgh Festival we're going to be on the fringe with a live audience of festival goers and we've got plenty of people to come and keep us company for you to listen to. Brian Cox, the actor and James Graham, the playwright Sarah Smith. From AmericasT, Kirsty Wark is going to be making a guest appearance. James Cook is going to be there merging being Scotland editor and sometimes host of Newscast. And we'll also be doing an in depth interview with John Swinney, the First Minister of Scotland. So plenty to listen to on our Edinburgh Festival episodes of Newscast and plenty to listen to on this classic daily.

[Helen Katz]

Episode of Newscast Newscast Newscast from the BBC.

[Adam Fleming]

He has just compared me to the fat controller.

[Ray Winstone]

Did I say that?

[Darshini David]

I can't believe I said that.

[Newscast Outro Host]

Next question.

[Adam Fleming]

This is R For the benefit of Earth.

[Theo Leggett]

I'm not personally a huge Sabrina Carpenter fan. I don't think I'm being rude.

[Adam Fleming]

I like landscapes. Take me down to Downing Street. Let's go have a tour.

[Theo Leggett]

Blimey.

[Adam Fleming]

Hello, it's Adam in the newscast studio. And shortly I'll be joined by our deputy economics editor, Darshini David. Because today, the 1st of August was a big day for Donald Trump's tariffs. And so I want to catch up and find out what's actually happened because there's been so many twists and turns to that. But first of all, we're going to talk about a British financial story, because this afternoon the Supreme Court ruled on this big story that's been brewing for a few years now about car finance loans. And so basically the claim was that car dealers had been working with the financial firms that provided the loans. And basically the financial firms were letting the car dealers set their own interest rates and then allowing them to earn quite a lot of commission off the higher rates. And so this was uncovered a few years ago. It was then banned as a practice by the regulators. But there's been a series of court cases just trying to work out how much compensation the banks could be on the hook for to compensate the customers who basically were paying too much interest on their car loans as a result. And it ended up in the Supreme Court. So the highest court in the land, and the Supreme Court issued their ruling quite strangely at 4:30 this afternoon on Friday. So let's find out what this is all about and actually what the Supreme Court has decided, because we're joined by two people who spent many, many years following every twist and turn of this story. Here in the Studio is the BBC's international correspondent, Theo Leggett. Hello, Theo.

[Theo Leggett]

Hello.

[Adam Fleming]

And also joining us on the line from Westminster is political correspondent Helen Katz, who also presented an excellent episode of file on 4 about this very issue. Hello, Helen.

[Helen Katz]

Hello.

[Adam Fleming]

And happy birthday.

[Helen Katz]

Thank you.

[Adam Fleming]

I got Donald Trump's tariffs on my birthday. You get the Supreme Court ruling on yours. Right, Theo, before we talk about the actual ruling today, which is quite significant, let's do a bit of backstory. So what are the car finance companies, the banks and the car dealers accused of sort of doing wrong when it comes to consumer here they're accused of.

[Theo Leggett]

Concealing from car buyers the fact that when they take out a car finance agreement, and let's not forget that most cars are bought on finance agreements today, that a commission is paid by the lender to the car dealer. Now, this is pretty Commonplace. But what the cases we're looking at at the moment consider is cases in which relatively unsophisticated consumers, that's the legal expression.

[Adam Fleming]

You're not dissing them.

[Theo Leggett]

I'm not dissing them. But this is what the legal papers say. Unsophisticated consumers have been offered credit agreements in which there is a built in commission paid by the lender to the dealer, but the customer doesn't know about it. That's one part of it. Another part of it is whether these commissions are fair, whether they're set at the level. But all of this came down to three test cases which were heard initially in county court. They were rejected or partly rejected later in the appeals court, where the appeals court basically upheld all the consumer complaints and then progressed to the Supreme Court because everybody was crying out for some legal certainty and because the Appeal Court ruling appeared to have opened the floodgates for an absolute torrent of compensation claims, which would have been great news for consumers who thought they had a claim, but would have been much less good news for lenders.

[Adam Fleming]

And we'll come on to that in a second and we'll talk about the Supreme Court in a second as well. But Helen, listening back to your file on four again this afternoon, it was amazing just how this sort of dribbled out over years, these practices.

[Helen Katz]

Yeah, it was. And we look at one particular practice actually in the file on 4, which has already been banned, this idea of discretionary commission arrangements. And these were banned back in 2021, but they'd been in operation for a lot of years previously. What it, what they were, was that a car dealer was allowed by the lender when they were selling a loan to someone to buy a car to set the interest rate, set the APR overall, and basically that the higher a rate they could get a customer to pay, the more commission they would get. And so that went on for a number of years. It was eventually banned by the regulator. But we spoke to a guy who's a former city trader, he does a lot of trying to raise awareness of practices in the industry who, who tried to raise this from about sort of 2015, 2016 onwards. So it was happening for quite a while.

[Adam Fleming]

And yeah, I mean, it's been the people that you spoke to who first noticed it. It took them a long time to then even convince the authorities to investigate it. The Financial Conduct Authority to get involved.

[Helen Katz]

Well, yeah, the Financial Conduct Authority says that it took them time to do this investigation, that it was on their radar in sort of 2016. But it took them time to gather the evidence, if you like, to then bring in a ban. But certainly lots of questions that are asked across the industry and by consumer groups about why it took them quite so long to step in and ban this.

[Adam Fleming]

And Theo, in the meantime, a huge industry setup of companies and lawyers saying, oh, we will help you claim on if you think that you've been overcharged for the commission on these loans when you got your last car and you could see the adverts popping up on Instagram and hear them all over the place.

[Theo Leggett]

Absolutely. When you get a legal question like this where there is potential for consumers to get compensation, the claims management companies rush in headlong. And that's not always a good thing for consumers, actually. Yes, it gets everything into the public eye and means people are more aware of what's going on. But also people can be sort of dragged into a situation where they may end up losing a chunk of the compensation they get because these companies charge quite high fees. And in the case of large scale consumer cases, sometimes the Financial Conduct Authority will set up a central redress scheme, as it still may do with those discretionary compensate commission agreements that Helen was talking about. And that would be free. So it's not always a great thing if people sign up with claims management companies when they could get their compensation without any of the fees being knocked off.

[Adam Fleming]

And Theo, you were talking about the potential avalanche of claims here and it's amazing when you see the estimates of what the biggest case scenario would be like. £30 billion, £40 billion, £50 billion in total. But that scenario has been avoided today because of what the Supreme Court has ruled.

[Theo Leggett]

Yeah, that scenario has receded and the Appeal Court's ruling basically suggested that if a commission had been paid from the lender to the dealer and you didn't know about it, then you had a valid claim and that the dealer had a duty of loyalty towards the customer. Now, you know, if you are as old as I am and you used to watch minder and television programs about car dealers, you would never see 90s drama. Used car dealers had the customer's interest front and foremost, but this is what the judges suggested, that the car dealers had an absolute loyalty towards the customer and therefore should be trying to seek out the best deal for them. Now, in the Supreme Court ruling that's been set aside, the judges decided that, no, the car dealer was a businessman who would naturally be acting in his own interests and didn't have a selfless duty towards the customer. So that idea has gone out and the idea that you have to know about the commission being paid and if not, you have a claim that seems to have gone out as well. What's been kept in. In one of the three cases we saw, the court upheld the car buyer's claim because the commission arrangements in that case were deeply unfair. This was a chap who'd been, I wouldn't say coerced, but encouraged to buy a car for a higher price than it was worth, considerably higher. And also, the commission on the finance deals he'd had to take out, and he had to take out two were very significant. And the court decided that this was unfair because the commission was so high and also because it had been suggested to him that this was the result of looking at lots of options for finance and choosing the best one for his individual circumstances, when in fact the dealer had an arrangement with a finance company and had simply picked that possible deal. So that was unfair, he was entitled to compensation. And so that does open the door for people in the most egregious cases where the commission payments are very high or there's something else that's underhand going on to claim compensation.

[Adam Fleming]

In other words, Helen, potentially millions of people could get compensation as a result of this, but not the tens of millions of people that could have got it if the Supreme Court had said yes to absolutely everything.

[Helen Katz]

Yeah. And that was the Treasury's massive nightmare scenario. And just to give you a bit of a sense of what the impact could have been of that, the treasury was so concerned about that that it did actually try to intervene in the Supreme Court case earlier this year. It put in an application. We heard the Judge Day say that that had been denied because the treasury was putting forward economic considerations rather than legal ones. But what the treasury were worried about was that they were concerned that payments on that scale, if it was running into the tens of billions, could reduce firms ability to. To keep lending, to keep the market going. They were also worried that it would make the UK look like a sort of not straightforward place to do business and that would put investors off because they would perceive that the rules were changing. So there had been a lot of concern about it and there'd even been to suggest that Rachel Reeves had been considering legislating if the judgment had gone the other way, to overturn that or to limit payouts. And certainly in this submission that they put into the Supreme Court, it does say that they did not want or do not want consumers to come out of this with basically windfall payments. They want them to be proportionate so that was the nightmare scenario which has now, because of today's ruling, gone away. There will still be that hit that you talked about on the bank from things like the discretionary commission arrangements, but it shouldn't, isn't going to run into that enormous hit that the treasury was worried about. And of course, that does also take some of the political pressure off Rachel Reeves, because in the scenario where it had been that, that massive hit, there would have been a bit of pressure on her to step in and take those sort of steps, that action. And that, of course, would have risked looking like the government was siding with the big banks over the consumer. So politically, not a great look.

[Adam Fleming]

So, Theo, this wasn't just a story about lots of people being affected by something or the banks having to pay out lots of compensation. It was about a sort of systemic risk to the entire British economy, at least as far as the treasury saw it.

[Theo Leggett]

Absolutely. Some of the lenders involved could have been liable for hundreds of millions or even billions of pounds worth of compensation payments. And that could have put some of them out of business. It could have made it harder for people to get finance because those companies would have had to restrict their lending, all that, that sort of thing. What we have now is a situation in which the compensation bill is unlikely to be 30, 40, 50 billion, but it could still be in the billions. I've seen claims it could be up to 10 billion still. So it's a sizable hit, but it's not that kind of massive systemic hit that would have put people out of business. It's not going to be in the same league as the payment protection insurance scandal we saw a few years ago, for example. But it will be something that lenders won't want. So while there'll be breathing a collective sigh of relief about this, I don't think we'll see any champagne corks popping.

[Adam Fleming]

And also, Theo, I mean, I was actually, I had my lunch outside the Supreme Court today. Cause I was doing my other Radio 4 program at Westminster, saw Helen, wished her a happy birthday, and I was sat outside the Supreme Court and I thought, oh, normally a story like this, this judgment would have come out in the morning and I'd be sitting outside the Supreme Court after it happened. But actually this judgment came out at the end of the afternoon. Why did it play out so strangely?

[Theo Leggett]

It did come out in the end of the afternoon. And that's not great for journalists when they have. As you well know, the reason it came out was because of potential impacts on the financial markets. So if it had come out earlier in the day, the court had been advised that the impact on the market could be substantial, whereas bringing it out after the markets have closed, that gives everybody the whole weekend to look over the judgment, interpret it, examine what the consequences are going to be. And the market's reaction on Monday morning, if there is one, is likely to be considerably more muted.

[Adam Fleming]

Oh, and there's a statement from the Financial Conduct Authority that says they welcome the clarification from the Supreme Court. And then they say, we'll confirm whether we will consult on a redress scheme before markets open on Monday the 4th of August. And that'll be, of course, at 8 o' clock on Monday morning. They say our aims remain to ensure that consumers are fairly compensated and that the motor finance market works well, given around 2 million people rely on it every year to buy a car. So, Helen, this story is not finished. We have to tune in on Monday morning to see what kind of big scale thing the FCA offer as a result of this.

[Helen Katz]

Yeah, absolutely. To see if they are going to come up with this compensation scheme and if so, who might qualify and whether it will be. Some of the talk has been, well, it could be, if it does happen, automatic, so that people wouldn't actually have to register a claim that it might be on the lenders to go back and see who, that they've, who they've sold an arrangement to that was under this sort of discretionary commission scheme. So there's a lot of detail still to be worked out. We also don't know, you know, exactly what the treasury thinks or is, is planning to do. They've put out a statement this evening saying they respect the judgment from the Supreme Court and will now work with the regulators and industry to understand the impact for both firms and consumers. And they are already, they say, making changes, reforms to, to, to some of the, the, the things that they say will deliver a more consistent and predictable regulatory environment for businesses and consumers, while ensuring that products are selected customers fairly and clearly. Because the other context to this is that as part of the Chancellor's real push to try and boost economic growth, part of that is about simplifying regulation and making it easier for companies to invest and to grow. So this does all sort of feed into that wider political context than what the Chancellor's trying to do.

[Adam Fleming]

So, Theo, newscasters listening to this at home or maybe listening to this in their car that they bought four years ago on finance, when will they know whether they might be eligible for compensation or not? Is it Monday Morning.

[Theo Leggett]

That's not clear at the moment, but it is likely to be focused on people who took out those discretionary commission agreements that Helen was talking about, because those are the most egregious. You know, dealers were basically being paid to push up the interest rates they were paying.

[Adam Fleming]

And would you have known that was one that you were signing up to?

[Helen Katz]

No.

[Adam Fleming]

No. Yeah, yeah, because it was secret between the dealer and the financers, because you.

[Helen Katz]

Were just presented with an APR or an interest rate rate. You didn't know that potentially the lender would have. Would have lent to you for less. That's sort of the crux of it.

[Adam Fleming]

So, basically, you just have to wait and see what this redress scheme is and then it will look into your own circumstances. So you can't know today if you're going to get compensation.

[Helen Katz]

I mean, some people will already know because there have been, for example, Martin Lewis, the money saving expert, he had a form on his website that people could download and send off to lenders that they had had contracts with and ask that them, basically. So some people will know that already, others obviously won't be aware.

[Adam Fleming]

And we should clarify, Theo, this is a historic thing because as Helen was saying earlier on, this practice has been banned for a little while now. So when you go and buy a car now and you get it on finance and you get a loan, can you trust that system?

[Theo Leggett]

You should be able to trust that system, or at least you'll know that discretionary commission agreements are not in force anymore because they were banned by the FCA back in 2021. So now, in theory, you should be offered a fair interest rate and a fair APR on the loan that you're taking out. But it's always worth reading the small print. You know, some of the people who were making claims in this, they weren't even arguing necessarily that the commission payments were secret. The commission payments were somewhere in the small print, but they didn't read that small print. So, you know, the best thing to do if you're taking out a finance agreement is say, what commission are you being paid?

[Adam Fleming]

And, Helen, do you want to leave us with one last bit of advice?

[Helen Katz]

Yeah. The advice at the moment is, look, sit tight, wait and see if you think you might have had one of these arrangements, don't sort of rush off and sign up to something. Just wait and see for a bit.

[Adam Fleming]

Helen, thank you very much.

[Helen Katz]

Thank you.

[Adam Fleming]

And, Theo, thanks to you, too.

[Theo Leggett]

Thank you.

[Ray Winstone]

Hello, it's Ray Winstone. I'm here to tell you about my podcast on BBC Radio 4, History's Toughest Heroes. I've got stories about the pioneers, the rebels, the outcasts who define tough.

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And that was the first time that anybody ever ran a car up that fast with no tires on. It almost feels like your eyeballs are gonna come out of your head.

[Ray Winstone]

Tough enough for you? Subscribe to History's Toughest Heroes wherever you get your podcast.

[Adam Fleming]

Now we're going to talk about Donald Trump's trade tariffs, those import taxes that he slapped on all sorts of countries sending goods to the USA. This is a story that started on the 2nd of April, but today, the 1st of August, when we're recording this episode of newscast, was another big milestone in that saga. Here to explain is the BBC's deputy economics editor, Darshini David, who's been covering this story since the very, very early hours of Friday morning. Hello, Darcini.

[Darshini David]

Hello, Adam.

[Adam Fleming]

Right, I'm a bit confused about where we've got to with tariffs. So, like, you're never meant to say that on the news, but just. I am. So what, what was the deadline today? What. What was the world aiming for? Or at least Donald Trump aiming for?

[Darshini David]

For the world, what was Donald Trump aiming for? Some people are calling this Liberation Day number three, because you remember Liberation Day. Course, you went back to April 2nd.

[Adam Fleming]

Of April, my birthday.

[Darshini David]

Your birthday. Oh, well, there you go. And what did you get for your birthday?

[Adam Fleming]

Loads of tariffs levied on all global trade.

[Darshini David]

Exactly what you wanted, in other words. Right, so you had Donald Trump and I'm sorry, there was no cake, but he did have that scorecard, remember, in the Rose Garden. And then there was sort of deadline after deadline saying, you know, if you come up with some concessions, if you come up with some arrangements which benefit America, then we'll rethink the those. And the latest deadline that was imposed for most countries was the 1st of August. And when we say 1st of August, it was midnight eastern time in the US, so early hours in the UK, and if you hadn't agreed some kind of agreement by then, there were revised tariffs that were brought out. So we've had another raft. I think it's about 70 countries in total have got an announcement of tariffs, some of which are higher, some of which are lower than they previously thought they were going to be. And guess what, there's another week for most until they come in, so things could change.

[Kachava Advertiser]

Again.

[Darshini David]

Adam, don't get too comfortable.

[Adam Fleming]

If you go on the BBC news website, it's a bit like a bingo card where you've got like the different Tariff rates that apply to each country. So in the 10% band, you've got the UK and the Falkland Islands. In the 15% band, you've got places like Afghanistan, Angola, Nigeria, Vanuatu, Zambia, Nicaragua's on 18%. 90% for Cambodia, Indonesia, Malaysia, Pakistan, the Philippines, 20% for some, 25% for others, 30% for Algeria, 35 for Iraq, 39 for Switzerland, 40 for Myanmar, 41 for Syria. So it's a real kind of mixed bag.

[Darshini David]

It's a real mixed bag. You forgot the penguins in there.

[Adam Fleming]

Oh, yeah, that penguin territory. There's no actual people or trade.

[Darshini David]

No, they got 10, by the way, in case anybody was worried. So some people, some beings are celebrating at the moment.

[Adam Fleming]

And so in terms of the. The deals that these countries have done. Yeah, I'm. I'm guessing that there are different kinds of deals that have led to different tariff rates.

[Darshini David]

Well, it's, it's quite. Let's go through the step by step, because you will know obviously, that the UK was one of the. Was the first to come out with an arrangement with the us, a long way from a free trade deal, of course. And then EU, Japan, others have followed. Right. And. And the UK got 10% at the time we went 10. That's a bit unfair. But the thing that worried Donald Trump was the size of America's deficit. With other countries, we were broadly imbalanced, but that 10% has looked quite sort of easygoing compared with some of the others. 15% seemed to be the baseline, if you were able to agree, an arrangement, a deal with Donald Trump. But then there was a few dozen countries left over who hadn't got a deal over the line by the first of August. Some of those, not because they hadn't been trying, but quite frankly, they'd not been prioritised by the White House because they weren't such major trading partners.

[Adam Fleming]

So in actual, because this was a big bureaucratic exercise just to deliver it.

[Darshini David]

I mean, you know, you know how this works. It takes years to arrange a trade deal. But what was interesting is that even by last night's deadline, we had a situation whereby the majority of imports entering the us, we already knew what the tariff would be because those deals had been struck with the biggest trading partners apart from China. And also various letters have gone out to other countries saying, look, this is already the tariff you're going to pay.

[Adam Fleming]

Because you have to look at the intensity of the trades between each country and America, because some countries export loads, so even a small increase in tariffs is a big deal. And some Countries could have huge tariffs, but because their trade's not very big, it's less of a problem.

[Darshini David]

It absolutely is. So India is a prime example for that because, you know, a couple of days ago, people going, wow, 25% plus is what India may face. And all of this is a perhaps who knows whether we'll get another round of this again. But in actual fact, less than 2% of India's GDP relies on American demand. So the impact on global growth, on Indian growth there may not be quite so severe. By contrast, Germany, of course, car makers there means that it's particularly vulnerable to that 15% baseline tariff. So it's going to suffer perhaps a bigger knock to its economic growth.

[Adam Fleming]

And so basically it's on a country by country basis, but then there's just actual exceptions even to that. So Canada's getting treated differently. Mexico got a sort of stay of execution for another week. China, the tariffs went way up and then came back a bit for kind of political reasons. And oh yeah, Brazil is also in a different category as well.

[Darshini David]

Brazil is an extraordinary category. And I think what this tells you is some of the deals we've seen struck are about what economic benefit you can be to the U.S. so those countries which are able to say, we'll invest more in the us, we'll buy more American energy, whatever, but then you've got those where Donald Trump is doing something which hasn't really been done before, which is using trade policy, weaponizing tariffs as a tool of foreign policy to try and get what he wants in other areas. We saw it, of course, with Canada when Canada saying we might recognize Palestine as its own state. And then, and Trump going, I don't like this here. 35%, by the way, the 35% actually only applies to a minority of Canada's goods going into the U.S. but still, it's not particularly nice place to be if you're Canada. And equally, when it came to India, there was this complaint up front on Truth Social saying, I'm not happy. India has been supporting Russia by buying Russian energy and its relationship with Russia when it comes to weapons. And that again is quite a departure for a major foreign leader to do that with trade policy. But having realised how he can weaponize tariffs in particular, he seems to have got rather trigger happy with this.

[Adam Fleming]

Is it making him or making the US government loads of money? Because that was also one of the other objectives here.

[Darshini David]

It was. And obviously this tariff regime has yet to come into full force. It is not quite as extreme as he was proposing in April. And you know, on the one hand he's saying, I want to bring jobs back to America. I want to get production back to America, which basically relies on Americans buying fewer foreign made goods. They're buying fewer foreign made goods. You're not getting in as much tariff revenue as you might have expected. So what I'm saying is you can't have it both ways. Chances are he will get more money through tariff revenue, not enough to replace a major tax.

[Adam Fleming]

I've noticed the stock markets around the world kind of tumbling today, but are they tumbling by as much as they have done in previous episodes of this, this tariff saga?

[Darshini David]

It's, it's a very different picture today. Yes. I mean, one thing that is similar is that if you look at, you know, the aftermath of both announcements, you're going to see red on the major markets. But the degree is different, the context is different, the mood is different. You're seeing relatively small falls. Falls this time around so far. And we are seeing those falls after a period of extreme buoyancy for shares on both sides of the Atlantic. Right. There's been some optimism there. So in actual fact, you're looking at a far more relaxed picture. And there is a good reason for that. And that is because these tariffs are not as aggressive as we previously feared they were going to be. The impact on the global economy is unlikely to be as marked. But also that uncertainty factor has been disappearing as more and more of this comes in. Right. At least we know what the, the baseline is likely to be. Things are not likely to get worse than this. But on the other hand, you know, there is still this feeling there are things to be sorted out. Pharmaceuticals, we still don't quite know.

[Adam Fleming]

Oh, yeah. Which is a whole different category that are going to get treated differently.

[Darshini David]

Yeah. So there's concerns there about what President Trump is demanding. And there are concerns too about what could happen with China. So you've still got that underlying mood of our knees there. But certainly we have come a long way from those huge leaps, the volatile roller coaster days of April also.

[Adam Fleming]

So the first thing everyone learns about tariffs is that the importing country government collects the revenue. The second thing you learn is that the people paying the tariffs, so the importing companies usually pass the extra costs onto the consumer. So actually you, the buyer of the product, actually you end up kind of indirectly paying the tariff. Has that happened to American consumers?

[Darshini David]

Not yet, but then we wouldn't expect for a couple of reasons. First of all, because we haven't seen the full scale of tariffs being unveiled till now, but also because it does take time for those who are involved along that supply chain to figure out who is going to pay that price and how they're going to pay it. Now, it's interesting to hear many companies, bonds with deeper pockets tend to say 10, 15%. There are probably ways we can absorb that within our supply chains rather than risk, perhaps consumers not buying our stuff in America. So they may not see that whole thing passed on by any means.

[Adam Fleming]

Make some efficiencies.

[Darshini David]

You can make some efficiencies, but that's one side of it. The other side of it is that you've seen some of the makers of big brands trainer, those who make trainers, for example, or household goods saying, we can now see how much this is going to cost us. And they're being more upfront about that. And what that tends to mean is that, yep, we are basically priming shoppers to prepare for sticker shock on some level.

[Adam Fleming]

I don't what sticker shock.

[Darshini David]

Sticker shock is a. I love the phrase sticker shock. It's an American thing and it literally means those shelf edge stickers. You go in one day, you go in and you go, how much? And I mean, I was in the States recently and I've got to say, things are pretty pricey anyway.

[Adam Fleming]

Yeah.

[Darshini David]

You know, and. And you think, well, the increase may not actually, in the overall scale of things, may not be that huge because Americans produce a lot of what they buy themselves. But even so, they are going to notice it on some sort of everyday items. And that is going to come through. Interestingly, it takes months. And some of the analysts we've been talking to say if you look at how things have been sort of phased in and the kind of lags involved, Americans now say they're not that bothered about tariffs. However, they're going to notice this sometime next year just ahead of the midterms. And that's when you're really going to see the reaction.

[Adam Fleming]

I was going to ask you a big philosophical question about are we still in the middle of something or have we arrived at the new world? And I think actually we have arrived at the new world. But the new world is uncertainty. It's not like old world, period of uncertainty, new world. It's like the new world is the uncertainty.

[Darshini David]

It's not like you and I can pack up our tariff sort of crib sheet and go away and come back and, you know, when the next administration comes in. No, not at all. And I think what is interesting is we are now At a position whereby at the start of the year, the effective tariff on goods coming into America was 2%. It is now 15 to 17%. And we're not going back to the world that used to exist. This is a new page when it comes to global trade, when it comes to America's approach to global trade as well. I mean, things could get slightly easier. Easier from here. They could get slightly harder as well. But this is definitely, you know, something new. This is not the end of it. You know, these countries, by the way, most of them, which have been told these are your new tariff regimes, have been told they're not going to come in for another week. And in that time you can try and have a chat, if you like, and see what we can do.

[Adam Fleming]

Right. So it could change again.

[Darshini David]

Could change again if you can get your foot around the door, which of course is not easy for many countries. But things could change again. And even those deals which have been done, done, there could be changes there. I mean, there are still things we don't know about whether UK deal or not.

[Adam Fleming]

Well, yeah, because it's not finalized.

[Darshini David]

It's not finalized yet. And there's bits like steel, you know, the rest of it. And there are question marks over where this could go.

[Adam Fleming]

So. Interesting. Thank you very much.

[Darshini David]

Thank you.

[Adam Fleming]

Right, that's it for this episode of newscast and that's it for this week. We will be bringing you some more old newscasts over the weekend, though, and we're going to be focusing on the MP's expenses scandal. And the day we'll be looking at is 8 May 2009, which is the first day that the Daily Telegraph printed a front page in their expenses scandal leaks story. But it was quite a long road that led to that point. So we will tell you all the twists and turns that led to it. And then in the second episode, we'll explore the many twists and turns that came after it. I will be welcoming back to the BBC BBC reporting and politics Live legend Jo Coburn. Great to catch up with her. And we'll also be speaking to Chris Hope, who's currently the political editor of GB News, but then was the Whitehall editor of the newspaper at the heart of all of this, the Telegraph. And he will be explaining to us how this juicy information came into their hands.

[Chris Hope]

My colleague Rosa Prince now is a brilliant journalist now at Bloomberg. Rosa was working on a Sunday shift gift. The place is empty. Nothing's happening. You're there because you want to be. You've got to work hard and you're doing all this. The stories for the Monday's newspaper Phone call rang and the voice said, I've got a computer disc which contains the details of every MB's expenses claim going back four years. Would you be interested?

[Adam Fleming]

And Rosa thought she would be interested, yeah.

[Chris Hope]

And then that's that. Kick started the process by which we ended up getting hold of this, this.

[Adam Fleming]

Disc and it was done. So that's a little taste of what you will hear in the two episodes of old newscast on the MP's expenses scandal, which will be dropping in the Newscast feed very soon. I hope you enjoy listening to it. Bye bye.

[Helen Katz]

Newscast Newscast from the BBC.

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