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- [00:00]
Steph McGovern
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- [01:14]
Chef Meilin
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- [02:08]
Robert Peston
Hello and welcome to the Rest Is Money with
- [02:10]
Steph McGovern
me, Robert Peston and me, Steph McGovern. I feel like we should introduce Trump as the third presenter if the show he appears that often in it.
- [02:20]
Robert Peston
Now it is another Trump Turmoil special. Can I tell you how I framed it in my own mind? It feels to me tonight like the first series finale in the sense that, you know, we've got these, we've got these like mega events. We've got, you know, some laying down of arms against China. But that battle is not over. We've got something coming to fruition which you and I have been talking about, which is how is he gonna get drug prices lower in America and we've got this extraordinary. Absolutely extraordinary. And this really is straight out of sort of a modern day Game of Thrones. You've got the Kingdom of Kata, you know, giving him a $400 million super jumbo jet, which apparently kitted up like a palace. So it's just the end of series one. It's so much more to either look forward to or fear in series two. But it does feel, don't you think, bit of a finale?
- [03:22]
Steph McGovern
Yeah, you're right, because it's making you just walk away, isn't it? It's like we're all committed to watching what on earth's gonna happen next. Because even with this China deal, it's for 90 days. It's not like forever. Not that anything would ever be forever with Trump. But yeah, you're right. You're like, well, that's 90 days. That's gonna go quick, guys, and then we're gonna be back on this roller coaster again. Although something's probably gonna happen between now and then that'll kick it all off.
- [03:50]
Robert Peston
I don't suppose you want to just take us through, you know, the tariffs that were in place, where they are now, how we got to this place.
- [04:00]
Steph McGovern
So, I mean, it's probably, you know, there's been tariffs between China and the US for, for a long time. But it got particularly aggressive, didn't it, on Liberation Day? That day a few weeks ago in April, when Trump came out with this board of Tariffs, what he called reciprocal tariffs, he was putting on the world. It looked like someone who was giving you the odds for a horse race when. Yeah, you're right.
- [04:25]
Robert Peston
I thought about it that way. Are they called tic tac men? I can't remember. Is that what they were called down the race course?
- [04:32]
Steph McGovern
Yeah, those fellas who stand by the side of the race course going two to one and all that. But anyway, it looked like that, but it was unfortunately a lot more serious and damaging than that. And so this. But the big deal on all of this is how much they. Trump increased the tariffs for China. So for Chinese goods coming into America, they went up to 145%, which as Robert and I talked about at the time, it's just me that's just closing the doors to business, basically, when they're.
- [05:03]
Robert Peston
It's an embargo, isn't it? It's basically like saying no trade, it's an embargo.
- [05:09]
Steph McGovern
And similarly, China retaliated and then put up their tariffs on US goods going into China to 125%. And this sent everything into total turmoil because of course, as we both know, we're talking about the two biggest economies in the world here. And the, and we're. And so much of the global trade relies on these two countries that this is something that impacts, you know, all of us. We saw the shares of all the big companies like your Amazons and Apple and all of those suddenly plummet because a lot of their products come from China. So it caused great angst. And since then there's been this continued kind of standoff between them. And then today Trump has said that the tariffs now so on the majority of the goods from China going into the US will now only face tariffs at 30%.
- [06:08]
Robert Peston
That is the 10% that all other countries have had imposed on them by Trump, including the UK plus 20% which is the so called fentanyl punishment, the 20% that he put on China weeks ago to try and force China, coerce China into stop making the ingredients that go into the highly addictive fentanyl drug, which Trump basically says is, which I think actually this is one of the few things he says which is true, is destroying thousands and thousands of American people. There are, it's a terribly addictive drug and doing terrible damage to American society.
- [06:54]
Steph McGovern
Yes, so, so these tariffs have come down, but I mean they're still very high compared to other nations, aren't they? Because I think, was it capital economics saying that they've worked out the total US tariffs on China will still be about 40%. So this is still high.
- [07:09]
Robert Peston
That's including the steel tariffs and the motorcar tariffs.
- [07:12]
Steph McGovern
Yeah, yeah, yeah, yeah, exactly. So on average you're talking 40% tariffs, which is still incredibly high. But it's obviously come down from the, you say the embargo, the no business putting the shutters up, 145% tariffs. And you know, we've seen a good reaction to this, seen the stock markets again rise. Companies like Maersk, the big shipping giant, they've seen their share price go up today because of it. Obviously there's concern about the fact that it's only 90 days at the minute, which doesn't give, you know, the people who are sending goods on these ships much certainty. We talked, didn't we, a couple of episodes ago about that kind of lag between getting stuff on the ships and then getting them to America and then getting them out on the trucks and everything else. So there's probably going to be a mad rush to get a load of ships out now. But they're seeing this as something in the right direction, but not necessarily creating the certainty that they want yet. But I mean, what do you make of it, Robert? Do you think that this is going to calm things down a bit or. It doesn't get rid of uncertainty, does it?
- [08:20]
Robert Peston
No, the uncertainty is still there because Trump is still saying he wants much better access to the Chinese market and nothing has been negotiated on that front. I think it's also important to tell people that China has brought down its 125% tariff to 10%, which is obviously considerably lower than the tariff which America is imposing on China. I mean, there are still going to be problems at that sort of, you know, whether it's 30 or 40 depending on what kind of business you are in China selling to America. Much lower tariffs, as you say, than they were yesterday, but still quite high. Interestingly though, these are tariffs which allow business to pick up again. Incredibly striking that the shares in Amazon soared 8% today. Amazon, a massive distributor throughout America, throughout the world of Chinese made goods. Apple, however, rising. I think it raised 5 or 6% today. Not as much because of course it is still very dependent on Chinese made pops.
- [09:43]
Steph McGovern
It's interesting though how and what these companies like Apple will say if they do put up prices, because there's this whole thing, isn't there, about not wanting to get into a row with Trump because obviously when Amazon came out and said we're gonna have to put up some of our prices and we're gonna list exactly how and why to do the tariffs, it all kicked off with Trump. So you do wonder if Apple are actually gonna, if they do put up prices, give the actual reason of what it is and obviously between the lines that everyone will know. But it feels like, for example, I feel like there's a fear amongst business retailers about saying anything against Trump. So this week I'm hosting a big world retail congress in London and a couple of the American CEOs have pulled out because they don't, because they know everyone's talking about tariffs and the impact on global supply chain, on the fact that, you know, they're going to have to talk about the impact to them and their prices and what that might mean and they don't want to.
- [10:48]
Robert Peston
One of the most conspicuous characteristics of the Trump administration is how much incredibly wealthy business people are just how frightened they are of Trump. And I was talking to a very well known, very senior figure in the whole sort of digital world about why the billionaires who run the likes of Amazon and Meta and Alphabet were all, and Microsoft were bowing and scraping to Trump. And with an absolutely straight face, he said, well, it's because they're terrified that if they don't that he'll put them in prison. And I said, you're sort of joking, aren't you? And he said, no, I'm not joking. They genuinely, they're genuinely terrified of that.
- [11:42]
Steph McGovern
Yeah, similar to that, I've got a friend who has had a high profile job in the past who said recently to me, do you know, I don't know if I should go to America just in case, because I've said some public stuff in the past about Trump and what if this person's small fry, I guess in lots of senses, but still has made plenty of headlines with what they said and they were like, I don't know if I should go. What happens if you do get arrested or something there? And I think even though that sounds so ridiculous because he's so unpredictable and he's so driven by his ego and what people say about him and he's quite happy to suddenly put, pull up the boss of Amazon and slag him off. And if he, you know, says anything against what he's doing that, you know, I think there's a, there's a, you can understand why people are scared because he literally is dictating everything.
- [12:39]
Robert Peston
You talked about how presumably the tankers are now rushing to various Chinese ports and are being filled up with containers to get goods over to America. But you know, let's be absolutely clear, you know, there is going to be a problem actually around now and in the coming few weeks because it takes weeks and weeks for these containers to reach America and there is still a risk that, you know, that there are going to be some really quite important items missing from the shelves of supermarkets or that suppliers can't get hold of. So we could still get another significant contraction of economic activity in America as a result of the so called embargo tariffs, the tariffs that were 145%, if we're right, and I'm sure we are, the Amazon, for example, will be pressing the button on massive shipments to America of the stuff it needs. You could have this crazy situation where you get a temporary, quite significant downturn in economic activity because America runs out of Chinese made stuff and then you get another glut, which means that the trade deficit with China will reach another record high, which is the reverse of what, of what Trump wants to achieve. But they'll be wanting to massively stock up on Chinese made stuff for the simple reason they won't be confident that in 90 days time penal tariffs won't be imposed again. So even though tariffs of 30 or 40% may still be high, if you are, you know, an Amazon or a Walmart or a Target, you're going to be thinking to yourself, I mean, that could be really cheap compared to what, to what Trump could do in just three months time. So you're going to be massively stocking up. And then there is one other point which I do think is absolutely gripping. Right. I talked about how Trump had achieved something that is not quite unique in the history of American capitalism, but is quite close to being unique, which is he was taking such crazy risks with the American economy and America's public finances that overseas investors were dumping dollar assets rather than doing what they normally do in a time of economic uncertainty, which is to plow money into the dollar. So they were selling the dollar, selling US Government debt, as I say, which, and normally they would buy that stuff at a time of global uncertainty. So he had turned, in a way that was potentially very damaging for America, the dollar, into what's known as a risk asset. Right. As opposed to a relatively risk free asset. So of course, what we saw today with investors thinking that the risks in the global economy have diminished, we saw the dollar absolutely soar. Now, Trump probably thinks in some ways that's a good thing, but it's not because it just confirms that the dollar is now seen as a risky asset. Gold, one of those other assets people buy when they're very anxious about the outlook. Gold fell today, right now, quite often. Normally you would expect if the gold price is going up, the dollar to go up, but the fact that they are moving in opposite directions tells you the damage that Trump has done to investor confidence in the credit worthiness of the American state.
- [16:30]
Steph McGovern
Yeah, it's like you've said all along, it's that kind of reset, isn't it? Should we have a quick break and then come back and talk about what's happening with pharmaceuticals? And also we must talk about the plane that you mention. This, you know, multi million dollar, what is it, $400 million, this plane.
- [16:49]
Robert Peston
Apparently Trump himself said, he said he made some comment at a press conference today when he was defending it. He said, well, you know, somebody gives you a plane that's worth a billion or maybe 400 million, you're not going to turn it down, are you? So we should talk about that.
- [17:04]
Steph McGovern
Yeah, we should. Let's have a quick break.
- [17:07]
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Robert Peston
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Robert Peston
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- [19:08]
Robert Peston
So welcome back to the Rest Is Money. That's another Trump special with me, Robert
- [19:13]
Steph McGovern
Beston and me, Steph McGovern. So we've talked quite a bit about the pharmaceutical industry, haven't we, and the concerns there about what's going to happen with tariffs. Trump essentially is raging about how much Americans pay for drugs and how many of those drugs are imported, or at least the ingredients for them and everything else. And now essentially he wants to try and set the price of drugs, doesn't he? He's tried this before in his first term in office and it didn't happen, but he's come back with a vengeance now, trying to basically fix the price of drugs so that drugs companies can't charge beyond a certain price.
- [19:53]
Robert Peston
And I have, actually, I have to say on this, I have a degree of sympathy with him because there'd be some very interesting work done by Rand on this. But also, actually, this is corroborated by a whole series of studies. What Americans pay for pharmaceuticals is something like three times what the NHS pays for the equivalent drugs and treatments. So there is no question that Americans are being ripped off. Right? The NHS is paying literally a third of the price. Something's wrong with capitalism in America that somehow the drug companies are getting away with charging so much more. Obviously, NHS buys in bulk and can give certainty of demand over a period of time. But even so, that disparity just looks. I mean, if you're an American, it's great if you're the nhs, but if you're American, that just looks terrible.
- [21:00]
Steph McGovern
I mean, it was interesting that some of the organizations around it donated to Trump's inauguration, you know, in the sense of trying to get him to be more lenient with them. And he's come out and said, which absolutely made me laugh out loud when he said it, did you hear that quote, campaign contributions can do wonders, but not with me and not with the Republican Party. Wow.
- [21:26]
Robert Peston
Yeah, okay, so exactly. Although it has to be said, actually, since he did say that, you know, maybe it was all cunning plan after all to, you know, undermine Elon Musk's wealth. I mean, Elon Musk, the biggest, you know, the biggest donor of all his fortune absolutely massacred collapse in the Tesla share price since he started to work for Trump. So maybe Trump is telling the truth that, you know, give me, you know, that donations do not buy any increase in wealth, either for drug companies or for Elon Musk.
- [22:02]
Steph McGovern
And also, as we were saying when we were talking about the UK US trade deal, the UK is not better off since Trump's come in, but he's totally selling it as that because of the clever move with putting them up, the rates up so high, the tariffs up so high on Liberation Day, and then bringing them down to higher than what they were before Trump even came in. It's like it's actually worked out tactically quite well for him. And obviously, again, talking about what's happened on the stock market off the back of this news about wanting to set the price of drugs, we've seen, for example, Novo Nordisk, the company we've talked a lot about, this Danish massive company makes Wegovy and Ozempic the fat jobs that's down 4%. Roche and AstraZeneca, again, massive pharma giants, down 3% as well. So, you know, the sense here is it's not looking good for the pharmaceutical companies. And obviously their argument back is that this is going to impact research and development and they won't have the money for that, which Trump said. That's rubbish. That's just an excuse. What are you thinking, Robert, on all this?
- [23:07]
Robert Peston
So, look, there are two things. I made the point that, I mean, I did think this was coming from Trump, that he wanted to reduce the price of drugs for Americans down to the lowest price that the drug companies charge other countries.
- [23:25]
Steph McGovern
Most favored nation, it's called, isn't it?
- [23:27]
Robert Peston
Well, that's the phrase that you use when you're talking about tariffs. He's sort of taking a tariff concept and he's applying it, in this case to pricing by the pharmaceutical companies. And if you take the fact that, as I say, NHS prices are something like two thirds lower than American prices, if he were able to force the drug companies to reduce their prices to the nhs, the levels the NHS pays, that would just be a massive squeeze on their profitability. What I therefore feared would happen, and I'm pretty certain it will happen, is in order, therefore, not to have to cut the prices in America that much, to sort of jack up the prices that the likes of the NHS pay, which will be an absolute disaster for Wes Streeting and Keir Starmer. Time of incredibly scarce resources. The last thing they need is for Trump's actions in America to force down prices to lead to the pharmaceutical companies charging the NHS way more. But I think that is a very serious risk.
- [24:42]
Steph McGovern
Yeah, yeah, that's a really important point. You know the term most favored nation, when. Whenever I think of it, have you ever been told, when you've gone for like a. If you've ever done any work for the BBC and they want to make sure they pay you the least possible, they always say to you, it's A favored nations and regions fee. So it means on no level can you negotiate any higher. And it's normally.
- [25:06]
Robert Peston
Is that what it means?
- [25:08]
Steph McGovern
As you say, it arrives in your contract and it's.
- [25:11]
Robert Peston
It says, we're hiring you on whatever that phrase is that, as you say, as soon as you see the phrase, you know, nations and regions, what you know is it's a rubbish fee. It's basically the BBC saying, we're doing you a favor by, you know, basically asking you to do this.
- [25:28]
Steph McGovern
Right, let's talk about this plane, then. So this is a luxury Boeing 747A. It's a donation, isn't it, from the Qatari royal family.
- [25:38]
Robert Peston
Well, it's just a bit. We should actually clarify. The Qataris have said they're not denied that they've offered it, but they are saying, oh, it hasn't quite been done. And, you know, we should point out that Qatari is obviously a bit embarrassed about the whole bloody thing. Donald Trump, though, not embarrassed.
- [25:54]
Steph McGovern
So it's like it's on the Christmas list. So it's there for, you know, it's on the Christmas list for Santa, but you haven't quite got it yet. Is it that, you know it's coming, but you haven't got it yet?
- [26:02]
Robert Peston
And he's off to the Middle east, actually, as we speak, within hours, he's off to the Middle East. So I think we all expect the formal present to be, you know, had or sort of, he's announced within a couple of days.
- [26:14]
Chef Meilin
Yeah.
- [26:15]
Steph McGovern
And the thing that blew my mind was you saying to me earlier that it's going to be upgraded to be Air Force One. Right. So the president's main plane forgetting about, but then when he leaves office, he gets to keep it.
- [26:27]
Robert Peston
Well, it goes to. So this is an interesting nuance, Right. He insists that it's not going to be his personally. You know, presidents, all presidents, create these foundations and these libraries of all their documents and all the rest of it. You know, every president has a library, archive. An archive and all that, you know, and he is saying that the, you know, so the plane will be used by him on official business and then it will be transferred to, you know, the Donald Trump library as and when. I mean, obviously, they're just gonna be some librarians flying around the world in this plane. There's no chance of Donald Trump flying around the world in a, In a, In a plane is basically kitted out like a palace. Is there?
- [27:12]
Steph McGovern
What does it buy them? What is this buy in the Qataris? That's What I'm worried about is now what. What are they going to get for this massive gift?
- [27:20]
Robert Peston
But you've hit the nail on the head here. This is what is literally astonishing about the current state of America, right? His legal advisers and his defense secretary have all said it's fine for him to have a 400 million or the American government to have a 400 million present from Qatar, a state that was only. Well, actually, at the end of Trump's first term, was put on, effectively, the naughty step. It was basically classified as not a hostile state, but as a state that was dodgy because Saudi pointed out that it was too close to some terrorist organizations that's come off that list. And it's obviously very keen never to go on that list again because it's making this lovely present. But Trump's legal advisors are saying it's fine to have the present because we cannot think of any favor right now that Qatar is asking for. Right. As though. I mean, it's just. It's just you're so headed, right? I mean, you know that if somebody gives you something you can't afford, at some point they're going to come back and say, hang on a second, I gave that to you. Now you can scratch my back. And there's no such thing as a free plane, is there?
- [28:51]
Steph McGovern
This reminds me of, you know, Chris Kamara, Cami, football in pundit legend, hero is from my hometown. Really good friends with him. And I once went. And he. Wherever we go, gets mobbed by everyone. It's like being with Harry Styles when you're with Cami. And so we were in this Indian restaurant and literally everyone kept trying to pay the bill or to give it for free. Like, the owners of the restaurant were like, we want you to have it free. And we were like, no, no, no, no, no, it's fine, it's fine. And then people kept trying to pay the bill and we were like, no. And I was like, does this happen to you all the time? And he's like, yeah, yeah, it happens quite a lot. And he said, but I never take it because it's never a free lunch. They'll always want something.
- [29:30]
Robert Peston
No, that's true. I've got a question for you, because you've got a good eye for these things, right? You remember Keir Starmer got those free glasses, right, from Wahid Ali, the free spectacles, right? Do you reckon. Do you reckon they are $200 spectacles or $400 spectacles? I mean, I'll tell you why, because if they're $200 spectacles. The plane is basically the equivalent of 2 million free spectacles. And if they're 400, it's 1 million free spectacles. But kidding about. In the UK, Keir starved like, you know, the press is all over him for, effectively, this is the most appalling act of corruption. He's had some free spectacles. Right. Basically, Trump has had that times a million.
- [30:15]
Steph McGovern
Yep, I know. And that's what we're talking about. And he just gets away with it all the time. It's really, really unfair. We should probably wrap things up, shouldn't we? Because it's getting late.
- [30:26]
Robert Peston
I know. Getting late sounds like beginning of a song. I was about to. You'll be pleased that I'm not gonna break into song.
- [30:31]
Steph McGovern
No. And that's definitely a sign that we need to wrap up. You've got Steph Flanders on the next episode, haven't you? Because I'm with all these retailers, I've
- [30:39]
Robert Peston
sort of decided that, as I said, I'm turning it into a boring old fart. And on the rare occasions you're away, I've decided just to make. Just so that I don't forget who I'm talking to, I'm only gonna have Stephs on the show from now on.
- [30:53]
Steph McGovern
And did you know? Right. So when I was working at the BBC, before I worked with you, I was Steph Landers producer, and that's when Stephanomics came out. It was the two Stephs. I mean, she was obviously writing it, but I was her producer at the time. And we're like, isn't that funny, Stephanomics? And it's the two of us.
- [31:09]
Robert Peston
You cannot have too many steps.
- [31:11]
Steph McGovern
Right, let's go.
- [31:12]
Robert Peston
All right.
- [31:13]
Steph McGovern
Yeah.
- [31:14]
Robert Peston
See you soon.
- [31:15]
Steph McGovern
Bye. Bye.