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Hello and welcome to World Business Report from the BBC World Service. I'm Sam Fenwick. Global markets are in turmoil as investors react sharply to President Donald Trump's latest tariff measures, who says he's not backing down. This is not sustainable. The United States can't lose $1.9 trillion on trade.

The ripple effects are being felt far and wide. Coming up on the programme today, we'll assess the fallout from Asia to Wall Street, to the European exchanges, and what nations might do to counter the tariffs. 25% tariff on Korea is not fair and much higher than expected.

You'll hear from South Korea's former trade minister, who is encouraging dialogue with the White House. Stay with us over the next 30 minutes. First, though, let's begin in New York, where the markets have opened.

So the opening bell there and a very volatile start. Big falls and then a bit of a fight back. Watching the reaction is Erin Delmore, the BBC's North America business and economics correspondent, joining us live from New York. So we're about an hour into trading now, Erin. How's it looking?

Sam, this is so volatile, as you mentioned, that I just keep refreshing my screen here just to get the absolute very latest. And normally when I do that, it's because I'm trying to get you the latest readout. How many points has a certain index jumped or fallen? What percentage is it up or down? Today, I'm looking to see if it's red or green. And that's not the story that we thought we'd be telling even just an hour ago. Look, we saw an across-the-board sell-off on Thursday and Friday, especially last week, these deep, deep fall in equities that took

trillions of dollars off of companies' value. We saw it continue in the stock futures over the weekend. We saw it continue in the Asian markets. And this morning certainly saw it continuing as well. Now we've seen a bit of a flat line, a bit of a bump even. The Nasdaq truly flat at the moment, just ticked to 0.1%.

in the green. That is a flat line if I've ever seen one. The S&P down 26 points, 0.74% just switched over as well. And the Dow down just about one and a third percent here. It's a wild session. It is truly a wild session. So they went up, there was a slight turnaround, wasn't there?

There was this morning. And look, in the face of clear policy and clear news, everyone is watching to see what President Trump says and what President Trump's surrogates say. So in this instance, one of his surrogates, Kevin Hassett, came out and said that there could be a 90-day reprieve on tariffs from everyone except China.

There have been other comments from his treasury secretary, from his national economic director. He said, don't panic, told retail investors not to panic by the market hit as well. So all of these messages that are coming out often on social media, aren't they? They are affecting markets.

Social media or on some of the major news networks here in the States. And, you know, President Trump is repeating the don't panic line, the hang in there, there's going to be some pain line. But the natural follow up, not just from a journalist, but from citizenry here is for how long? Until what?

And so when we have something like a meteor tidbit of news saying that there could be a reprieve on tariffs, OK, is that an insider who really has some insight into what could happen here? That's when you see a market bump. But a lot of this hang in there, hang tight. That doesn't do much to move the markets over the weekend. And then over the weekend, we heard from business people who are Trump allies like Bill Ackman, the multi-billionaire businessman, saying that tariffs are a bad idea.

Yeah, his exact phrasing was a economic nuclear winter, which I can't overstate. And he is, again, a Trump administration ally. So we're seeing a lot of divergence here. We are also seeing administration officials sparring with Elon Musk, who is as close to the president as anyone in the inner circle that we know of. Elon Musk was floated by.

Having free trade agreements, taking tariffs down to zero. A lot of infighting here, a lot of differing thoughts within the closest inner circle of the presidency. But we are seeing people really speaking out and speaking loudly, trying to make economic sense of this policy and in Bill Ackman's case, not finding it.

We've got some specifics on some particular brands because some sportswear brands were doing quite badly, weren't they, at the end of last week? Those are the likes of Nike that produce a lot of stuff in the Vietnam, for example. Right. And Nike is a perfect microcosm. I will zoom out for a moment, though, and just to illustrate for you how broad and how deep this stock route is. When we entered the day on Friday, the trading day and the trading week, there

There were only 14 stocks in the S&P 500. That's 500 companies that were in the green. So while I'm about to tell you the story of Nike, I do want to explain to you that these sell-offs are deep and broad, not just in consumer discretionary spending, not just in retail and footwear where we find a lot of production overseas, but really putting pressure on all sides and all sectors of the market. But let's talk about Nike for a moment. Oh, go, go. Sam, if you have a moment for me.

Give me a quick moment on Nike. Sure, sure. Back in 2024, produced half of its footwear and 30% of its apparel in Vietnam. And Sam, this was a move by the company to take production out of China. Because remember how badly China fell out of favor years past, certainly within the first Trump administration. The idea was if you could build your centers outside of China, you could avoid some of the

deepest business penalties. Well, Nike did move production to Vietnam, but now Vietnam with a tax, a tariff rate hovering in the upper 40 percent was just poised to get hammered. We have seen a bit of a rebound there because we have seen discussions taking place between high level officials in Vietnam and President Trump.

If a door is open for negotiation, Vietnam wants to be lined up to talk about it. But this is certainly one of the volatile stocks and one of the stocks that tells the story of what businesses are going through right now. Erin Delmore, thank you very much for clarifying

bringing us up to speed on that dizzying situation let's go and have a look now what european stocks are doing is are doing joining us is rachel winter she is investment manager at killick and co so dizzying in the u.s markets less so perhaps on the cross the european markets which are starting to come to a close now is that right rachel yeah i'd actually say also quite dizzying here in europe um

So, for example, the DAX, which is the German index, that was down nearly 10% at the open this morning. So that was a huge decline. But actually, it's recovered quite well throughout the day. And now it's only down about 1%. So we are seeing some very significant moves here in Europe as well.

OK, well, thank you very much, Rachel. We'll come back and talk to you in a moment. EU trade ministers have been meeting today, Monday, to address President Donald Trump's latest actions. Ahead of the Luxembourg meeting, the EU Trade Commissioner Maros Savchenkov stated that Europe needed to confront a new reality in light of US measures.

What we are going to discuss is how to position Europe in what I would describe as a paradigm shift of the global trading system. So I'm very glad that I would have the opportunity to inform and debrief my colleagues, the ministers, on the ongoing contacts with my American partners.

Well, European trade ministers have broadly agreed to prioritise negotiations with the US over retaliation. The EU Trade Commissioner warned that the bloc was prepared to use every tool in its trade defence arsenal to protect the EU single market producers and consumers.

Spain is calling for an EU-wide emergency plan to support sectors hardest hit by Trump's 20% tariffs across the bloc, announced last week. This follows a Spanish government unveiling a $14 billion aid package. Let's talk now to Spain's

Economy, Trade and Business Minister Carlos Capiro. He's in Luxembourg. You've just nipped out of those meetings to talk to us. Thank you very much for that. How are the negotiations going? What are EU bloc ministers prioritising?

Well, hi, good afternoon and thanks also for calling. Let me give you maybe a quick update on my main takeaway from today's meeting, which is a clear message of unity amongst EU ministers and also support

of the work from the European Commission and particularly of its engagement, trying to find a negotiated solution with the US. I think this was a very clear message that transpired from the discussion. As you said as well, of course, not being naive and understanding that there is a, we need to tango somehow and if there's no willingness, we will be ready to engage, of course, in using the instruments that are available to us to protect

Basically, our industries, our consumers and our firms. But again, I think there is this willingness to engage with the US that is, of course, still there. We are keeping the lines open. So more sort of diplomacy than adding strong retaliatory tariffs? Yes.

Well, I think the message of diplomacy is our way forward in any case. We've been advocating for this since the very beginning because we understand that this is a win-win situation for everyone and that we have a lot to protect. So you know that the exchange in terms of goods and services across the Atlantic reaches up to 4.4 billion on a daily basis. So that's how much we have to protect.

Therefore, negotiating a solution and a fair agreement should be the way forward. And that's what we're pushing for. And in any case, of course, we would be ready to use the instruments that are available for us to protect if it's needed our customers and our firms as well.

This sounds like a slight change from the end of last week when the European Union sounded more bullish. Is that because of the comments that have come out from various people associated with the White House?

No, I think, I mean, to my recollection, this is pretty consistent from what we've been saying for the past few weeks. Always put in negotiating first as a clear objective for us. And aside from that, again, we are, of course, getting ready, working in our instruments to be able to respond if necessary, but always keeping the line open. I think that's important.

That is always somehow our line. We need to be seen, of course, as a stable, as a reliable and as an open partner, not only with the US, but also with the rest of the world. And what do you think is your best negotiating tool when you go to these discussions to try and keep trade moving?

Well, I think I just talked about one key element, which is how much we have to protect and how much it is in both of our interests to keep on protecting this trade in goods and services. So the EU is a great market. We're talking about 450 million consumers at the EU level. And this is how much worth we are. So again, we can be...

a great ally, a great strategic partner for the US. And we can come to an agreement that will serve both of our interests. President Trump wants manufacturing production to move to the US. Is that something that you'll be looking at doing? I think we might have lost Carlos Capiro there.

the Spain Minister for Economy and Trade Carlos I think we just lost you I don't know if you heard my question I'm sorry did you hear my question I was asking you about the US President Donald Trump wants production to move to the US he wants European companies to move their production to the US and make stuff and create jobs in the US is that something that you will be thinking about in more detail do you think now and how quickly can you do that

Well, from our side, we've been working on what we call strategic autonomy and our quest also for re-industrialization of our economies at the EU level, trying to also increase the investment and the production in key industries going forward, including, of course, electric vehicles, semiconductors, electric batteries, also for sustainable mobility. So we're all in the same quest for leadership of those key industries.

And I think what we need there is a fair competition and also a collaboration, a joint open view on how to develop those elements. I mean, trade today is completely interconnected. All the value chains actually are now so interconnected that we cannot just pretend that we can do everything on our own. We need to keep on these open avenues and Europe or the European Union and the US could actually benefit from this perspective. You've been calling for an

EU-wide emergency plan to support sectors hardest hit by these tariffs. How did the conversations about that go? How much money might there be for businesses affected? Well, I mean, we understand that there needs to be an EU dimension to the protection of potentially affected sectors because we need, I mean, both customers, industries and firms need to understand that the EU is actually protecting them, that there is an umbrella, an European one that protects their interests and

and the EU has the competence in terms of tariffs and the EU would get most of the revenues from potential duties or tariffs put on US products. And therefore, the instrument geared towards providing support for firms should essentially come from the EU level. And what we got today when we presented that idea at the meeting was a rather positive, I would say, support and from most of our participants

years. And what we hope is that in the next few weeks, we can work with the Commission to put it in place. We are running out of time, but I just wanted to ask you one final point. There are concerns, I think, for some European countries that China or Vietnam might start dumping excess produce that they've got in Europe. What can you do about that?

Well, that's an important issue at this point, that we look at what's going on with trade that will be diverted from the U.S. as the U.S. is closing on itself. And from that, I mean, from that point of view, of course, the EU has to be very attentive on a daily basis, basically, on what's going on.

with trade coming into the EU. And actually then, for example, in order to protect our steel sector, what we did was to actually reduce the safeguard clause limit to steel production from outside the EU to avoid this sort of impact and keep our firms playing or competing in a level playing field. And again, that's the sort of measures that we will take going forward. But

We need to be very attentive first with a very granular and high frequency follow up of analysis of the data. Thank you very much. Spain's Minister for Economy, Trade and Business, Carla Cueppo, there speaking to us live. You're listening to World Business Report from the BBC World Service with me, Sarah.

I'm fanatic.

It was the Asian markets that led the way in the big sell-offs early on Monday. Here's the BBC's Asia business reporter, Mariko Oi, reporting from the BBC's Singapore bureau. Well, some analysts described it as absolute carnage, even a financial bloodbath.

All we've seen all day was sea of red arrows pointing downwards. Japan's Nikkei 225 ending the day 8% lower. Now the stock markets in Japan, South Korea, Australia and India, they extended their losses for a third day, while the stock markets in mainland China...

Hong Kong and Taiwan. They were actually shut for a public holiday on Friday, so we saw even a sharper fall there as investors played catch up. No sector was spared from today's sell-off, but some shares were hit hard, including British banking giants HSBC and Standard Chartered, which are also listed in Hong Kong. Also, carmakers in Asia, their shares have been taking a beating.

last week and today as well because of those new tariffs brought in last week on all imported cars entering the United States. Investors are also increasingly concerned that not just the U.S. economy, but the global economy could fall into a recession. Of course, it takes an enormous shock to trigger something like that.

The last time was during the global pandemic in 2020, and the one before was during the global financial crisis of 2008 and 2009. But some investors are now fearing that these tariffs could actually be big enough to push the world economy into a recession. Of course, the White House says more than 50 global leaders have been in touch trying to come to some kind of an agreement. So we'll continue to monitor that.

But for now, investors are definitely not liking what they're seeing and what they're hearing. Asia business reporter Mariko Oi. And those meetings that Mariko mentioned are already underway with South Korea set to send its trade minister to the U.S. this week to discuss tariffs following the actions taken by Donald Trump. The country has been hit with a 25% levy, one of the highest duties imposed on a U.S. security ally.

Earlier, I spoke to Han Khoi-ya. He's South Korea's former finance minister and is now a senior fellow at the Peterson Institute for International Economics. He's been in some of those negotiating rooms before. So I asked him what he expected from the meeting between his successor,

and the US this week. You know, 25% tariff on Korea is not fair and much higher than expected because Korea has been a FTA partner. Still, it's not clear what the intention of the White House when it comes to negotiation with these many countries. So I think this meeting will be more kind of information sharing. If you look at...

exports from Korea into the US. They totaled a

US$131.5 billion in 2024. That's up 13% from 2023. What sort of products are we looking at? Cars, ships, semiconductors? Yes, these automobiles and the automobile parts and also semiconductors and IT, those are the main export items from Korea to the United States. But also we have to know that

For the last two years, Korea was actually number one foreign investor in the U.S. in terms of this greenfield investment. That means that Korean company has massively invested in the United States, in the semiconductor, EV, batteries, etc., in these critical manufacturing sectors. And then this kind of surge in the exports.

is related to this surging investment from Korea. Is that why you're surprised at how high this tariff is for South Korea? Because as you say, you've invested heavily in the United States over the past few years. Exactly. And actually, Korea has been

really helping the United States to rebuild this new supply chain in this critical industry, in addition to the 13-year free trade agreement partner. Donald Trump says that he won't cut tariffs unless you eliminate the U.S. trade deficit with South Korea, which is recorded at $55 billion U.S. against the U.S. in 2024. So how do you deal with that?

I mean, we all know that this trade deficit, the level of trade deficit is much more complicated function of, you know, not just this free trade agreement, but also macro factors.

the imbalance between, you know, the savings and the investment, etc. I think Korea and the United States need to really, you know, devise more sort of constructive ways to reduce trade deficit, but also sort of forge this more forward-looking partnership in these manufacturing sectors that I mentioned.

And in the meantime, how does the South Korean economy cope? Yes, I mean, today we saw a very volatile market in terms of this cost P and exchange rate, etc. And I think because of this tariff level, it's no surprise that the market was really sharp. Do you think it will become...

an election issue as you approach your elections next month? Yes, basically, one of the reasons why Korea was imposed this high level is because of political vacuum. Unfortunately, Korea didn't really have any opportunity to communicate directly, leader to leader with President Trump. So during the two months of campaign time,

I think the major topic will be economy. So I think this is going to be a change election and this is going to be putting growth ahead

ahead of this distribution. With a new government, Korea has renewed momentum to really push through, you know, all these reform measures and kind of set the new relations, economic relations with the United States. There's still quite a long way though, isn't there, between now and

your election. So there's still a period of uncertainty for South Korean businesses, not knowing how to deal with the US and the situation with the tariffs. Yeah, that's true. But it appears to me that this, you know, whatever negotiation that the current Trump administration is planning doesn't seem to, you know, just go fast.

And also, it kind of takes time for this tariff shock to really materialize into the real sector, to the mainstream. So I don't think there is a, you know, the Korean needs to rush. Other countries are looking at retaliatory measures. You seem to be going for more diplomacy to try and reduce the level of tariffs that you've got on the country. Why?

which do you think is the best way to go? I think it really depends on the circumstance that a country faces. In case of Korea, I mean, the economy is not just, it's just only one dimension. We also have this, you know, security, national security and the military dimension, especially when Korea, you know, South Korea faces the North Korea. So,

I think it would be more constructive to try to find solutions through more collaborative and diplomatic means. That was Hanku Ya, South Korea's former trade minister. He was talking to me a little earlier on. Well, Rachel Winter is the investment manager at Killik & Co. And she's been with us throughout the programme. We started off half an hour ago, Rachel, talking about what the markets were doing. And

What's happening now? Can you give us a quick update? Things sort of settled back down to being in the red. Yes, just about. So we've seen so much volatility today. As I said, the German market was down 10% this morning. That's only down a tiny bit now. The American markets opened down, then moved into positive territory. Now, as you say, they're slightly in the negative. So I've never seen so much movement in one single afternoon.

It does remind me of when the UK voted to leave the European Union and there was a huge amount of volatility then. Is it similar to that or is it sort of on a scale of volatility, is it sort of worse? It

It is similar to that, but that was mainly the UK that was moving, whereas this is every single country. Can we talk about oil prices? Because they fell this morning to around $60 a barrel. They rose, as you said, slightly after the news that some of these tariffs might not be implemented immediately. But then that news has kind of gone away and they've pulled back into that negative territory. Where are we at with oil prices?

Well, oil demand depends very much on global growth. So when people expect global growth to slow down, then you tend to see a drop in demand for oil and therefore the oil price. So actually, when these big tariffs were announced last week, we saw the oil price dropping by over 6% in one single day. So that does suggest that some people are concerned that we may have a recession coming up. Okay. And so when stock prices move around –

albeit today, is incredibly volatile. They do move around a lot, don't they? They do, yes. On any normal day. Why is this so significant?

Because the moves that we're seeing are so much bigger than what we would see on the average day. And it just makes people feel very uncomfortable and very uncertain about the global economy. There are some benefits. So if you are someone who's young and looking to invest in your pension for the longer term, then when you have a big drop like this, it's a good time to get into the market.

But for other people who may be looking to realise some money from their investments, when you see moves like this, it can lead to a lot of nervousness. And for some businesses that have lost a lot on their stock price, it could take them quite a while to build that back up again. Is that right?

Possibly it could. It really depends how quickly markets come back. You couldn't rule out Donald Trump tweeting this afternoon that he'll be cancelling all the tariffs and then the market may recover. If we go back to the COVID crash, we saw a very sharp drop in markets then, but then a very quick recovery as well. Whereas the financial crisis, we had a drop, but then a multi-year recovery. So it's very difficult to know exactly when and how markets will come back. Rachel Winter, thank you for joining us today on World Business Report. And thank you to you for listening.

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