Will tariffs lead to a global recession?
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You're listening to World Business Report with me, Rahul Tandon. Thank you so much for joining us. We are at a crucial moment for the global economy because on Wednesday, many businesses across the world will be dealing with new tariffs as the reciprocal ones announced by Donald Trump last week will come into effect. China, which has faced tariffs on its exports to the US, both during the first Trump administration and during the Biden one, will they have vowed to fight tariffs?

Speaking a short time ago, Donald Trump said his tariff policies had been explosive, but that they were bringing in a lot of revenue into the U.S. For those of you that want to know the tariffs, you've been hearing about tariffs. We've taken in almost $2 billion a day in tariffs, $2 billion a day. And we're doing very well. Thank you.

And we're doing very well in making, I call them, tailored deals, not off the rack. These are tailored, highly tailored deals. Right now, Japan is flying here to make a deal. South Korea is flying here to make a deal, and others are flying here.

He was speaking in front of coal workers. We'll be talking about coal a little bit later in the programme. Also, there were plenty of opinions expressed at a Senate hearing on tariffs where President Trump's trade representative, Jameson Greer, was testifying. Here is his exchange with the Democratic Senator Ben Ray Lugin. Have we seen one of the worst drops in the stock market in over 35 years? We've certainly seen volatility. Have we seen one of the worst drops in the stock market in over 35 years?

I think Senator Warren talked about this. We'll move on. Mr. Greer, do you agree with President Trump that families are going to have to feel a little pain?

I'm not going to speak for the president. I didn't ask for you to speak for him. I know none of you have the courage to stand up to him. What I'm asking you, Mr. Greer, is do you agree with what the president said about these tariffs in that people are going to have to feel a little pain? That's my question. If we have companies that feel pain because they're adjusting their supply chains, that more American product made by American workers, that's an adjustment we have to make to prepare for the future.

So as you heard there, emotions are running high. So how crucial a moment is this? The global trade and the global economy. I've been speaking to Carmen Reinhart, former chief economist at the World Bank. It is about as significant as it can get. You really have to go back to the 1930s to see the infamous Smoot-Hawley Act implemented.

And let me say when a policy package looks worse than this moon holly,

it says something. The Smoot-Hawley came into being in 1930. It didn't cause the Great Depression, but it greatly aggravated it. And let me also add that the Smoot-Hawley came into place after an equity market crash in October of 29. Here, this package has created the stock market crash in US and elsewhere. If we look at global economies...

What sort of impact do you think these tariffs could have on many countries? Are we talking about many countries possibly going into recession? Yes, I think that is a very probable scenario. We cannot underestimate the dislocation. The

Point being, the volatility, the uncertainty is not just that we're seeing is not just impacting trade and economic activity. It will also impact global capital flows to emerging markets, especially in Asia, but elsewhere. We are in a risk off mode, which means that in those conditions,

The capital inflows, which sustain growth in so many economies, tend to dry up. So it's a shock to trade. It's a shock to finance. And I think it has very significant downside repercussions and recession risks.

But sometimes you need a shot to a system to help improve it, don't you? So in this situation, is it possible, lots of countries are now negotiating with the U.S., that we could end up with a better system? It is possible, but the road is very rocky.

And between now and a successful negotiation, we have to go from point A to point B. And let me highlight that I think that road is going to be complicated. And as to a better negotiation,

It seems like a long shot, but...

Isn't Donald Trump right to try and re-industrialize the manufacturing sector of the U.S.? Well, that's his job, isn't it? Let me let me say the following. Manufacturing employment currently accounts for 7 percent of U.S. employment. The level of manufacturing employment in the U.S. is approximately what it was around World War Two.

So that pendulum has swung very sharply. But let me add, Rahul, that if you are a corporate and you are deciding, do I want to really entail the cost of relocating and really restructuring my business? How do you deal with the fact that we have seen reversal after reversal in policies in the U.S. in recent years?

And if you're planning and you're considering the prospect that these adjustments take real costs, are you going to be willing to undertake those costs if you believe that perhaps the next administration may send us off in a different direction? Carmen Reinhart there. Let's bring in George Convoy, chairman of Brighton Securities. We've heard lots of talk about the markets. How volatile were they today, George? Oh, it

Oh, exceedingly volatile, Rahul. We opened up sharply. I think the Dow was up about 5% in the morning, 1,400 points. And that stayed through mid-afternoon. We had a reversal as the bulls ran out of steam and the bears came on. And we closed down about 1% for the day. So it went from huge bull run in the morning to a moderate bear attack in the afternoon. Yeah, bull run.

When things are going up, bear run. When things are going down, George, stay with us. There are many businesses in the US who do support Donald Trump's tariff policy, saying it will protect them and jobs. Here's one of them, Leanne Borsage, board member of the Southern Shrimp Alliance and owner of Borsage Boats, which catches shrimp off the US Gulf Coast.

The domestic U.S. shrimp industry definitely welcomes that. Our industry has been suffering due to unfair trade and overseas global aquaculture, shrimp aquaculture for decades now. And really, we have done more with less and more with less. And we are at the end of our rope. If we didn't have this, I don't know how much longer we would have lasted as an industry. Have you seen lots of businesses around you go out of business? Yes.

Most definitely. If you ride down to any domestic U.S. shrimping port, so where there are a large number of shrimping vessels and the infrastructure that supports them, you will see, regardless of which port you go to, you'll see the boats tied to the dock. There's an old saying that you can't make any money at the dock.

But the reason that they're not offshore shrimping is because they may actually lose money by going out. Where is most of your competition coming in from? Well, there's four major overseas countries that it comes from. But I would say the two biggest are probably Ecuador and India at this point. And that varies sometimes from year to year as time passes. But right now, those are two of our biggest competitors.

Does it worry you that Donald Trump will put these tariffs in place? But they could just be a negotiating tool, so they could well disappear in the next few weeks. We know that is a possibility.

However, I hope and pray that just the limelight that our industry has been able to garner from this will be enough to educate not only the U.S. consumer, but also U.S. policymakers and U.S. trade representatives for these international financial institutions.

As to what we have really been suffering and fighting against, and this is us as small businesses fighting against this unfair trade on a global level for decades now. And as just a small business owner, it's hard to make headway in that arena.

So hopefully the education that's coming from this will be enough, even if the tariffs go away, to give us a foothold to possibly enact lasting change and reform in the overseas aquaculture industry. You talked there about American consumers, and I'm sure many of them will have a lot of sympathy for you. But

The bottom line is they don't want to pay higher prices and that's what's going to happen now. Well, why do you say that's going to happen? Well, surely if your products were cheaper than the products that were coming in, Americans would be buying them.

So if you look historically, there is a very narrow trade remedy where we can have some duties placed on foreign overseas aquaculture industries that are dumping into U.S. markets. It's very hard to prove and very expensive. But in the past, the U.S. shrimp industry has been able to get very small duties placed.

put onto some of these companies and countries. And so if you look at history as your guide, you haven't seen any spikes in the price for the consumer of shrimp. In fact, if you look over the past few years when we were experiencing rampant inflation in this country, we actually saw a decrease in the price of shrimp. Further to that,

There's actually a large gap between the wholesale price, which is what we as fishermen receive when we offload our catch at the dock, and the price that the consumer pays when they go to a restaurant or a supermarket. George, listening to that, it is a reminder that whilst many people have been concerned about Donald Trump's tariff policies, there are many businesses in the US that do support him.

There are many. You know, when I think about it, Raul, I think about the industrial jobs lost in the U.S. over the last 30 or more years of free trade. And I wonder, should I pay a little more for my shrimp or my manufactured goods and have it made by a neighbor and not have to support him through social welfare programs? It might be better to have my neighbor have a job and be prosperous, and we're both better off.

That is a question, isn't it, that a lot of people are trying to answer at the moment. George, stay with us.

This is Shirley Strawberry from the Steve Harvey Morning Show. Toyota has been building a legacy of excellence for years, from developing hybrid technology to upping the standards of safety and efficiency. Toyota is always innovating, always making progress. And with a superior lineup of in-stock SUVs, including the adventure-ready RAV4 and capable, affordable Corolla Cross, you can experience the legacy of Toyota for yourself. Visit

buyatoyota.com, the official website for deals to find out more. Toyota, let's go places. If you're just starting your personal finance journey, Financially Inclined is exactly what you need. I'm Janelia Espinal, host of Financially Inclined, and each week we discuss money lessons you need to know. Listen to Financially Inclined wherever you get your podcasts.

You're with World Business Report from the BBC World Service. The imposition of tariffs means that many workers are now facing uncertain futures. So we're now going to go and look at the car industry. We've been speaking to one of them, Derek Gungle. He's an auto worker in Windsor in Canada.

Myself and about 4,000 other workers have been laid off just at Windsor Assembly Plant, the Stellantis Chrysler plant. There's probably 7,000 or 8,000 other workers for the feeder plants that have all been laid off as well. We've been told by the company that because of the tariff policy, it's at least a two-week layoff and waiting to see what is going to be the result after two weeks. You must be worried that in the long term,

your job could go as well. Absolutely, absolutely. I mean, this entire region, not just Windsor itself, but the entire southwestern Ontario, we're kind of enveloped by all of the United States. Everything is tied to the US. There's probably 30,000 or 40,000 jobs that depend on automotive and manufacturing. So to try and find another job in this area would be very difficult.

Do you understand, difficult though it may be for you, why Donald Trump is doing this? He says it's to protect the jobs of workers like you in the US. Yes, that is what he says. I mean, at the end of the day, it's been a process and a policy for the last, oh, 50 years or so of de-industrializing in the United States and sending those manufacturing jobs to places without as much of an earning power. So I understand the reasoning behind it.

You have elections at the end of the month in Canada. What do you want your new government to do? Should they be firm with Donald Trump? Should they negotiate with him? You're dealing with an administration in the United States that negotiated with us about four or five years ago. And we all came to a consensus on a free and fair trade agreement. And that very administration is now tearing it up and saying that it's not good enough. So I don't know how you trust anything that they put on paper.

There we go. There is somebody who is really feeling already the consequences of Donald Trump's tariffs there, laid off for a couple of weeks, uncertain about his future moving forward.

Let's talk a little bit more about what Donald Trump has done today because he's made it clear that a 104% tariff on imports from China would go ahead in a few hours' time after they didn't withdraw the retaliatory tariffs they'd put on the US. Some businesses in China have been talking to the BBC. We've got their messages voiced up. Let's just keep going and fight till the end. We are not afraid of them. I cannot think of any other US-produced things that I cannot live without.

it is still unknown who is going to win in the end. We as consumers at this time can do nothing more than work hard to earn money and to consume and to promote domestic consumption. A few years ago, because of tariffs, we opened the factory in Vietnam as an overseas warehouse. But now Trump has also levied high taxes on Vietnam

So we really do not know what to do next. First, wait and see. The next period of time will be very difficult. Gary Locke served as Secretary of Commerce under President Barack Obama and then as U.S. Ambassador to China from 2011 to 2014. Gary, before we talk about China, we are entering, you were Commerce Secretary, aren't we, a very uncertain period for global trade with these reciprocal tariffs coming in in a few hours' time. Yes.

How would you sum up the situation that we're now facing? Well, all these tariffs that the White House has imposed on products coming in from all around the world is creating huge uncertainty among business leaders. And so they're going to slow down their investments. So even if the tariffs go away in four or five months,

During this intervening period, that level of uncertainty will cause a slowdown in production, slowdown in expansion of manufacturing facilities, slowdown in investment, and that will have a permanent effect that cannot – well, have a long standing period of effect that will not be easily remedied. With respect to some of these high tariffs on countries, China, Southeast Asia –

It's going to simply hurt the consumers and the workers on both sides of the Pacific. So much of what Americans consume every single day comes from China. And American products are highly valued and in great demand in China. But the thing is that those things coming in from China, landing on the docks of America –

ultimately sold by the big retail establishments, if those retail establishments now have to pay twice as much for that product, they're going to simply pass it on to the American consumer. Well, yeah, that is the case. But, you know, Donald Trump has said you sometimes, you know, you need to take tough medicine to solve a problem. You would know better than anybody that China's industrialization has cost jobs in the U.S. What is wrong with Donald Trump trying to reindustrialize the heartlands of the U.S.?

Well, obviously, we want more jobs in America. Every politician from a governor to a mayor to a member of Congress and ultimately the president wants to increase employment. And yes, we've lost a lot of manufacturing jobs. America could have done a much better job in terms of job retraining and retraining and helping dislocated workers. But the reality is that those jobs have left.

Some of them will come back, not much. We saw even on the tariffs under President Trump's first term, tariffs on steel, for instance. There was a slight increase in steel jobs in America when American companies started making more. But there was also a lot of jobs lost elsewhere in the economy. And even the most conservative economic think tanks have said that the benefit to America was almost negligible.

Well, yeah, there's some there's so many things that I'm going to do just for a second, because, you know, tariffs have worked in the past, haven't they? If we go back to the Ronald Reagan period, you know, the way that he dealt with Japan led to Japan opening up its market a little bit. There seems to be a rush of countries now wanting to to renegotiate their tariffs with the US. Isn't that an indication of a policy that's working?

Well, that'll be helpful because obviously there are tariffs that are not necessarily fair all across the world and how they treat the United States. But if the objective is to bring back manufacturing jobs to America, there will be some. And some of it was started under the policies of President Biden with all the tax incentives for semiconductors and manufacturing and solar panels being made in the United States. And some of that will continue forever.

But not everything can be made in America. And not everything that Americans consume can be grown or produced in America, whether it's mangoes or avocados, and the list goes on and on. You will know the Chinese leadership well from the time that you spent there as ambassador from 2011 to 2014. Clearly, at the moment, they don't seem willing to back down in this standoff. Do you think that will change?

It needs to change. Both sides need to come to the negotiating table and try to address their concerns without these

tariffs by America and retaliation by China, because both workers and consumers on both sides of the Pacific will suffer. So much of what Americans use every single day comes from China. That is true. But who's going to back down first here? Because Donald Trump's not going to back down, is he? Do you think President Xi will?

He will not either. And China does not want to be perceived on the world stage as capitulating to what they perceive as the antagonistic, extortionist policies of the United States. True or not?

That's how they feel. And it may be up to a world leader, a retired world leader, a prime minister, a president of another country or America to do some shuttle diplomacy to get both sides to the negotiating table. Let me just say that America has long had grievances about the trade policies, the

The industrial policy of China, their lack of enforcement of intellectual property. But tariffs are the wrong way to go about trying to address that. President Trump did that during his first term.

and impose high tariffs on China. It did not really work. China retaliated by not buying American agricultural products, and so American farmers suffered. China, on the other hand, didn't have to buy American products. The Chinese could buy products, medical equipment from Germany. They bought soybeans from Brazil. They bought Airbus instead of Boeing airplanes. So China does not need as many products from America.

as Americans need and use from China. It will take many years to diversify the supply chain so that so many things that America depends on coming from China will might be built elsewhere, but it will not happen overnight. And in the meantime, American consumers will pay the price.

Gary, thank you so much for joining us. I'm a Commerce Secretary under the Obama administration. George Conboy still with us. Gary Locke is completely right there. We'll take time. But is Donald Trump wrong for trying to change that?

We were on Rahul hasn't been a very good track with the deindustrialization, with the loss of jobs. Beyond just those things, what Gary mentioned was the theft of intellectual property by Chinese industry. So the idea is everything Gary said is true. One thing he didn't mention was the U.S. economy at twenty eight billion dollars, a trillion dollars, I'm sorry, GDP is

55% bigger than the Chinese economy and 40% bigger than the combined Eurozone, Canada, and Mexico. They want our markets. And if they can't sell to us because we won't buy or they choose not to sell to us, they may have a problem selling elsewhere, trying to sell into markets that are not even close to our size.

Does that end up with unemployment in China on a large scale? Does that end up with some instability, which the Chinese Communist Party tends to prefer to avoid? So that's their weakness. Every side has a weakness. And we should look at all pluses and minuses of each side differently.

The most important word, you've said it, several guests have said it, is uncertainty. The uncertainty makes it hard to allocate capital. That's the tough part. Okay, let's talk to somebody who's facing that uncertainty at the moment. That's Danny Reynolds, president of fashion business and wedding specialist, Stevenson's of Elkhart in Indiana. Thanks so much for joining us, Danny. We're talking about uncertainty. How's that affecting your business?

Well, I guess that's kind of been a key word, at least of the last few weeks or so. And we are a business, as I'm sure most are, who kind of thrive on what we learn and what we know. And that's how we determine how to proceed forward. It's been just a little bit difficult these days, kind of not knowing what's going to be coming at us or, you know, what we're

facing on a daily basis. Where do you bring a lot of products in from? We're talking a lot about China, you know, 104% tariffs coming in in about five or six hours. Is that going to affect you? Yes, it absolutely is. So we bring merchandise in from essentially all over the globe, but our special occasion business, specifically our bridal business, relies heavily on Chinese manufactured merchandise. So certainly,

Well, Danny was telling us that they were bringing in lots of products from China, but he's, I'm afraid, problems on the line happen sometimes nowadays. Let's go back to George Conboy, who is still with us. That uncertainty that you are talking about, we're now getting a bit more stability in the policies of Donald Trump. So do you think that's beginning to go away at all? I'm not sure it's gone away yet because it really hasn't materialized yet, Rahul. I think we're looking at a case where

Let's go back to...

to Danny once again 104% tariffs on Chinese products so you will now pay from Wednesday how do you do that Danny do you have to pass that on to your customers do you stop buying those products from China

Well, you know, I think inevitably it's going to have to make its way down to the consumers. I mean, our hope, I guess, would be that we can, you know, absorb some of that ourselves, that our manufacturers can absorb some of it, the distributors can absorb some of that. But eventually it's going inevitably to factor down into higher prices at the cash register. There's just no way around it. And we would love to be able to produce domestically. Can you not? Yes.

As our country once did, but we just don't have the facilities, the manpower, the resources to do it, certainly at our, you know, moderately priced price level. Last 30 seconds for you, Danny. Is it possible to go to other countries and get those products or because so many countries are facing tariffs now, is that difficult as well?

I think as we speak on the landscape now, there's going to be tariffs regardless of where we go. I think it's possible to get to other countries, and I think manufacturers are working on it, but that's a six, nine-month lead time best case scenario. So the time that we have in between there could be very difficult. I've said before, it took us 30 years to dig ourselves into this hole where we're not

producing things in America like we did once before, it's going to take longer than a week or a month to dig out. My hope is that we can come up with some sort of strategic policy to work our way back to being a domestically produced country. Danny, thank you so much for joining us. George Conboy, thank you for joining us as well. Donald Trump has also announced measures to boost coal production and ordered the Justice Department to fight states trying to hold back growth in the coal industry. That's it for World Business Report.

This is Shirley Strawberry from the Steve Harvey Morning Show. Toyota has been building a legacy of excellence for years, from developing hybrid technology to upping the standards of safety and efficiency. Toyota is always innovating, always making progress. And with a superior lineup of in-stock SUVs, including the adventure-ready RAV4 and capable, affordable Corolla Cross, you can experience the legacy of Toyota for yourself. Visit

buyatoyota.com, the official website for deals to find out more. Toyota, let's go places.