WTO says exports from North America will slump 12%
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Hello and welcome to World Business Report on the BBC World Service. Will Bain with you today. Thanks so much as always for being with us on the programme. Coming up today, the World Trade Organisation warns the US-China trade war risks dragging the world into recession. We'll have more on their fresh report in just a moment. Also today we'll cross to Malaysia to hear the latest on President Xi of China's visit to the country and how amongst the high-level talks there's been agreement for a major new railway project.

and we'll hear about a pretty prickly problem for saffron farmers trying to stop hungry porcupines destroying their crop and driving up prices in the process. Yeah, rather them than me trying to handle that problem, and why the opening of an ATM cash point sparked this celebration.

Yeah, we'll hear about the first ever cash points to open on the Pacific Island nation of Tuvalu. That's all to come here on World Business Report over the next 25 minutes or so. Let's start, though, with a warning from the body that sets the rules for global trade, because in the past half hour, the World Trade Organization says North America will be the first to open.

will bear the brunt of President Trump's tit-for-tat trade war. In its latest Global Trade Outlook and Statistics report, the WTO also said global trade output will decline 0.2% this year, but North American exports could slump as much as 12%. Here's the WTO's Director General Ngozi Okonjo-Iweala just a few minutes ago. Based on the trade policies currently in effect, we project, and that includes the pause,

We project that global merchandise trade volumes will decline by 0.2% in 2025, nearly three percentage points below the level we would have expected without recent trade policy shifts. This downward revision reflects the combined impact of newly introduced tariffs and heightened uncertainty.

And as I say, the WTO also said that the trade war could risk dragging the world into recession, warning that global output could be set to drop 7% if the two economic powerhouses collapse.

completely decouple from each other in terms of economic trade. Lots for us to get into. It's having a lot of implications for companies as well as countries all around the world. Russ Mould is standing by, investment director at the UK investment firm, AJ Bell, to take a look at that side of things. And David Hennig is also in the studio with us today. David is the director of the UK Trade Policy Project, a former man soaked in various trade negotiations. Good, bad, ugly David. Thanks so much for being in the studio. David,

We were just saying before you sat down, really, World Trade Organization, a body that is there to, I guess, not only trumpet, but police and make sure that global free trade works around the world and believes in it, saying tariffs and barriers to global free trade are perhaps not a good thing. Perhaps that's not raising many eyebrows to our listeners at home. But were there things in this report, in this warning that did raise yours?

So I think, first of all, the notable number for me is 0.2%. That's the drop forecast in global goods trade with the current state of play, as in the current state of tariffs after Trump suspended the reciprocal ones. Now, what that shows for me is that actually Trump is having less of a global impact than you would expect. In fact, trade still increases in all regions except North America.

But, and here's the kicker, if Trump goes back to those reciprocal tariffs and if there are more retaliatory actions to them, that number goes down from 0.2% drop in global trade to 1.5%. And that starts to be a huge number and a huge decline. So really, this is why those reciprocal tariffs were causing such a big impact in the world.

in various markets and why President Trump obviously had to suspend them. Yeah, contextualise that number because to listeners, again, it'll sound like one kind of small number going to another small number, but you were astonished by that number when you came to the studio. I mean, you know, these are huge numbers. There are trillions going around the world in goods, individual trade deals, businesses,

barely have a pinprick of an effect on those numbers. So, you know, fractions of percentages. To get a situation where you're going to lose one to two out of every hundred parts of world trade is a huge number. We have seen numbers like that recently because these were... Brexit numbers were pretty huge when the UK left the EU and the barriers to trade coming out of that. These are of a similar...

order except that this is the u.s this is the world's greatest consumer market so so it has an impact across the world and in terms of the impact why the wto's think in particular in north america is that because of the integration that that has been built through the kind of u.s north american tree free trade agreement already the type of the companies working so tightly across those borders there's two parts to it i think that one is the uh

integration of North American supply chains. They are a market. So supply chains go globally, but they are also predominantly regional. So there's an East Asian supply chain. There's a European supply chain. There's a North American one. That's obviously going to be hugely upset by tariffs. But actually, the other big issue

impact is the US-China trade. That's one of the world's largest trade flows. I think it runs about four or five in the largest in the world. And obviously at the moment we're talking about...

tariffs over 100% that is going to have a dramatic impact on trade. Quite interestingly, though, these forecasts suggest that China will find alternate markets for quite a lot of these goods. Well, that would be a point that we'll hold in our thoughts in a moment when we hear from Nick Marsh, who's continuing following President Xi on his tour of East Asian exporters. We're going to hear from Nick in Malaysia in a moment. But Russ, just a quick thought on that

impact that David's talking about as well. Is that why we're seeing, again, I was just trying to look over my shoulder there, the NASDAQ, tech-heavy stock exchange in the United States, Apple, Tesla, lots of the biggest companies on the planet listed there. It's opened down pretty sharply again today. That sort of integration of supply chains is pretty key for something like technology. It is, and there's a very specific story regarding NVIDIA, one of the world's biggest designers, I should say, of silicon chips.

for use in servers, for use in artificial intelligence servers and the cloud. The Americans have now imposed a ban on a specific NVIDIA product that's been shipping to China. It was designed as a slightly less advanced product to try and get around some of the Biden administration's restrictions.

But nevertheless, NVIDIA shares are down 5% today because they're having to abandon around $5.5 billion of profit in the first quarter. So surprise, surprise, the shares are down 5%. Yeah, not just NVIDIA as well. We saw the Dutch chip equipment maker, ASML, shares down really sharply when Europe opened earlier today as well. Yeah, and again, that makes the machines that make the chips that NVIDIA designs. So this is the food chain that you're seeing. You're seeing the ripple effect. ASML's first quarter sales figures were strong. The profits more than doubled, but...

The order intake was only 50% of sales in the first quarter. And that is what analysts are looking at. Well, if your book-to-bill ratio is only so low, your future sales growth is going to start to slow down. So boss Christophe Fouquet was trying to be as positive as he could be. We're still going to see growth this year. But he did admit again that word uncertainties. We don't quite know what's coming next. And it's amazing, isn't it? There's things that people think about, you know, tech and cars and stuff. We've talked about loads. But I was looking at Heineken, you know, beer companies.

And they had reams and reams in the chief executive statement about difficult macroeconomic backdrop. We're not sure about supply chains, i.e. they're worried about what we might do, all of us around the world, in terms of our spending. I think we can see what consumers are going to do is really interesting. United Airlines, another industry yesterday, gave out two sets of profit forecasts for the year.

one with the Trump tariffs and one without because it doesn't quite know what's coming next so it's trying to give investors as much guidance as it can but ultimately no one knows what's coming next so running a business must be exceptionally difficult right now. Well we will try and pick through what's coming next. The three of us are going to do a little bit of crystal ball gazing in just a moment but David led us to it so let's chat about Nick Marsh who's been following President Xi as I mentioned talking exactly about these sort of

alternative arrangements, new arrangements, beefing up existing arrangements, I suppose, as David was mentioning. Here's a little bit of what Nick had found out on his trip. Well, Will, I'm in Putrajaya, which is a small town just south of Kuala Lumpur. It's where all the government offices are. It's where the Prime Minister's office is, and that is where Xi Jinping currently is now. He's talking to Anwar Ibrahim, Malaysia's Prime Minister, holding a series of meetings.

And, you know, this is all part of Xi Jinping's charm offensive, I suppose, his week-long tour of Southeast Asian nations. This visit actually was planned way before this whole trade war kicked off, but it is the perfect opportunity for him, isn't it, Will? What I was going to say, you say it's a charm offensive by him. Has it been sort of a mutual charm offensive? We were chatting with you earlier in the week about the visit to Vietnam as well. It does seem like there is exactly, as you say, mutual warmth here.

I think there is. When it comes to trade and economics, definitely. Countries here are acutely aware of the fact that China is the biggest investor. No one else, to put it frankly, is going to put money into these massive infrastructure projects that countries here need and want. Railway lines, factories, ports, airports, you name it, it's going to be built with Chinese state-owned enterprises, Chinese loans, that kind of thing. The United States certainly...

doing that, that's for sure. And on the business, you made a really interesting point before we started recording, Nick, as well. All of these countries, all three of them, Vietnam, Malaysia and Cambodia on this trip, are in a really interesting position, aren't they? Particularly Malaysia, because it's got the lowest of the tariffs from the United States right now. So it's sort of...

it's potentially got an advantage on China and some of these other countries at the moment, and yet, as you say, wants to try and work with them as well. Quite a difficult tightrope. Yes, definitely. So if we break it down, Malaysia has been given a 24% tariff by the Trump administration. Now, that's bad news, clearly, because the US market is the top market for so many exporters here in Malaysia. You can say what you want, but the American consumer is still really, really important. So that's bad news.

But if China is operating with a 145% tariff, then maybe that's not so bad for a Malaysian exporter. Because, you know, if you're a, let's say, rubber glove maker, this is the hub of rubber glove making. It's the world leader in it. If you're an American importer and you're looking at a 24% tariff from Malaysia and 145% tariff from China, you're probably going to stick with the Malaysian export. So...

They're not exactly jumping for joy here in Malaysia, but it's not such a bad outcome. Having said that...

you don't want to be in the middle of a trade war. If China and the United States aren't getting on, if trade starts to become sticky and you're a country caught in the middle because you're involved in supply chains, you need to sell electronics, semiconductor chips to China to make an iPhone that would then be sold to the United States, that's not going to be good either. So there's lots of different knock-on effects, lots of

Intertwined factors. Make no mistake, there are rather no tariffs than some tariffs, but it's not all bad. There are opportunities amid this confusion. And in terms of those opportunities, beyond the kind of really high-level stuff that the leaders have been talking about, Nick, they have actually thrashed out some sort of tangible projects as well, haven't they? They have. There are, I mentioned infrastructure. You've got this East Coast rail link, which has been in the works for quite some time. It's due to be opened in June.

2027. It's an $11 billion project. There was some reassurances this week about that. That's going to be financed with Chinese money. Really, really necessary for the movement of goods in Malaysia. There's also been talk about China increasing Malaysian food exports to China. Malaysia is a big exporter of palm oil and palm oil products, but it also wants to try and sell food to the Chinese market.

Nick Marsh reporting there from just outside Kuala Lumpur, where those talks are being held. David Hennig still in the studio with us. Is that an example of what you were talking about, David? People who've got relationships already, trying to beef them up, and people looking for new relationships away from the U.S.?

Major companies these days are, in effect, supply chain operators. And when tariffs change, when regulations are changed, this is exactly what they do. They're trying to find where the right commercial arrangements need to be put in place. But it's an ongoing game. It's a long game. They can't respond to every single change of President Trump. Sorry to bring that word in again, uncertainty. But

This is the problem with Trump thinking that everything is going to bring manufacturing back to the US. They can't operate on a basis of daily changes. And, Russ Mould, that's why the stock market vibrations, again, is exactly what David's saying, isn't it? It's the pace at which all of this can... You know, the decisions might be made quickly, but the actual putting them into practice, much slower. But also, if you're a chief executive, you don't know if the decision's going to change tomorrow, so you're generally likely to do nothing. You probably will put hiring on hold.

you will put spending and investment on hold because you don't know if it's the right thing. So that's when the economic fears or a slowdown and a recession start to come in. Well, Russ threw down the gauntlet. I'm going to hand the gauntlet to David Henning in terms of looking ahead a little bit now. A Japanese delegation in Washington, David, just seen the headlines go through on the BBC News Channel, kind of the first of these countries that President Trump claims there are a queue of,

heading to Washington to try and strike deals. If you were in some of your former roles looking at some of these deals, what sorts of things would be sensible, do you think? What sort of things are on the table? First of all, from a perspective of what you can, I guess, what you can deal on with the United States from your perspective.

Yes, these are not traditional trade negotiations necessarily where you look at the whole pattern of trade, existing tariff rates, as said at the WTO. These are very much about meeting the challenges of the moment. So the best precedent would be the deals that were done in Trump's first term. Can we buy more from the US? Can we voluntarily restrain some of our exports?

The Japanese have been dealing with the US on such questions really for 40 years. And I think that's why they have the head start. They're trying to get into the minds of the US. What is it that you're actually looking for from us? And that's the important thing here. How can we construct

a deal that in some way both of us can live with. And the real problem is that nobody quite knows in the US system what Trump will accept in terms of a deal. Will he be prepared to bring his base tariffs down or not? For example, the 25% on cars. Japan needs to know that. Japan's a huge exporter of cars to the US. Yeah.

And Japan has been one of those that has chosen not to really respond much so far. European Union, another big partner who you'd imagine would be one of those in the queue to, has talked about responding. What's been your assessment of how different people have danced that particular tightrope? I think everybody is trying to send out feelers into the US to find out from the administration what...

Exactly. They're looking for what might be on offer, what needs to be offered. My sense is that nobody has yet got a good answer to that question. And also on the US side, the first deal they do will be a precedent for the others. So I think there'd probably be nervousness on the US side. What is it we can actually offer here?

Yeah. Russ, a couple of interesting things in there. One, in terms of, again, companies, Toyota, big Japanese car company, seen their share price. One that's been a good one to keep watching if people want to try and get a feel at home for the impact on companies. But you were making an interesting point about Japan specifically and its sort of role, I guess, in the global economy. It's huge in that it's a major top five economy anyway, a top ten economy anyway, but also...

The yen is a huge source of finance and liquidity for global stock markets and global financial markets. The yen has been going down for years. Interest rates have been zero for years. So traders have been borrowing in yen and using that money to fund investments overseas. That trade's now going wrong. So the yen is going up. They're losing money. So they're having to sell their positions in the

or buy the yen back, that's driving the yen up, having to sell their overseas positions. And as the yen goes up, that's not good for Japanese exports. And that's a very tricky situation for Japan. So kind of bluntly less money going into sort of company stocks and shares as a result. And then those companies don't have that kind of financial firepower for investment and all this stuff. And that's why we get this talk about recession. Correct. David, do you think that's a fair concern from the WTO as we round that out?

Undoubtedly, what they're concerned about is not just the US tariffs, but the retaliatory actions, the potential spiral if others follow, even to a small degree, the US actions. They're trying to keep this World Trade Show really on the road to some degree.

at this stage going okay you know they the the downside risk is manageable at the moment but there is this question does it get worse pharmaceuticals come reciprocal tariffs come in that's the big question i think that they and others are looking at it's going to be one that we're going to have for the next whatever of the left of this 90 days isn't it david hennig thanks so much for your time and russ mold as well from aj bell thanks so much for your time your

You're with World Business Report on the BBC World Service. Now, saffron farmers in Indian-administered Kashmir are dealing with a prickly problem, porcupines. The spiky-backed mammals have, it seems, got a taste for guzzling down freshly grown saffron bulbs. It's become a serious business, so much so farmers are worried it could drive up prices of the already pretty expensive spice. So much of their land is being damaged by the animals. Javid Ahmed has been farming saffron in the region for 40 years.

Number one is global warming, that is climate change. Number second is the porcupine. The two factors causing our suffering, damage our suffering from last five years. Right now, one damage is from climate change because raining is not coming on the same time. When we want the rain on the same time, it doesn't come. And other thing is the porcupine, the world animal. But the World Life Department couldn't control this porcupine from our field. We have requested several times to the government of India

...and the government of Jammu Kashmir... ...to curb, to control this parkopine from the saffron field. But unfortunately, they have sent their recommendation... ...to the wildlife department. But till date, they have not had an action... ...to control this parkoprine from our field. Our farmers are in a stress from last five years... ...because of this parkopine...

Because the sparkoprine comes to our field in the night hours. It does not come in the day hours. So it comes at night, and what do they do? Do they literally eat the crop, or do they dig it, or what do they do? It comes at night hours. In saffron fields, there are saffron bulbs, a

approximately 5 inches from the soil, soil top and it gives some holes and eat saffron, caromels and here. And what can you do? Can you do anything? Can you put nets and things over it or is it just too big a space? We have tried several methods of the traditional method to control this parka plant but we fail in all. We can kill it but it is prohibited in the government because it is wild animal.

We cannot kill wild animals because there is a separate department for this, that is wildlife department. And what is it potentially doing then to the price of saffron, the amount of saffron you can farm as a result of jobs? It damages approximately 20% of the farms of the field.

I mean, what does it mean for the industry long term, do you think, if you can't get the porcupine population under control?

This is a particular area, approximately 3,200 hectares under saffron cultivation here. We have requested the government to kindly see this seriously, this matter, so that you can control this park on this area. Kindly trap them all and send them back to the mountains. Our thanks to saffron farmer Javid Ahmed there. Now, there's been celebrations and feasts on the island nation of Tuvalu overnight. But the red carpet was being rolled out for something many of us take for granted –

a cash machine. After a year's long wait, the Pacific Island nation unveiled the first in a network of ATMs at the headquarters of the National Bank of Tuvalu. It's the first step in connecting the island's 12,000 people, who use the Australian dollar as their currency, to the international banking system. Samoan journalist Lagi Poiva Sherelle Jackson was at the opening ceremony yesterday.

in Tuvalu. At any given point on the main island of Funafuti, you can stand in the middle, you'll see the lagoon on your left side by about, you know, 10 metres and on the right side you'll see

the ocean. So you hear the sound of the waves crashing throughout the day. It's an absolutely beautiful island. About 12,000 people live on the islands of Tuvalu. It's not just one, there's several islands around the lagoon. It's picturesque and it's like paradise. Yeah. And until now, unspoiled by everyday things that we might have on the street here in London, like

But that changing because the noise of ATMs might be breaking in against the waves now. Most unfortunately, indeed. You know, I'm here on an assignment for The Guardian and coincidentally speaking to someone from the prime minister's office. And I said, hey, we're launching an ATM tomorrow. I said, oh, interesting.

thinking, OK, that's not news. And they said, it's the first ATM in the history of the country. And I said, wait, hold on. It's 2025. And they're like, yes. And what's made the change? Why have they decided they're necessary, I suppose? I think they want it, but the cost constraints, infrastructure constraints...

As well as, and that's all due to the geographical remoteness of the islands. You know, I've spoken to everyone from the general manager to the prime minister to people on the street to government workers and all.

They've all desired to have it. But there are, at the end of the day, only 6,000 customers. And so, you know, as the general manager said in my interview with him, it just wasn't profitable enough to even consider the large investment into this infrastructure. And so what's changed?

What's changed is that there's government willingness and that they feel that they need to catch up with the rest of the world, that they need to do it in order to develop further their tourism, government, you know, private sector and so forth. So there's this willingness by the government and the bank to make it happen. And somehow everything fell into place now.

since 2021 to kind of get it to this moment. Yeah, and I guess for the economy too at home, not just from those tourists, people having access to cash perhaps makes them a bit more willing to spend it if they don't think they're going to run out of it and worry about how they're going to find some more. It's very awkward to fly here hoping that the amount of cash you have at hand is enough. You're better at budgeting than me.

So, no, I'm not because I ran out in the first day. And but so so the situation for me was, OK, you know, because I can't use the ATM. They start with a prepaid card. So you still can't use as an international traveler use the ATM. You know, that's going to come. It's a staggered approach. So that's next year they anticipate.

But the way that I have to get cash is I would have to go line up at the bank and use my bank card from my home country to try and get cash. And that's in the hopes that they will be able to use my, you know, my account there or wire myself money somehow and get it out here or to someone here. But I did find a hack. I transferred cash to myself on an international money transfer service.

And cashed it out. Because one thing you will find in every Pacific Island country is a money transfer service for remittances. Yeah. And who had first go at the cash machines? Was there sort of, you know, a ceremony for who made the first withdrawal? Oh, huge ceremony. You know, it was a big deal. You know, everyone you spoke to on the island, small island, everyone you spoke to was like, oh, did you hear, did you hear, we're going, we're going.

You know, traditional leaders, prime minister, the governor, you know, all the private sector, all the ambassadors were there, you know, business leaders and so forth. So this air of excitement, there was a ribbon cutting and a cake cutting, which is...

what you do when you're celebrating something quite momentous here. And indeed, it is a historic moment for the small island nation. Was the cake in a shape of a cash machine? That is the question I should have carried on answering. Our big thanks to Sam Owen journalist, Largi Poiva, Sherelle Jackson there on the opening of that ATM in Tuvalu. Amazing what we take for granted, isn't it? Just about it from us here on World Business Report. If you miss an episode, remember the podcast is available every single day. Just search World Business Report wherever you get yours from.

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