Trump marks first 100 days in office

0:04Hello and welcome to Business Matters here on the BBC World Service. Now, sometimes we decide to devote the whole programme to a specific issue. That's often because it is an issue that's dominating not just the business headlines, but the news headlines as well. And we're doing that today because Donald Trump, it's now 100 days since he took over the presidency. So we're going to be looking at some of the economic policies that he's put in place and the impact that's had not just on the US economy, but the global economy as well. As always, to guide us through that, we have two guests on opposite sides of the world.

0:39Rebecca Chung-Wilkins, senior Asia correspondent for Bloomberg, who, of course, is there in Hong Kong. Rachel, 100 days of Donald Trump has kept many people busy. I'm sure you as well. Just give us your initial thoughts from the part of the world that you're in of what this 100 days has meant. well I think it's really been a story about tariffs and uncertainty over precisely where we're going to end up of course we had that toe-for-toe matcheting ratcheting up from tariffs up to and all the way above 145 percent so really the discussion I think in this part of the world has been do we come down from here where do we end up and in the meantime how do companies and corporates figure out how they're going to pass that cost on either to consumers or absorb that themselves.

1:28Rebecca, I don't know why I called you, Rachel. My brain is frazzled from 100 days of this. But Rebecca Chung-Wilkins there. Tony Nash, CEO of Complete Intelligence, joining us from Houston there in Texas. Your impressions initially of this 100 days? Hi, Rahul. Thanks for having me. Gosh, there are a lot of people upset over the last 100 days, I think, just over the drama of Trump delivering on what he said he was going to deliver on. And so it's interesting to see the level of kind of shrill criticism of things that he said he would do all last year while he was touring the US for election. Rebecca, that is true.

2:13But I know as somebody who's looked at global trade so closely, have you ever seen a period like this where, Tony's totally right, Donald Trump said what he was going to do and that's what he's going to do. But he really is turning global trade or the system to some extent upside down, isn't he? I think that's right. I mean, we are entering an unprecedented period, not just in terms of sort of that uncertainty, but to your point, Rahul, about fundamentally the global trading system and the principles that it's operated. I would say to some extent, of course, you can say, yep, Donald Trump laid out partly what he was going to do in terms of tariffs.

2:48But part of the difficulty for companies has been a sort of whiplash and the flip-flopping, one day thinking, OK, we're about to see tariffs imposed on, let's say, Mexico, Canada and China, and then seeing some of that reverse the next day, or indeed the sort of really dramatic escalation that we saw with China ratcheting up higher and higher and higher and higher. And so I think that kind of whiplash or indeed the pace of change has really been what businesses have struggled to deal with. President Trump has been holding a rally in Michigan to mark the first 100 days of what is already, according to some, one of the most radical presidencies in modern US history.

3:26He's pretty happy with the way that things are going. We're here tonight in the heartland of our nation to celebrate the most successful first 100 days of any administration in the history of our country. And that's according to many, many people. This is the best, they say, 100-day start of any president in history, and everyone is saying it. We've just gotten started. You haven't even seen anything yet. It's all just kicking in. And he said that prices are coming down for consumers. So gasoline prices are down by a lot. Energy prices are down. Mortgage rates actually just went down. Prescription drug prices just saw their largest monthly decline ever recorded.

4:19How about that? Grocery prices have gone down. Everything's gone down. Throughout the programme, we are going to be joined by Erin Delmore, familiar voice, North America business correspondent. Erin is extremely busy. She is watching Donald Trump's interview on ABC. She's going to keep flipping in and out of the programme. He's going to be talking about tariffs again, isn't he, Erin? Hi, Rahul. Yes, surely. And in fact, we do have a snippet of the interview that has come out a bit early that ABC is using for promotional purposes, where the interviewer does press Donald Trump on tariffs and says, you know, surely we do know that the prices of many things will be going up.

4:58And the president seems to push back, saying that he thinks that China will absorb the higher costs that come into effect because of tariffs. So that's a bit of a news line there. Tony made a good point at the beginning of the program. I mean, often does, that when it comes to Donald Trump, he was pretty clear about what he was going to do with tariffs. Does it surprise you, Heron, that sometimes we seem so surprised by what we're seeing? You know, I think the math is really what surprised a lot of people here. President Trump, as you say, was not shy, saying that he wanted to level the playing field as he puts it and impose more tariffs.

5:32He said for a long time now, the better part of a decade, that he thinks that the U.S. is being ripped off by other countries. But I think what really shocked a lot of folks in the business community is when he held up those big charts on what he called Liberation Day on April 2nd, showing what he thought the tariff rate was that other countries had imposed on the United States, which in fact measured goods but stripped out services. And many economists have found to be a bit imbalanced. And so that is what he is responding to. And I do think that that is what has garnered a lot of attention here.

6:02Aaron, go back, watch it. I know you spend a lot of time watching, listening, analyzing what Donald Trump says for us. So we will be hearing from you, I'm sure, in a few minutes time with more details on that. Tony, there is a point in that, isn't there? It's not the tariffs. It's the numbers that took people by surprise. Yeah, you know, I think what most people – so I started my career as a customs broker. So I know I've worked around global tariffs for 30 years. And so I think what people haven't been attuned to, because what we've had for the last 30 years is an era of free trade. And I put free trade in air quotes because we've had tariffs fall to an average of 2.4 percent under the WTO.

6:49But we've had subsidies and non-tariff barriers rise to unprecedented levels. And so when we see these tariffs levied by the U.S., it's the full tariff impact for trade. And we can argue about how that was calculated, but you can't argue the fact that import restrictions, regulations, other barriers have barred U.S. goods from a lot of markets. And the U.S. has tolerated it for 40, 50 years in many cases. And so when the yardstick is simply tariffs, people are shocked when they see what their own exports face when they go into a country like Japan or China or something like that. That is a valid point, isn't it, Rebecca?

7:44Because China is often accused of subsidizing huge – a lot of its sectors, particularly we're talking about EVs. And when we use the word tariffs, that's one part of a way of dealing with a problem. But, you know, there are other restrictions that people put in place. The Indian market, a lot of that is closed to foreign companies as well. Yeah, that's absolutely right. And to Tony's point, I mean, those sort of protectionist measures have been imposed, not just by countries, other countries, but also by the US. You can look, for example, at the US autos market, where China really makes very little dent, for instance.

8:17but absolutely there is a concern not just in the US but also that we've seen expressed by the European Union for example about subsidies that they see are unfairly directed and rooted into industries that we now see over capacity including automakers but historically has also involved solar panels and so on battery makers and that kind of thing I think the challenge you know to Erin's point is that because tariff levels have been set according to deficits rather than say actual reciprocal rates, there is a bit of a question mark for governments, particularly in Asia, who have been hit by some of these really high tariffs about specifically what they should be taking into the negotiating room to try and figure out a deal.

9:01And so to some extent, I think there is this feeling among some governments and some diplomats that they're slightly operating in the dark. They're not entirely sure what it is the counterpart across to the desk really wants to see from them. Okay, let's bring in somebody who knows a lot about trade negotiations, because as we've been saying that trade and tariffs really have been the central point when it comes to economic policies of Donald Trump's first 100 days in office. Stephen Vaughan was the acting trade representative when Donald Trump was in office last time. And he told me what he makes of the introduction of tariffs this time around.

9:35He's always had the belief that we should have stronger tariffs. And I think he saw an opportunity to put these measures into place here at the beginning of the term. And I'm not surprised that he took advantage of that opportunity. He's talked, hasn't he, about short term pain that the American economy is going to face. Has he underestimated that pain? No, I don't think so. I mean, I think if you look at sort of the overall economic numbers are still looking strong. The markets have been going up here in the last few days. And I think he's, you know, he has a very, very good sense of sort of how the voters feel about these things and how the economy works.

10:11And I think you're seeing them, you know, making, you know, adjustments as necessary. And I think they're going to get in a very good place. You talk there about that good sense. All the opinion polls seem to say Americans have never been so worried about their economy. That fear of recession seems to be growing every day. Polls go up and down. And I think, you know, History shows that successful leaders are the ones who can persuade the country to go in the direction that they want it to go. And I think he's had a lot of success in this. He's been in our political system now at the very top of the system for nine years.

10:46He's won a lot more battles than he's lost. And I think he's going to win this one, too. Whenever we speak to businesses, they talk about confusion in policy. We just had another change in the automobile tariffs that's been announced. That is the problem, isn't it? Nobody knows with any certainty what's happening. Well, I think you have to understand that this is basically a situation where you're trying to get companies to change some of their approaches. You're trying to get them to hire more Americans than they would hire otherwise. You're trying to get them to pay those Americans more than they would pay otherwise.

11:18And it's an ongoing negotiation between the White House and the business community. And, of course, anytime you're in a negotiation, it's never in your interest to let the other person see all of your cards or all of your intentions. How would you sum up the first hundred days of the Donald Trump presidency when it comes to the economy? I think it's a very exciting beginning. I think that he was elected to create a stronger position for middle class Americans, the people who have been forgotten, the people who have been left behind. And I think he's putting policies in place that are going to work for those people.

11:50And I think it was a success in the first term. And I think it's going to be a success this time. So let's see if it is a success. On some of those trade deals that are being negotiated, we're going to talk about China in a moment, Rebecca. But when you look at other countries around you, like let's take Vietnam, do you think they're in a very difficult position because they need both markets here, the US and China? And it looks like Donald Trump and China want them to choose, don't they? Yeah, I mean, Vietnam is a really excellent example here. They're facing potential tariffs of around 50 percent.

12:24And what's more, they have actually promised to entirely eliminate their tariffs. And that has been that sort of request has been so far apparently dismissed out of hand by Navarro. And so that sort of underscores the difficulty that, you know, I was speaking about earlier about what it is that diplomats, what it is that policymakers from Asian countries need to be presenting. And Asia in particular is so vulnerable to these tariffs, of course, because we've seen very high levels, but also because trade, there's such deep interregional trade in this part of the world. And so it is really imperative.

13:00There's a real urgency that countries here want to sort of get their act together. Now, alongside that, we have also seen, of course, China pushing now, to your point, to try and strengthen some of those trades in Asia, to try and make the case that they are a more reliable partner, and not just when it comes to trade, but also to some extent over this issue of national security that has been very, very pressing. And of course, there are many US allies in this part of the world have long sort of depended on the US as the sort of security partner for itself in the region. And so there's sort of these dual priorities that I think are going on.

13:39It historically has been pretty difficult, though, for Asian nations to figure out these sort of trade deals. We saw the resumption of discussions between China, South Korea and Japan, for example. These are sort of trade talks that have been going on for years and years and years. So it'll be really interesting, I think, to watch and see, does the sort of pressure and economic stress as it starts to really bite here, does that actually successfully escalate and accelerate some of those trade discussions and trade agreements? Right. Let us talk about what has probably been the defining feature when it comes to economic policy of the first hundred days of the Trump administration.

14:13And that is relations with China and the tariffs that have been put in place on China. I'm delighted to say we're joined by Ningxiu, Professor of Finance at the Shanghai Jietong University. Thank you so much for joining us on the programme, Professor. There is a trade war between the US and China at the moment. Both have high tariffs on each other. How is that affecting China? And how is that affecting Chinese factories in particular at the moment? Well, I think it is definitely having its impact on China's economy. I mean, it is not a secret that China depends on about 20 % of its GDP growth on export.

14:52And the US has been historically a very important trade partners with China. And that being said, I think China also has morphed a lot over the past decades in a way that, well, now consumption makes up around 40 % of China's growth and investment makes up the remaining 30%, 40%. So, I mean, export is no longer the most important driver of China's economy. Of course, it was very important over the past two or three years with the softening in the real estate market. But then it is not that China's economy depends solely on export anymore. So I think that is one thing. It doesn't, but it's a huge part of it.

15:30When we were chatting this morning when I was speaking to you in China, you told me about what you were seeing at the ports in China. Just remind our listeners or tell our listeners of what you are seeing there. Yes, I think there are shocks to various parts of China, especially the coastal region, which used to be very heavily depending on export. And we are seeing that while some of the really busy ports in the past are now, I mean, having far less traffic, both in terms of the importing and exporting ships and also the trucks of delivering goods to that. That is partly because of the uncertainty.

16:09It's not like it is going to be like this forever. It's just people don't know what to do with whether the tariff will be dialed back or whether Chinese exporter will be shouldering the cost or it will be the importer from the U.S. side or eventually U.S. consumers doing that heavy lifting. So I think it is impacting Chinese economy, not a question. But then I think it remains to be seen about how this game eventually is going to play out. Stay with us, Professor. Tony, it will have a big impact on China's export-driven economy, won't it? But won't the Chinese be able to bear this more than the U.S.?

16:44Oh, no, I don't think that's the case. What I do think, though, and I think there is a potentially very good outcome here, and it's this. China really has to have more domestic consumption in its economy to move to the next generation of economy. And it's a very convenient situation where they can blame Donald Trump to undertake some very unpopular economic decisions to force more of a consumption economy in the US. So while we hear things out of China that they're very opposed to this and all this other stuff, I advise those guys in 2015 and 16. I spoke to the National Development and Reform Commission when Trump was coming into office the first time.

17:35They had no idea that he was going to impose tariffs and they didn't want to plan for it. And I doubt they did this time. But if they can blame Trump so that they can make some unpopular economic adjustment decisions at home, then everybody wins. OK, so I don't think this is – although there is short-term pain in China, if we look at, say, 1959 or other parts of China's recent economic history, China has been willing to undergo very difficult economic decisions in order to bring about, say, generational change in the economy. So I think it's possible that although they're not expressing that they're happy about this, I think on some level there may be some satisfaction in China that they can actually become more of a consumer-led economy after this.

18:22Professor, would you like to pick up on that? I do not disagree with the other guest about China's transition into a more consumption-driven growth. I think China has been thinking and doing that over the past decade. And I think it's exactly Donald Trump's 1.0, the trade war with China that is holding China's back from making that transition faster or smoother. So in that regard, I think it is China's interest to going through that transition. But then China is never willing to do something under the pressure or being hijacked by another major country in the world. I think that is one thing. The second thing is, I mean, let's not forget it.

18:59It's not China that is having a trade surplus to the U.S. U.S. is having trade deficit to almost all countries in the world. And then it is not surprising to China that U.S. is imposing terrorists on China. What is surprising to both Chinese and many Americans is the U.S. is imposing tariffs on so many other countries, which don't quite seem to make economic sense. Well, there is a pause on those. Rebecca, give us your perspective, particularly on this point about China and becoming a more consumer-driven economy. That is difficult, isn't it, when a lot of people in China have seen the value of their houses decrease so much in the last few years?

19:38Well, I think Professor Zhu is absolutely right that the move and shift towards a consumer-led economy was already taking place. And indeed, policymakers have already been trying to sort of engineer that and engineer a more sustainable model of economic growth. To your point, Rahul, in order to, for example, eliminating excessive amounts of property debt, this big crackdown that we've seen. And that has dented consumer confidence in China and it has slowed the economy significantly. And in fact, the Chinese economy is still sort of struggling to fully find a bottom when it comes to the property market.

20:11And that has held back in some ways this transformation. But ultimately, it's all about engineering its way to a much more long term, much more sustainable model. I do think that Tony has a good point, though. It's worth looking at what Donald Trump has done in terms of unifying and unleashing this wave of nationalist support for presidency. some of those transformations that we have been talking about, for example, targeting the tech sector, targeting the property sector, have been really uncomfortable and painful for Chinese people. They have seen the property, the value of their properties fall, for example.

20:48And there has been some amount of not just a confidence, a crisis in China, but also some discontent and scepticism, you know, that really, in fact, you can trace back to, for example, very strict COVID lockdowns. But what we've now seen is that the tariffs have sort of sparked this wave of patriotism in China. People from all sorts of backgrounds rallying behind Xi, not just business people, but also Bloomberg has, for example, reported that local government officials have been invigorated by this. They are feeling sort of much more confident to try and engineer economic plans and growth plans.

21:24So we have seen really situation giving Xi this sort of temporary reprieve from some of the criticism that he has been facing. We have Aaron Delmer, who is watching Donald Trump's interview with ABC News senior national correspondent Terry Moran. And Donald Trump was pushed on the impact terrorists are having on small businesses. So your answer to the concern about the tariffs is everything's going to be hunky dory. Everything's going to be just fine. It wouldn't have been if I didn't do this. I had a choice. I could leave it, have a nice, easy time. But I think ultimately you would have had an implosion.

21:55Donald Trump has spent quite Had a lot of time speaking today. Spoke for about an hour and a half at Michigan. Erin Delmore still following him. What are you making of it so far? Doing a lot to calm nerves of Americans who are worried that the tariff policy could cost goods to cost more. That is, you know, how he spent part of his interview with Terry Moran here saying everything is going to be fine. He also talked about how he sees prices coming down, inflation falling. He also talks about the price of eggs and the price of gasoline. And again, he echoed that from his speech in Michigan as well, but really doing a lot to kind of get out ahead of some of those anxieties, which we've seen borne out in the polls.

22:34A lot of Americans are nervous about the impact the tariffs could have. And so he's trying to assuage those fears. Erin, keep watching for us. We're going to hear more from Erin in the second half. We're going to finish up our conversation on China at the beginning of the next half as well. And then we're going to hear from a lot of U.S. businesses about how things are for them.

23:03Welcome back to Business Man News here on the BBC World Service. We're looking at the impact of Donald Trump being in power for 100 days. Of course, tariffs have been a word that we've been using more than ever on this programme. We have Rebecca Chung-Wilkins from Bloomberg, who is there in Hong Kong, and Tony Nash, of course, there in Texas for us as well. Before we went to the break, we were talking about Chen. I want to get some final thoughts from Professor Zhu Ning, Professor of Finance at one of Shanghai's leading universities. Somebody who's also advised the Chinese Central Bank as well.

23:38Now, Professor, when we're talking about the possibility of communications between President Xi and President Trump, President Trump keeps trying to indicate that there is some sort of communication. From the Chinese perspective, is that happening? I don't think there's any official evidence of negotiation. I mean, let's be very specific with the wording. I wouldn't be surprised there were some communications between the two sides. I mean, the depth or the width of the discussion is highly contingent, I think. But then in a way, I think China is being pushed against the war this time in a way that China has made a lot of concessions in Donald Trump 1.0, but it doesn't seem to rebalance the trade or please the president.

24:25So I don't think there's a lot of room for China to back down this time. So I think even if there is some discussions or communications, I think it's more of the boys in the quarter of the U.S. side to make certain changes and concessions. With your knowledge of those in the corridors of power in Beijing, do you expect there to be some sort of swift deal here or is it going to take some time? I think China is sticking to its ground this time. And we're also preparing for a wider range of ammunitions in monetary and physical stimulus in case that the trade war situation were to persist. Professor, thank you so much for joining us here on the program.

25:06Rebecca, would that be your thoughts as well, that we're not going to see a quick resolution between the world's two great economies, something that many across the world would like to see? Yeah, I mean, I'm just thinking about a couple of months ago, we were talking about this potential birthday summit between President Xi and President Trump. By coincidence, they have a birthday just either side of each other on the 14th and 15th. And that just now looks so, so far off. I mean, not least that President Trump and, you know, Chinese foreign ministry and other Chinese officials seem to sort of disagree over whether or not negotiations have even started to take place.