Doomed traders: Trump’s tariff fallout

0:10Hello and welcome to The Intelligence from The Economist. I'm your host, Rosie Blore. Every weekday, we provide a fresh perspective on the events shaping your world.

0:25You may have noticed that gut health is really having a moment, as is the idea that your body and my body might respond differently to what we eat. But not everyone is convinced. Our correspondent chews over the evidence. and there are days when I can't quite believe the range of stories that cross my desk and this one on how seals spend so long underwater without breathing isn't something I ever expected to talk about but believe it or not it's completely fascinating

1:01first up though

1:12America's so-called Liberation Day is already wreaking havoc around the world. Since last week's announcement of punishing tariffs, stock markets have plunged, governments scrambled to respond, and businesses held crisis meetings. Back at home this weekend, protests erupted in many American cities. But administration officials were out in force to back Trump's agenda. So here's the bottom line. Secretary of Agriculture Brooke Rawlins told CNN that the global trade system had been rigged against America. It isn't just that they have high tariffs. It's the way they've treated our products. Oh, sorry, we can't take your beef since 2002 because you use a certain type of feed.

1:55That's just absolute bull. Commerce Secretary Howard Lutnick insisted that import duties aren't going away. I don't think there's any chance that President Trump's going to back off his tariffs. This is the reordering of global trade. Aboard Air Force One, Trump was asked about falling markets and defended his own decisions. I don't want anything to go down, but sometimes you have to take medicine to fix something. For those who thought that tariffs were a negotiating tactic, it looks increasingly likely that they're here to stay. Since Trump announced his Liberation Day tariffs on April 2nd, stock markets have not reacted well.

2:35In America, they've fallen by about 10%, losing$6 trillion in value. Rachna Shambhog is our business affairs editor. This morning, markets in Asia have fallen by about 8 % on average. Parts of the world are retaliating. The Trump team over the weekend give no indication of changing their minds on these hefty tariff increases. And investors are starting to wake up to the fact that these might actually come into force. Rachna we spoke on Thursday's show the morning after Trump's Liberation Day tariffs four days on what have we seen in the way of retaliation? We saw Rosie on Friday China come out and say it would retaliate it said that it will match Donald Trump's reciprocal in inverted commas reciprocal tariffs with a rate of 34 percent on all American goods coming into China it's announced a range of other measures as well for example export controls on rare earth metals going to America.

3:32It's added some American companies on to its unreliable entities list, which means they'll face sanctions. It was a surprising response and it had the effect of unsettling investors and markets fell further on Friday. In addition, Canada's new Prime Minister Mark Carney has said that it will retaliate against the tariffs on cars and car parts that America's introduced. No reaction yet from the European Union, but European ministers are meeting today to discuss their retaliation to Trump's tariffs on steel and aluminium. So this is an earlier set of tariffs that were announced. And that's the retaliation we've seen so far.

4:08Before Trump's announcement, some people thought that he was going to use tariffs as a negotiating tool. Have countries tried that? Yes, some countries have. The White House has said that about 50 countries have rung up asking to speak to Donald Trump. No sign yet of this negotiation actually working out. So Vietnam, which has been a country that's been really badly hit with a tariff of about 46%, they've offered to remove all of their tariffs to lower their tariffs on American goods to zero. And they've asked for a delay of more than a month for the implementation of these tariffs. But so far, no sign that this is going to yield anything.

4:47Israel's Prime Minister will be in the White House today. Again, no indication yet that the White House is willing to change its mind. But some countries appear to have rolled over and just accepted these tariffs without reciprocation, right? So what's their calculation? The difficulty with retaliating, Rosie, is that you know you're going to hurt your own economy if you do that. As we've discussed before, Trump's tariffs are going to hurt the American economy. So other countries, when thinking about retaliation, will weigh the consequences of the retaliation for their own producers, as their own consumers.

5:21So I think part of the calculation here is, is it worth retaliating? Is it worth the economic pain of retaliating? That's one thing. It's possible also that some of these countries, the UK, for example, are thinking that retaliation will only spur even greater tariffs and result in a spiral. And perhaps they have a better chance of negotiating with Donald Trump if they don't react right now. So that's what countries are doing, Rachna. But how have businesses reacted. Some businesses are going to be hit hard. Apple, for example, the world's most valuable listed company, is in a bit of a pickle here.

5:58Most of the production of its gadgets still happens in China. In response to tariffs that came in in Donald Trump's first term, the company started moving some of the production of its iPhones and other gadgets out of China and to Vietnam and India. And now Donald Trump has decided to hit these countries with tariffs as well. What are we seeing in terms of businesses' response? I would say we haven't seen much yet. Possibly few bosses want to sit their head above the parapet and criticise the president. He may not take criticism well. It's possible also that they're waiting to see what happens.

6:34So these reciprocal tariffs are due to come in on April the 9th. As we just discussed, there may be some negotiations, there may be some changes to the final rates. So I think businesses are waiting and watching. And the other thing to say is, you know, a chief executive doesn't decide to build a new factory at the drop of a hat. These things cost a lot of money. They take a lot of time. So they'll want to get a sense of whether the tariffs are here to stay and really try and get as much certainty as they can before they start changing their plans. And Rachna, a big question, but where does this all leave the global economy?

7:10Things aren't looking great. If you look at the stock market reaction and the financial market reaction, we've seen the companies that are most exposed to tariffs, their stock prices take a hit. But we've also seen those share prices and those asset prices that are very correlated with the economic cycle also take a hit. So, for example, oil prices have fallen, copper prices have fallen. These are often regarded as indicators of the health of the global economy. We've also seen bank stocks in many countries fall and again financial firms are very exposed to what happens to the economy. So if you look at the market reaction it seems to suggest that the global economy is in for a slowdown and similarly economists at JPMorgan Chase for example have raised their probability of a global recession by the end of the year from 40 % to 60%.

8:02So things don't look good. The worry here is that businesses will be investing less because of the uncertainty, that prices will rise and that will chill consumers' spending. And even if a recession doesn't happen this year, I think it's clear that we're going to see long-term effects of this shift from Donald Trump, this sort of descent of America into protectionism. For at least 20 years now, even longer, the fact that there was certainty about the rules of global trade encouraged investment, encouraged the world economy to become more integrated. And now that's being smashed. Sobering stuff.

8:42Rachna, thank you very much for talking to me. Thank you, Rosie. And you can hear more from our correspondents on Trump's tariffs on the current episodes of Money Talks, our business and finance show and Checks and Balance, where our US team discuss how Trump's agenda is changing the politics of other countries.

9:11Have you ever pooed in a little poo hammock? If so, you've probably eaten a blue cookie too. And sent a carefully collected blue sample through the post to be analysed. while a yellow glucose monitor mounted on your arm measures every morsel you put in your mouth. If you're confused, then you clearly aren't a member of Zoe, which presents itself as a personal nutrition coach in your pocket. Zoe's really quite popular. It hasn't released figures for some time, but we think it's probably got hundreds of thousands of paying members. Tom Sass is our Britain Public Policy Editor.

10:21depending on how long you sign up for. And what does Zoe promise its users? It offers them a range of health benefits from healthier eating and a more sort of personalised diet. So the way it works is you do a stool sample, you then put on a glucose monitor, and you have an app where you can track your glucose. And Zoe is going to give you some personalised recommendations on what sort of thing you should be eating. And in doing this, Zoe has placed itself right in the zeitgeist of the wellness industry. People are very interested in personalized recommendations. It uses AI to derive insights from users' data.

11:03It's got a clever algorithm. And then they're able to monitor their progress. And some people are seeing good results. Others say that actually the recommendations are quite generic and they perhaps sort of drop off quite quickly. So what are they actually monitoring here, Tom? What's the science behind it? Zoe's really based on a couple of things. It's this idea that personalised diet recommendations can give people real health benefits. And the second thing is continuous glucose monitoring. That's something that previously mostly had been confined to diabetic people, but they're arguing that actually using that data to look at how food is affecting us can give you real benefits.

11:43Other scientists and nutritionists remain a bit more dubious about this. So Zoe's published a bunch of studies that employs lots of scientists who look at this and it's been trying to prove its model. But Zoe's critics say actually the evidence that they've produced doesn't show that those two things provide real benefits. And actually this personalized advice is no better than general healthy eating advice. They're also skeptical of the idea that most people can benefit from monitoring their glucose particularly closely. And the other thing is if you talk to some GPs, they will actually argue that perhaps looking too closely at all of this stuff can lead to some concern.

12:24You get people who the GPs describe as the worried well coming forward with lots and lots of things which they think are problems which might actually not be problems. So Zoe is using glucose monitoring as a proxy for the health benefits, right? But it's not controversial that eating differently might change your health outcomes. No, absolutely. I mean, a lot of people have pretty poor diets in rich countries. We have huge problems around obesity. So the idea that people could benefit from eating more healthily is not at all controversial. What is controversial is the idea that you and I should be eating different things based on the way our bodies are set up, or that we can derive particular insights from looking at how food is affecting our glucose.

13:07And Tom, you recently wrote about this in The Economist, didn't you? And got a response from one of Zoe's founders, Tim Spector, who many Britons know as the scientist who helped us track our COVID symptoms during the pandemic. That's right. So Tim Spector wrote in to us and he particularly disagreed with the characterisation of some of Zoe's members as the worried well. So Tim's letter we've voiced up. Thank you for highlighting the importance of gut health. However, describing people who sign up to Zoe, a personal nutrition company as the worried well suggests deep confusion about human health.

13:45He compared people using Zoe to people brushing their teeth to prevent future root canals and he noted that most dementia and heart disease can be avoided with the right lifestyle changes. To be clear, health anxiety is a genuine mental health condition that requires psychological support. But those planning for the future are not the worried well, they are the proactive well, who wish to enjoy more energy and better moods in weeks and be on track for many more healthy years in the future. So that use of the term the proactive well is quite interesting, Tom. What do you think about that? I think it's certainly true that apps like Zoe, and it's not the only one, there's a sort of growing number of these, they're leading people to pay more attention to what they eat.

14:32That's not a bad thing. In fact, it's largely a good thing. And I would argue that the benefits of that healthier eating outweigh the risks of people worrying about the wrong things. And Spectre is probably also right that as an emerging area of science, this focus on gut health and personal nutrition is here to stay. It's likely to prove more durable than dieting fads might have done in the past. What's more open to question at this stage is whether Zoe works in quite the way that Tim Spector says it does. And he didn't, in his letter, pick up on the criticisms we made of some of the science that they've put out.

15:12And does it? Does it work? So almost all of the studies that Zoe's done are observational studies. So they don't really try to look at causation. Most scientists are not yet convinced by the claims that they're making about personalized advice or glucose monitoring. So Zoe's trials could actually be showing that people are just more likely to eat healthily when they're being badgered by an app, or perhaps they're more likely to eat healthily when they think they're following some special recommendations that are just for them. We really don't know at this stage. But all that said, I think we can probably expect to keep hearing much more about this.

15:51Fascinating stuff. Thank you so much, Tom. Thanks, Rosie.

16:11Free diving is a perilous sport. Divers who swim underwater without breathing equipment often black out from low oxygen. and put themselves at risk of drowning. But marine animals are different. They spend much of their lives below the surface without the same impact. And a new scientific paper studying a group of seals explains why. When you hold your breath, the oxygen that you've just taken in is being used up, so it begins to drop. And the carbon dioxide that you're producing increases because you can't get rid of it. Emily Steinmark is a science correspondent and that's true if you're holding your breath on land or if you're diving obviously if you're diving you can't just stop and take a breath so you begin to get this really unpleasant feeling an urge to breathe usually that comes from the perception of high carbon dioxide rather than low oxygen and so to understand this better people have been looking at human free divers of course, but specifically also now, seals.

17:20Tell me about seals, Emily. So seals dive all the time. They can spend a lot of their time underwater. And what this marine biologist called Chris McKnight at the University of St Andrews thought was that if you dive all the time and you only take small breaks where you breathe, then your carbon dioxide is going to build up in your body and suddenly it's going to turn out that it's not a very good proxy for when you actually need to take a breath. What's important there is when you run out of oxygen. And so he hypothesized that seals, rather than getting that uncomfortable feeling from high CO2, perhaps would get it from low oxygen.

17:58And how did he test that hypothesis? It's kind of a crazy experiment. So him and his team caught six wild juvenile seals and they took them into this enclosure, which at one end had a breathing chamber so seals could pub up and have a breath and then at the other end 60 meters away underwater there would be a feeding station they would swim underwater and get to the food and then swim back and have a breath this breathing chamber he designed it so that they could change the air inside of it and so he could set it to one of four conditions normal air low oxygen high oxygen or very high carbon dioxide.

18:38If they were able to sense oxygen, they would respond to the changes in oxygen. Or if they worked how humans work, then they wouldn't necessarily really respond or change their dives based on the oxygen, but they would respond very much to the very high carbon dioxide. And what happened to the seals? What did the results show? He had a very good idea because it was exactly as he had thought. Initially, the seals shortened their dives when they didn't have the much oxygen in the breathing chamber by almost half a minute, and they extended them when they had more oxygen to begin with. And then interestingly, the high carbon dioxide, which you would assume they would also be sensitive to, didn't seem to produce a statistically significant effect.

19:23And so essentially what he showed was that seals were able to perceive the amount of oxygen that they had and change their behaviour accordingly. Emily, aside from understanding seals better, and I'm not underestimating the importance of that, why does this matter? Well, the researcher behind this, Chris McKnight, he thinks this could be a more widespread phenomenon amongst marine mammals and other diving species. And then also there's a parallel to human divers. There are free divers that dive with no oxygen tank and we know that you can train yourself to push through that uncomfortable feeling you get from really high carbon dioxide and to an extent also really low oxygen which does come up at some point and basically use the edge of your consciousness, the kind of feeling of impending blackout as a cue to start breathing again and come up to the surface.

20:21So it'd be interesting to see there whether there are parallels between how we can perceive the environment and the gases around us and how animals do it. If humans could be taught to perceive low oxygen, that might be really useful for us. So maybe there is something we can learn from seals. I shall put learning how to be a seal on my bucket list. Emily, thank you so much. Thanks for having me.

20:59that's all for this episode of the intelligence we'll see you back here tomorrow

21:17Thank you.