Trump's Greenland tariff threat

0:00BBC Sounds. Music, radio, podcasts. Wake up to money from BBC Five Live. Hello, morning. Welcome to Wake Up To Money. Relations between the US and Europe seem in tatters this morning following President Trump's threat to hit eight countries with additional tariffs unless they agree a deal to hand over control of Greenland. This conversation about tariffs we believe is wrong, we believe it's deeply unhelpful and we believe it's counterproductive and the Prime Minister has not shied away from making that clear. Government Minister Lisa Nandy explaining the UK government's position there. we will take a look at President Trump's proposals and find out how new tariffs might hit British manufacturers in particular.

0:43Elsewhere, the World Economic Forum annual meeting in Davos, Switzerland, kicks off today with the pre-US president meant to be amongst the attendees. We will find out what's going on there and how the agenda may have been hijacked a little. My gosh, GLP-1s are going to change absolutely everything about the food business. We're taking an extended look on today's programme at weight loss jabs and how they're changing the way we eat and spend our money. Wake Up To Money with Will Bain. Morning, welcome to Wake Up To Money on Monday, January the 19th. Will with you this morning, just gone five o 'clock in the morning.

1:18Great to have your company as always here on the programme. Yes, been a very busy weekend, hasn't it? The kind of order, our running order here on the programme, definitely the order for business in the UK, turned upside down over the weekend by President Trump's pronouncements that in this row over whether the US should be allowed to take control of Greenland, that he would impose tariffs on the eight European countries that had sent some of their forces for training exercises in Greenland over the weekend. That included the UK, as well as France, Denmark, Sweden, Norway, Germany, the Netherlands as well.

1:5410 % from February the 1st on all goods imported into the United States from those countries and ramped up, the president said, to 25 % in June, should there be no headway on the US's ambitions to control Greenland, sorry, from Denmark. Greenland, of course, part of the Kingdom of Denmark at the moment. In the last couple of minutes, the president has actually been on Truth Social, saying NATO has been telling Denmark for 20 years that you have to get the Russian threat away from Greenland and seems to be doubling, tripling down on ambitions to take control of it. So we're going to use the first chunk of the programme to work through what happens next for businesses here in the UK, not just our exporters, but what it might mean for the price of goods coming to us too and where we go next with all of this.

2:40And Richard Rumblow is joining us this morning. Richard is the Director of International Business at Make UK, which represents UK manufacturers. Morning, Richard. Good morning, Will. We've got Olivia Micklem with us as well. Olivia, the fund manager at Artemis Fund Managers. Olivia, morning. Good morning. And Anastasia Feddick also going to be with us for the first chunk of the programme as well. Anastasia, the assistant professor of finance at the Haas School of Business at the University of California in Berkeley. Anastasia, great to have you back on the programme. Morning from us and evening to you.

3:12Thank you. Let's run through a little bit more of the backdrop then. I've done the kind of headlines there. But wrong, dangerous, blackmail, just some of the words that European leaders have been using to describe President Trump's latest moves over Greenland. Relations between Europe and US seem pretty much in meltdown this morning, including with the UK. Those additional tariffs we mentioned that could come into force. The Prime Minister, Keir Starmer, set to address the country a little bit later on this morning from Downing Street. He had a phone conversation with the president over the weekend, warning of the impact that applying tariffs on NATO alloys might have and saying that it was wrong.

3:47The leaders of those eight nations we mentioned have all said it's a dangerous downward spiral. Other European leaders have also weighed in with their opposition to the plans, including Denmark's Prime Minister, Meta Friedrichsen, who says Europe won't be blackmailed. This was Denmark's foreign minister, Lars Rasmussen, who was in Washington last week for talks, speaking to reporters yesterday. We have been asking since the very beginning of this to have a constructive dialogue with our American ally and friends. We opened that dialogue last week. We will not give up on that. Richard can I start with you with this before we get into so yeah it is one of those mornings isn't it with a sort of wry chuckle before we get into the impact and we'll get all of you guys views on on where this goes and what's what's going on but it's worth kind of really spelling out exactly what and this is a mite isn't it at the moment it's um however you want to say it a threat a cajoling the beginning of a negotiation because it's February the 1st but these 10 % tariffs this would be across the board on our exports right so not just your your members that make uk but anybody who exports products to the united states and they would be right on top of that deal that we struck last year with the us as well so so ostensibly starting at 20 right yeah good morning will yeah i mean what we don't know yet is the legal certainty that lays behind the announcements we've seen from the administration this weekend there is still no official legal papers or other guidance which has been issued so all of this is speculation at the moment as to what it would look like how it will be applied etc etc and whether of course it will be applied as well but if you take the announcement at face value then quite clearly that 10 % would be potentially added to that flat line localized tariff of 10 % which was announced by the administration April last year on all UK exports.

5:47What this wouldn't affect at this stage, as we could see, it would be those on separate tariff arrangements with the US, which were part of what are termed the Section 232s under the Trade Act. Those are probably not included, but as you said, it would be on all goods exported to the US from potentially from the 1st of February. The caveat I will add is that we are expecting at some point, probably this week, it could have happened last week, is the decision of the Supreme Court on the legal basis of how those localised tariffs came into effect from April of last year. If that court rules against the administration, then at some point that 10 % could fall away from UK tariffs.

6:33So we've had potentially the situation of 10 % being taken away because of that Supreme Court judgment, but then 10 % being added back in from the 1st of February. And as you rightly pointed out at the top, 25 % from June, if nothing else happens between then and now. That's the situation we face or see today. But again, there's no legal confirmation of the announcements that were made over the weekend. And just explain what's covered by the section 232. Is that steel and aluminium and things like that isn't it yes it's very specific focus targeted measures on specific products and sectors as it affects the uk that is on steel copper and aluminium it is also on what's termed steel derivative products so that's a definition currently of over 400 products which have got a steel component in them it also affects uk automobile exports as well so cars do so those wouldn't necessarily then be subject to this extra 10 % or they would?

7:33They wouldn't necessarily. As it would see at the moment, the answer to that is no, because those are Section 250, are very specific tariff measures and those are legal tariff measures which have been applied by the US administration. This would seem to be falling into the category of these localised reciprocal tariff regime measures which were announced in April. So at the moment, unless you get confirmation, Otherwise, I would say that this is a 10 % on and the potential 10 % which is currently there, it would exclude those products covered by Section 232s. Olivia, from our perspective here in the UK, then potentially the big losers here, then are our big pharmaceutical companies, chemical companies, presumably as well.

8:15And then I saw the First Minister of Scotland, John Swinney, on the BBC over the weekend talking about this, things like food and drink products, Scotch, whiskey, salmon, that kind of stuff as well. yes i mean i think the thing we've got to really focus on from a market point of view is as richard said you know the legal uncertainty we're dealing with here something that markets don't like certainly is uncertainty um and as we saw from april onwards last year a series of headlines of ever escalating tariff situations that then all got rolled back and so while we're seeing you know the headline numbers look very concerning and for those sectors involved there is clearly a risk factor at play, it feels increasingly like these are just used, again, as sort of negotiation tactics.

8:57I think we're seeing in futures this morning, obviously, markets are down. But ultimately, you tend to see the markets sort of have a bit of a knee-jerk reaction and then wait for the dust to settle and really see what the reality is. Now, US markets are shut today for a bank holiday, so we won't get a full picture of that until Tuesday. And perhaps over the course of today, we get more information as to what the reality of this situation might hold. Anastasia, that seems a good place as well. Exactly as Olivia says, this is part of a wider framework now, isn't it? Brazil, Canada, China, Mexico, where the president has been using tariffs as an arm of foreign policy.

9:36Yes, exactly. It seems by far the preferred foreign policy tool for everything ranging from Russia with very serious actions that need to be punished to trying to strike trade deals, as what we've seen in the spring and into the summer, and then trying to get what President Trump wants on a more esoteric basis, as we're seeing now with Greenland. It seems like all of these very disparate situations are all covered by the same hammer of tariffs. And the concern there, of course, for the US policies, at what point is that tool blunt? Because, of course, I just repeated the usage. And every time that something comes up, threatening those tariffs, removing those tariffs, right, as has been pointed out, there's a lot of uncertainty because they get announced and then they get removed.

10:27There's almost an expectation that they will get removed or negotiated away. And that, of course, blunts and limits their impact a priori as well. Well, let's take two things in hand and be interested in both of you's view, Anastasia and also Olivia, because obviously very much your bag at Artemis, you focus on kind of the US stocks as well. So perhaps Anastasia first. The data, from my perspective, certainly looks quite mixed on the impact of, one, the tariffs themselves in the United States over the past year, but two, the kind of the sort of simultaneous kind of uncertainty and freezing of investment or pausing of investment, delaying of imports and exports, all that kind of stuff as well.

11:07What would you say the takeaway of the impact so far on the kind of wider economy U.S. consumers has been, Anastasia? Yeah, so of course we saw pretty dramatic impact initially in April in terms of the financial markets, both the stock market, the bond market, which in some way perhaps was even more concerning at the time. So kind of the full impact of tariffs as they were announced in April before they got removed and negotiated away, I think was interpreted as very negative. of now in reality much of that hasn't come to pass and pretty much settled in that 10 % sort of baseline reciprocal rate which is much milder and so that kind of has allowed some recovery now that said inflation numbers have not dramatically risen but have kind of steadily increased over this time while the kind of employment numbers have not been that strong so the monetary policy has been a little bit more complex there and of course we've also seen the disagreements between President Trump and the Federal Reserve Chair that are in part sort of precipitated by that more difficult position that the US Fed has been in, in terms of balancing these goals.

12:16So at the end of the day, the impact has not been as dramatic because much of the announced tariffs have indeed gone away and are almost expected to be just a negotiation tactic and to go away. But we are seeing, I think, kind of more subtle signs of where. Olivia, from the really big stock market listed companies, thinking in particular of companies like Walmart and Target, so they're sort of equivalents really of your Tesco's and your Sainsbury's, the big giant American supermarkets. They have been, in stock market terms, kind of losers through that tariff period, haven't they? And is that an area where, because they're the type of companies that so many people use, right, in their everyday life, is that where the sort of political pressure of this, the business and the politics kind of meet again, if you like?

13:05I certainly think back in April and May time period, it was the executive firms like that and others that have heavy exposure to imported product and a big consumer base were certainly a big part of the pressure, I think, on the administration to really reassess what those pariffs meant. I think what we've seen as the whole picture evolved to the back half of last year and certainly the last few weeks with some of the rollbacks is a real sensitivity that the administration is trying to balance between what their objective had been with tariffs, but the issue of inflation and affordability for your average consumer in the US.

13:41And certainly for the Republicans, as you're looking towards the midterms later this year, affordability, I think, is going to be a key issue. And we've seen some headlines from Trump already in the last few weeks around this topic. Now, one of the areas, for example, we saw change in the last few weeks was a pause or a rollback on things like furniture imports, something that obviously directly affects the consumer wanting to find a way to try and ease some of the pressure. So I do think you've got this friction. And I think the sort of understanding of the importance of a robust voter base for the Republicans heading into the midterms is going to fuel some of this focus on affordability.

14:16And that's really been part of it. Now, in terms of the actual market side of things, we obviously saw a very robust market through the back half of last year after the tariff announcements. Certainly from a specific company point of view, what you were able to see is companies that did have a global supply chain were able to really lean into the flexibility they had there to try and move their supply chain around to try and counterbalance some of the tariffs and use some of their own other parts of their P &L statement to try and offset some of the pressures. Pricing is certainly a tool in that.

14:47And again, that sort of feeds back into this question of inflation and affordability. But ultimately, we actually saw kind of corporate profits hold in very well through the end of last year. And the expectations for this year is for another pretty robust year for markets. So in many ways, the equity market was able to shrug off a lot of these pressures. And sort of companies that had, as I say, this robust supply chain situation were really able to find ways to offset the pressures. And Anastasia, we're going to focus more on the kind of European response in just a moment because Jan-Henrik Forster from Bloomberg, their bureau chief in Switzerland, is going to join us live from Davos where the sort of format for those meetings this week has been turned on their head a little bit.

15:27But just to Olivia's point there, Anastasia, about the financial pressure points and the importance of those midterm elections later on this year in the United States in control of the House of Representatives, in particular, potentially up for grabs. European Union over the weekend in all the papers it seemed to have been briefed by preparing this massive potentially retaliatory tariff regime which in huge part you know some of the biggest exports right are food and drink things that are already under price sensitivity in the United States already how is that sort of where the pressure point may be in the coming months honestly i think one of them i think there's several pressure points i think this can go poorly in multiple directions for sure economically in several ways right the retaliation and the direct effects but also in the longer term i think i am already sensing if anything europe and china getting closer in terms of trade relationships which is exactly antithetical i I think, to what President Trump originally intended, right, in terms of the trade war with China.

16:37I mean, security-wise, right, he's talking about kind of securing the Arctic from China and Russia. And what we're seeing is basically an inter-fight inside NATO, which, again, seems exactly antithetical to security against those other potential adversaries, well, real adversaries in the case of Russia and potential adversaries in the case of China. and certainly economically at home. The vote that President Trump received in the election was largely motivated by economic considerations. So the people who voted for him were sort of unhappy with the inflation numbers that we had seen in previous years, which had come down, but it kind of takes a while to adjust in terms of the feeling of prices going up in the supermarkets.

17:27even once they stop going up, they're still high. And so people voted for him with the expectation that he'll kind of stay out of foreign conflicts, that he'll, they thought would make their economic situation better and sort of getting the opposite with some of these actions, both the terror as well as the infighting. So I think there are multiple pressure points. The question is sort of how they play out in the timelines and whether that aligns with the midterms. Sure, we're going to have you back on to steer us through those timelines and answer some of those questions as we go as well. Anastasia, always great to have you on the programme.

18:02Thanks so much for your time. Anastasia Feddick there, Assistant Professor of Finance at the Haas School of Business, Richard Rumblow from Make UK, then the trade body representing our manufacturers. What have our businesses, your members, been telling you over the weekend then? well I think at the minute the news is still landing and I think this week for many firms they'll be assessing what this might mean for them should the tariffs be applied from the 1st of February and there'll be a number of considerations that they will be going through first of all relationships and contact with their US supply chain to understand their reactions to that second they'll be understanding what mitigations can we begin to put in place to help reduce those impacts.

18:43And third, I think it's just that sense of confidence around what does trade look like with the US in the future. And I think we already have begun to see a degree of uncertainty and pessimism enter boardrooms around the about the smoothness and historical ability of getting products into the US will have all those trading effects. And there is one practical consideration here as well. The 1st of February is only two weeks away. It takes longer than that for product to reach the US. So therefore, if you've got goods in shipment, or potentially having goods in shipment to the US from this week, if those tariffs were to be applied in addition to current ones from the 1st of February, those goods that are in that transit position will be affected and there is nothing you can do about it.

19:28So therefore, those are practical considerations which many firms and boardrooms will be considering this week. Olivia, we've heard that in previous sort of rounds of these tariffs uncertainties as well, haven't we? JLR paused exports, for example, some of the big whiskey companies did, JCB did. Is that sort of, regardless of whether, and you guys' scepticism about whether this actually comes into force or not, is that the thing that could have the most immediate impact, actually, just the sort of freezing, the pausing again? I think you know companies want to be able to protect their profitability and in that situation you know in the base of uncertainty sometimes the safest thing is to just stop now what that what we've seen in kind of prior periods whether it was tariff related or even if we go back to the pandemic you know anytime you stop parts of your supply chain getting it back up and running can also be costly so there's a kind of a risk reward balance there to be considered but yes we'd certainly be watching closely to see what the initial reaction from companies is whilst the you know political uh turmoil kind of sorts itself out over time well let's broaden the reaction too to those potentially impacted because as i mentioned right at the top not just the uk but seven other european countries as well including germany france netherlands and the nordic countries as well and jan henrik forster joins us bloomberg's bureau chief for switzerland he's in the swiss ski resort of davos where the world economic forum um jan henrik was hoping to get kind of back on the rails and had secured a big signing and getting an american president to come and visit again this year are they now wondering whether that was necessarily the best person to invite i think they love it um that was that was a special place uh you know it's it's this forum where i guess business leaders politicians academics and maybe a bit of civil society come or who are meant to come together and discuss and have a dialogue about, you know, the pressing issues of these times.

21:31And that doesn't work without the most powerful country in the world. So I guess Trump will make a big splash. He did rent out or the U.S. administration did rent out a church where they will set up their base. So, yeah, I think it's going to be a big show. Is there a danger that this row, though, this Greenland row and the potential new tariff row overshadows all of those kind of discussions that perhaps could have been had about kind of kickstarting trade, all that kind of stuff again? I think certainly everybody had a different expectation. Last week, also when the World Economic Forum had its press conference, some of the topics that were outlined were economic growth, how to restore it, can we get finally or can we find a path to peace between Ukraine and Russia?

22:29those were the topics that were on top of the list but um yeah i guess now it's going back to tariffs on the other hand you can argue that it's a good chance to have a deeper discussion about this topic i think europe's response is now clear there might be you know if this if this is going to happen um don't forget that europe also owns greenland and also owns a lot of treasuries so i I think the discussion here will be much more granular around what kind of response European countries can bring to the table. Well, take us to that. Take us to that response, because there does seem ambition, certainly in some corners of Europe.

23:15The French president Emmanuel Macron, perhaps the strongest, the most vocal out there so far about really responding and using this anti-coercion instrument. It's got a better nickname than that, hasn't it? The big bazooka in terms of their response. Sketch out for people what that might look like. Well, it's a tool that has never been used. It's probably the strongest tool the European Union has. well, Europe is obviously the biggest trading partner of the US and Europe also owns a trillion of US bonds and equities which is a testament of the relationship the two continents had over time I think the question is does Europe have to own that many treasuries and US assets and I think companies will also think about

24:14alternative supply chains. Davos is a place where, I guess, principles meet principles. So there's a lot of opportunity as well to discuss, I guess, alternatives to US trade relationships, for instance. And then the other question is really, do the Europeans come back with kind of an aligned response? Do they find alignment here? And with all big countries here, the UK, Germany, France, Zelensky will be here. So I think there's a lot of room for dialogue and finding that response. Olivier, could the markets be key here again? I was just interested in you talking before about knee-choke reactions, but then be more muted as we've gone through each phase of these tariff changes.

25:04Is your sense that it will be more muted this time, do you think, then as well? Or could they kind of shape the next decisions? It's hard to say. I mean, it does feel like the equity markets certainly have become pretty resilient through some of this sort of geopolitical kind of noise. And ultimately, you know, the equity markets at their core are really trying to be driven by corporate earnings, which, as I said earlier, you know, remain pretty robust. The bond markets maybe is a different issue. And I think the bond market is where the administration have certainly reacted more keenly to reactions there.

25:38you know the 10 year has been held in a pretty narrow range kind of for 4.2 for a while and started to drift above that on friday um you know whether that's related to the greenland issue whether it's partly driven by the uncertainty around the fed chair issue remains to be seen but i do think um you know the bond market has a has a pretty strong impact i think on how the administration is trying to navigate some of these issues so we'll be watching that closely again have to wait till tomorrow to actually see how that pans out. And Richard, in terms of responses that Jan Henrik was talking about, what would you like the government here to do?

26:14All heads. I think this is an absolute moment for cool heads in trade diplomacy. We have wider discussions going on with the US as part of the economic framework that was agreed in the spring of last year. There is still some way to go on that in terms of getting other trade preferences sorted through so this is a moment to walk back from the edge of having so you don't think for example you know we had tariffs in place in the first trump presidency didn't we on areas that we thought might be pinch points for politically for the president bourbon whiskey things like that at 25 you wouldn't want to see us turn back to that playbook the retaliation will have benefits for no one if that if that that does come to pass and certainly we would encourage the UK government which they have been consistent from this point since the spring of last year to play with cool heads to look at practical solutions not to retaliate directly to any threat or in fact imposition of tariffs which we saw last year diplomacy here is key as part of that wider geopolitical diplomacy which has just been referred to so I think it's really important that the UK adopts that approach clearly if other countries other nations decide to take retaliatory action against the US including the EU that will have an effect on UK interests both indirectly because of supply chains but also directly because the impact on Northern Ireland which is in the trade envelope of the EU on these matters.

27:37When you talk about these negotiations though Richard I mean it doesn't seem that they're worth the paper they're written on half the time these agreements if you can just change them when a new geopolitical event that we disagree with the Americans on comes up I mean can we trust the US anymore as a business partner? We have to progress with those commitments which we've made in the economic partnership deal. Those have seen benefits from the headline tariffs that we began to see in the spring of last year. So for example, UK automotive exports to the US, yes, is at 10%, but that's far preferable than some of the figures for automotive exports from other countries into the US.

28:15We are still talking about steel granted, but we have seen the pharmaceutical heads of terms agreed before Christmas, which when coming to force will have three years worth of tariff free access for UK pharmaceutical. And there are other aspects of the agreement where both sides have come together to have some trade preferences through it. So it is still worth going through that process. And we would absolutely encourage the UK government to continue to pursue that, despite obviously the very big noise that's been created over the last 48 hours with regard to the prospect of further tariffs being applied so it's cool heads time at the moment and that's the point we would make to uk government richard thanks so much for your time this morning richard rumblow the director of international business at make uk jan henrik you're gonna have a fun week out there in davos i think oh big thanks to jan henrik forster of bloomberg as well he's already off to find that fun in the ski resort of davos there he's the bloomberg's bureau chief for switzerland olivia micklam's gonna be with us in the second half of Wake Up To Money.

29:14We're a little bit different this morning. We're going to be looking at the issue of weight loss jabs, their impact on the world of business, how we spend our money, how we chop, how we head out and about for our leisure activities as well. So we're going to do that in the second half of the programme with a new panel of guests. Wake Up To Money with Will Bain. Morning. Welcome back to Wake Up To Money on Monday, the 19th of January. Olivia Micklem is with us, fund manager at Artemis Funds, throughout the rest of the programme, where we're going to be chatting a little bit more now about weight loss jabs in the second half of Wake Up To Money because we've put together a bit of a panel to talk through some of the impacts they're having on the way we live our lives and the way businesses have reacted to that.

29:53We're going to be hearing from a couple of people with insight into how drugs like Monjaro and Azempic have changed customer behaviour and demand. But before we get into that, here's Wake Up To Money as Olivia Hutchinson to set it all out for us. the increased use of weight loss drugs is not only trimming waistlines it's having a fundamental impact on the way we eat and spend our money if people want to eat less and therefore spend less the food industry needs a new plan new products and new marketing the challenge is how to make money out of a population where people simply don't want to eat as much it's a key focus for retailers and brands this year with multiple supermarkets launching specific products that relate to GLP-1.

30:37This is the name for the hormone that's released by our gut to tell us we're full. Drugs like Wego V, Monjaro and Azempic all work by mimicking this hormone, making us feel fuller for longer. A new study by University College London suggests one in 10 British adults have recently used a drug to support weight loss or were interested in using one in the near future. and the majority of us, 95%, are paying for it out of our own pockets. It's not cheap and can be up to£375 a month. Olivia Hutchinson setting that out for us. We'd love to know what you're seeing out there and perhaps the trends. Perhaps you run a hospitality business maybe.

31:17Are you seeing sort of changes to portions or the type of ingredients that people want or are asking for when they come in or maybe a retailer seeing a bit of that too? 85058 if you want to join the conversation in the second half of the programme. here 08085 909693 is the whatsapp number to do that as well olivia um some of the stocks and shares of the companies behind these thinking particularly in europe of novo nordisk the danish company that's behind um wagovi have been sort of the i guess they've kind of spoken to the the wildness and the i guess the excitement but also then the twists and turns of something new at every corner that's kind of really affecting this sector at the moment.

31:59Yeah, absolutely. I mean, you know, when you roll back to the kind of early years, the sort of start of this whole wave of new drugs, which is only a few years ago now, you know, as an aside, I'd say these drugs existed in a more primitive form for the diabetes market for a while now. But Nova really was the first mover and we really saw the kind of market exuberance reflected in those shares over time. But then we very quickly had Eli Lilly, the American company follow with their own drugs. And what we've seen is this fascinating two horse race play out. So whilst adoption of the drug class more broadly has been incredibly strong, both in the US, UK and in other international markets, you've had quite different experiences in the share price of those two businesses where Lily has really dominated and Novo has really struggled to keep pace.