How tariffs are hitting the Japanese auto sector
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recruitment, development, career transition. LHH, a beautiful working world. Discover recruitment solutions at LHH.com slash beautiful. Japan's exports just stalled. Hello, this is the Marketplace Morning Report and we're live from the BBC World Service. I'm Leanna Byrne. So,

So Japan's overall exports dropped in May, the first decline in eight months, as Asia's second largest economy feels the squeeze from President Trump's tariffs. Tokyo is pushing hard for a trade deal and automakers are taking the brunt of the hit. The BBC's Katie Silver has the story. Selling Japanese cars abroad is a fundamental part of the country's economy. Last year, the US spent about $40 billion importing Japanese cars, including Toyota, Honda and Nissan vehicles.

It was about a third of what Americans spent overall on Japanese goods. Now, though, these cars are subject to a 25% tariff, which, other than Britain, has hit the automotive industry across the board. It's contributed to Japanese exports to the US dropping by more than 11% in the month of May, compared to the same period a year earlier. The

The tariffs are a huge blow to Japan's manufacturing sector and something Prime Minister Shigeru Ishida is desperately trying to tackle. There was hope some progress may have been made when he met President Trump at the G7 summit in Canada. But, as Shigeru said, some disagreements persisted and despite negotiating until the last minute, he walked away empty-handed.

Japan also faces a 24% so-called reciprocal tariff rate. That's due to start July the 9th, unless a last-minute deal can be reached. Katie Silver there. Now let's do the numbers. Oil prices dipped slightly today after a 4% jump on Tuesday, driven by fears of supply disruption from the Israel-Iran conflict. Brent is trading just above $76 a barrel. Markets are watching both the risk to shipping through the Strait of Hormuz and today's Fed decision.

Meanwhile, a Spanish government report says April's massive blackout across Spain and Portugal was caused by too much electrical voltage in the network that spiralled into a chain reaction, exposing weaknesses in the region's power grid. And flights to and from Bali were cancelled or delayed during peak tourist season after a volcano erupted, sending ash more than six miles into the air, disrupting travel.

Once dubbed Russia's Davos, the St. Petersburg International Economic Forum opens today. But geopolitics will likely steal the spotlight. Moscow is using the event to showcase economic resilience and claim it's not isolated over the war in Ukraine. The BBC's Steve Rosenberg is there. The organisers of this year's forum maintain that representatives of 140 countries and territories will be taking part.

And the Russian authorities will almost certainly try to use this event to demonstrate that attempts to isolate Russia on the world stage have failed. Now, one thing I'm going to be looking for this week is to see whether there are more American companies here than in recent years. This is an economic foreshadowing.

But geopolitics is never far away here. So we'll be looking for comments this week from President Putin on Ukraine, on events in the Middle East, on international security and on relations with Washington.

Steve Rosenberg with that report. Let's return to President Trump's tariffs because negotiations are still ongoing over what tariff rate will be applied to European Union exports to the US. Yesterday, we looked at the impact on Spain's food industry. Today, we're heading to the vineyards of France. The BBC's John Lawrenson reports from Burgundy. We're going down in the cellar now to discover some wines of the domain de S'il Tremblay. Ah, it's a great smell here.

Monks planted vines in Burgundy a thousand years ago. Bourgogne, as it's called in French, produces some of the most prestigious and expensive wine in the world. Among the oak barrels and bottles with labels weathered by mould and age...

winemaker Cécile Tremblay rattles off names. Producers like her export a lot to the States, so the Trump tariffs could be damaging. Can I ask you if you're worried?

Yes, sure. As everybody. And that was all Madame Tremblay would say about the Trump tariffs. French winemakers are walking on eggs at the moment, fearful of saying anything that might aggravate the situation. Perhaps the Vintners' representatives would be more forthcoming. I get in my car and drive over to one of her neighbours, François Labé. He's the president of the Burgundy Wine Interprofessional Office, which represents this region's 3,500 winemakers.

On the palate, a red cherry. You know, those big, red, juicy cherries that you crack when you bite. He pours me out some of the 2023 vintage from the vats down in his cellar. For Burgundy, he says, the American market is worth $400 million. Let's say that we export 130 million bottles. US take 25% of that.

The US is the largest export market for the whole region, definitely. And while French wines and spirits exports dropped 4% last year overall, sales of Burgundy wines to the US rose by 16%. They've never been so high. The Americans appreciate the whites like Chablis and sparkling Cremon. They also go for the reds, which are lower in alcohol than most American red wine.

Francois says the most recent period of tariffs on wine saw a 50% drop in exports to the United States. We have in memory the tough situation we were in from October 2019 until April 2021, with a 25% tax due to an aeronautic conflict in

But in France and the US, it really did affect our sales to the US. So what could be the impact of the 10% duties in place now? Some shippers and importers are going to couper la poire en deux, you know, the 10% tax. So I take 5% on my margin on my side and you take 5% on your margin, just not to stop the flow of the export of your products.

What would the impact be if after the end of this three-month suspension, President Trump decides to impose this 20% tariff as he threatened to do? We will go back to the 2019 situation where...

The market was almost, you know, stopped. For French wine exports in general, it could be even worse. Because last time, champagne and wine stronger than 14 degrees of alcohol were excluded. This time, it's across the board. In Nuit Saint-Georges, France, I'm the BBC's John Lawrenson for Marketplace. And that's it from the Marketplace Morning Report from the BBC World Service. I'm Leanna Byrne. Have a great day and thanks so much for listening.

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