US-China trade talks: What’s up for grabs?
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Hello and welcome to World Business Report on the BBC World Service. I'm Will Bain. Great to have you back with us on the programme. Coming up today, as talks continue between the world's two largest economies on how to try and end their trade war, we hear from the Chamber of Commerce caught in the middle and the squeeze their members are feeling.

We've heard everything from automakers will have to shut down, other electronic equipment may have to shut down. Actually, in our survey, we asked them, how much longer do you have supply of rare earths? And 75% of our members said they had three months or less. Also today is the UK Greenlights, a new multi-billion dollar nuclear power project. We look at why countries around the world are starting to look once again at the technology as a bigger part of their energy mix and ask what the challenges are to getting that right.

All that to come. But let's start once again today in London, where talks are into their second day between senior trade teams from China and the US. As he arrived at Lancaster House in West London, the US Commerce Secretary, Howard Lutnick, seemed upbeat and said he expected another day full of discussions. It's going well. Thank you.

Yeah, one of those classics. Been to a few of those myself where you stand there and shout a question out if you couldn't quite make out what the Commerce Secretary said going well. And we're spending lots of time together with his response to reporters there as he headed into the talks.

Actually, it seems tariffs as well aren't top of the agenda between the two teams. Instead, it's what's known as non-tariff barriers. That's usually things like the cost or time it takes to get a visa, for example, or the non-recognition of different sort of professional and safety standards. But in this case, what the US side in particular is concerned about is export controls China has in place on minerals critical to things like the energy transition strategy.

And chip making in return, China's pretty worried about its access to high end microchips and chip making equipment itself, as well as restrictions it feels are unfair towards its tech champion, Huawei. Lots then to discuss. And those already concerned,

being impacted are many of the companies trying to work in both countries. Michael Hart, President of the American Chamber of Commerce in China, has been telling us. He started by telling us what his 800 plus members needed to hear from the talks.

We started the survey actually trying to talk mainly about tariffs. That was the main cause of concern that started in January and then really escalated in April. And so the U.S. laid tariffs on China and then China laid tariffs on the U.S. And one of the other things that China did was they laid on what are called non-tariff barriers. So other restrictions that aren't specifically tariffs. And in this case, it was restrictions of the export of rare earths,

which heretofore had been fairly flowing fairly freely, but this all stopped. Then the two sides met in Geneva. The understanding of the US side was that China would allow rare earths to flow again. And then China seems to put in a new regime where they were looking export license by export license, and they either completely stopped or very heavily slowed down. But that's been a big cause of concern for the past month. And what impact has that had on members tangibly? Can you give us a sense of

What that has made more difficult? Certain types of rare earths are used in magnets and other things and lots of electronics and other machines. And so we've heard everything from automakers will have to shut down. The people who make other electronic equipment may have to shut down. And we did actually in our survey, we asked them, how much longer do you have a supply of rare earths? And 75 percent of our members said,

for who this was important, said they had three months or less of supply. So pretty quickly, supply chains in the US and other parts of the world that rely on rare earths either started to or would very soon start to shut down. I was going to say, so that just means they literally can't keep making the finished product that they were hoping to make. It's sort of as dramatic as that. It is. And the really frustrating thing would be, let's say if you're missing one type of magnet for one component of a car, that would mean the whole car couldn't be completed immediately.

The same thing if you had all of the materials that you needed for an electronic appliance, with the exception of one component, which needed rare earths, that also stops. From the other side, we've heard today seems to be coming out of the talks, China been very concerned about

Well, not just restrictions on its technology companies around the world. Huawei, of course, the biggest one on the chips that it makes, but also restrictions on the type of chips and chip making equipment that its companies can get their hands on. Do you think that's a fair concern, a reasonable thing to bring to the table when debating freeing up the supply chain of those rare earths again? Yes.

So one of the complaints that the U.S. had before was that China was using this merging of military-civil fusion. So China was using, for example, high-end semiconductors, which were sometimes used in electronics but sometimes used in military hardware. And so the U.S. has restricted fusion.

some of the top level types of chips from being exported to China. And China felt that that was restricting their industry and commerce and not allowing them to catch up with the rest of the world. And so you could say that in both cases, each of them have

A bit of a fair argument. Each country and many countries have export regimes that don't allow certain things to be exported. But China definitely has in the last year felt the pressure when the U.S. has restricted, even before President Trump was in office, where the U.S. had started to restrict the highest end of semiconductors and equipment related to the manufacture of the top types of semiconductors.

Since the start of all of this, Michael, the jargon is business confidence, isn't it? Sort of how businesses are feeling, whether they're going to hire, how much money they're going to spend in the year ahead. How much of a hit is all of that taken from your members, even if everything was resolved tomorrow? Yeah.

So one of the concerns with U.S. companies in China is how is the Chinese economy growing? So China has a big market, but are the consumers spending and are things moving in the right direction? And so as certain types of trade restrictions come on, the tariffs back and forth and other things, then people are very worried about China's

China's economy. China's economy was already sluggish coming into this year. It actually, frankly, has been sluggish since COVID. So that's a concern. And then the other direction, because the US put on tariffs, a number of factories in China started to shut down. So there are some big picture, a lot of restrictions, a lot of challenges. And then you have to start to look at what type of industry is it and how they're impacted. Is this relationship recoverable?

even if there is some kind of agreement this week? Has it changed forever for your members and for broadly trade between these two giant economies? Well, I actually would go the other direction. I would say it's almost impossible to separate the United States and China, and frankly, China from the rest of the manufacturing world. So China is so embedded in our supply chain's

And we rely on China so much for producing and sourcing certain items that, frankly, it would be very, very hard to decouple. The U.S. and China are going to have to find a way to work together. A lot of trade still continues, but it's very constrained now because tariff levels are very much still elevated now compared to January 1st. Of course, after the U.S. and China really raised tariffs on each other to 145 and 125 percent respectively, they've come down substantially to a 30 percent.

and 10. But that still is crimping the style of folks who have exports or imports going either direction. That's Michael Hart there, the president of the American Chamber of Commerce in China. Well, sticking with tariffs and consumers back home in the United States are apparently already feeling some of that tariff impact, not just on their wallets, but on the beer glass too, since so-called Liberation Day tariffs back in April on agricultural products that make up that delicious beer. And of course, tariffs

Co-owner Leanne Darling at Talaia Brewery in Williamsburg.

There is a lot of overhead in beer production, so obviously the labor. Utilities are incredibly high. We have rent in New York City, which is not cheap. We've definitely noticed an increase in the cost of our raw materials for a while now. Definitely just the increase in the cost of shipping, but we are anticipating an increase in the cost of aluminum and our grain, because a decent amount of our grain comes from Canada.

We've heard from the end of the supply chain where the beer gets drunk, but where does it begin? I am Ryan Hopkins. I am the Chief Executive Officer for Yakima Chief Ops. I am speaking to you from the beautiful Yakima Valley, which is located in the center part of the state of Washington. Almost all of the...

grown in the United States come from the Pacific Northwest. They end up in beers across the globe. Brewers are having more and more challenges in their businesses with interest rates going up, inflationary cost of all materials rising. If you add on a tariff that's imposed, that just adds an extra layer, an extra cost.

for a business that is really trying to remain healthy and viable. I think that's the stress that we hear from our brewing partners is just the economics of running their businesses. For your can of beer, you'll need a few more ingredients than just hops.

We sell everything but water. So we sell cans, barley for malting. So that malt comes from Europe and the UK. Also hops and yeast nutrients. Terry Little is Senior Vice President for Commercial Operations for RAR BSG, one of the largest suppliers of raw materials for brewers in North America. When we look at the U.S. beer market and the cost of labor, insurance, overhead costs for small family-run businesses...

Small impacts, even $100 or $200 more a month can really put a dampener on a business. We have over 9,000 brewers in the United States, small family-owned businesses. And these owners of the brewers, they have everything into it. Their families are invested. They have investors that they are working for.

The only option they really have is to continue to move forward and find new ways to bring their beer and their products to market and diversify their offerings as well. My name is Charles Johnson. I'm the president and CEO of the Aluminum Association based in Washington, D.C. We represent north of 70% of the aluminum that is sold in the United States market.

Steel and aluminium imports to the US have attracted special attention from President Trump, and it's changed frequently. From March, they were subject to a 25% import tariff, but recently this was hiked up to 50% for those materials coming from almost every country. Our industry is...

excited to see an American president that is focused on American manufacturing. And we want to partner with this administration to make sure that what they do is good for our industry and good for American manufacturing in general. At the end of the first quarter, our members are turning in good first quarters. So the material impact in the first quarter has been net positive for our industry.

But we've been very clear with the administration, though, that it will take more than just tariffs to bring aluminum smelting back to the United States. Most notably, it will take power. Your average aluminum smelting plant uses the same amount of power as a mid-sized city. So Cleveland, let's say.

And American energy policy has not been in a place in the last few decades to make a smelter economically viable in the United States. So there have been winners and losers and a lot of uncertainty for business. But what about consumers? Leanne Darling at Talaya Brewery again. The tariffs have obviously increased our cogs. But beyond that, I think the decline in consumer sentiment is the bigger issue.

Alcohol is recession proof, but premium alcohol, not so much. People tend to downshift to cheaper alternatives. And so it's been a really tough year for us so far, year over year. We're only about five years old, but it's really the first year we've seen a decline in growth on wholesale and in our own tap rooms. Hannah Bewley reporting there. If you want to hear a bit more of Hannah's piece, then search for the Business Daily podcast wherever you get yours from.

You're listening to World Business Report on the BBC World Service. Now, the UK today has announced a multi-billion dollar project to build a new nuclear power station. Like many countries in the aftermath of Russia's invasion of Ukraine, the UK has been keen to take a greater control of its energy supply after spiking gas prices in particular helped fuel oil.

price rise inflation crisis for not just the UK but much of the world of course. The project though is fraught with concerns too, concerns about what the environmental impact might be, questions about why countries aren't shifting towards pure renewable energy and storage more quickly and of course the sheer cost and time frame of building a nuclear power station. We thought as a result today's announcement had potential ramifications far beyond our borders here in the UK and in a moment we'll hear from a country

leading the world in nuclear power production. But first of all, our international business correspondent, Theo Leggett, is with us in the studio. Theo, great to have you back on the programme. Tell us a bit more about this UK project, then, first of all, Sizewell C, they call it. Sizewell C, yes, it's the second of two new nuclear projects that will be underway in the UK. The first is at Hinkley Point C, on the other side of the country, and that's been underway for several years.

What the government's done is committed £14 billion, about $19 billion, towards building this new nuclear project. And the reason it's had to do it is that the UK has a fleet currently of nine nuclear reactors, but...

Most of them were built in the 1970s or 1980s. One was built in the mid-1990s. And all but one of them are coming to the end of their useful lives. Now, those plants contribute about 15% of our electricity. It used to be 25%. Many stations have closed. So something needs to replace them. And we talk about wind and we talk about solar power and all these things.

Those forms of power do provide a lot of the energy used in the United Kingdom. Wind, for example, is about 30%. But nuclear provides something that's very useful. It's called baseload power. It's steady, continuous power that can be used to meet the steady, continuous demands on the grid. So if you sort of looked at it on a graph, it would just be there at the same level. It wouldn't go up and down in a way. It doesn't go up and down suddenly. And if you have

peaks in demand, then you can bring in other things like gas generation, which are very flexible to meet the difference. But of course, gas prices fluctuate and that can be a problem. So the government is convinced that it needs to have new nuclear to replace the old nuclear. The problem is new nuclear is very expensive, very complicated, in part because of safety standards. It takes a long time to come to fruition. The reactor that's being built at Hinkley Point C in the west of England is

is many years over schedule and billions of dollars over budget. Now, that is based on a design that EDF, the French company, brought in from a plant that's built at Flamanville in France. That project was also massively over budget, fraught with problems, and Sainswell C is going to be another plant of the same design. What they've calculated is that all these mistakes have now been made, so this one will be easier and cheaper to build.

But, you know, sceptics are out there. What is it? Why is it that makes them so expensive? You talked about some of the safety standards and things like that. What is it that makes them so disproportionately expensive to build compared to other types of power? They're very big, they're very complicated, and it is really safety standards.

A lot of the world moved away from nuclear power in the wake of, first of all, the Chernobyl disaster and later the Fukushima disaster in 2011. Those two accidents showed what can happen if nuclear power goes wrong. So in order to make it publicly acceptable...

And in order to avoid the catastrophic consequences of an accident, safety standards are incredibly high now. And that means that the scrutiny that goes into every stage of building a nuclear power plant is intense. There have to be lots of redundancies, lots of fail-safe systems. And some people within the nuclear industry argue that this has gone too far and it makes...

nuclear power much less economically appealing than it ought to be. Theo, stay with us. I want to get your thought as well as that. That's something you mentioned earlier as well about that sort of mix with renewables and how the two could potentially go hand in hand. But as we mentioned before, I wanted to get a view from a country that's kind of leading the world in this because according to the World Nuclear Association, France gets 70% of all its power from nuclear power plants. And Caroline Pia, Paris energy correspondent at Montel News specialises in energy news and energy markets.

joins us now. Karen Lee, great to have you with us. Thanks for being with us on World Business Report. Thank you very much. Hi. How has France overcome some of those challenges that Theo was just outlining, I suppose?

Well, I'm not sure we've overcome them yet, actually. So Théo did a really good job in explaining all the challenges that, you know, the sector is facing. And basically, we face the same challenges, but maybe on a bigger scale, because you said, you know, as you said, in France, 60, 70% of our power mix is made of nuclear. So it's very huge. We rely a lot on nuclear power.

So, yeah, the main issue we have is reactors are very old as well. So, you know, they were built to last 40 years old. And right now, the average age of the reactors is 39 years. So we are at the end of it.

So we can, I mean, it's safe to run them still, of course, but we can't just shut them down like that. It would be like 60% of our overall production. So we have to find, yeah, that is why actually they want to build new reactors as well. Right. So is that a sort of cost or a challenge that we haven't talked about yet then, Caroline, as well? Spending the money to keep these things up to date as you go?

Yes, exactly. You have to spend a lot on maintenance as well. Yes, because, you know, one of the things like in France and you have to make sure that the old reactors are still very up to date and with the highest standards.

of the last reactors you've built. So, you know, the last reactor we've built is Flamanville. And we had the experience of the Fukushima explosion as well. So we, you know, we improved, we upgraded a lot on the safety standards. And so all the old ones, then you have to upgrade them

upgrade them as well. So that's why you spend so much. So every 10 years, you know, you have this, it's almost a one year maintenance plan that you have to do on your reactors every 10 years. So it's huge. And you spend also a lot of money on that as well. Yes, sure. Theo, huge commitments, as both of you have pointed out. And yeah, you were saying just

before we came on air there as well, that this has become kind of back in vogue again, I suppose, almost for politicians and decision makers. Why?

Because of net zero and because of gas prices, in effect. Now, France is actually a case in point. A few years ago, France was planning to reduce its reliance on nuclear power. As Caroline said, it's about 60 to 70 percent of electricity in France is generated from nuclear power. They were going to move away from that. But now nuclear power is back in vogue in France. And it's because of

In 2022, we had the invasion of Ukraine by Russia. That helped to push up gas prices to stratospheric levels briefly, and they're still much higher than they used to be. So it exposed a vulnerability to the price of imported gas, which means we don't want to be reliant on gas. We don't want to be reliant on coal because it's very, very dirty. What nuclear power does offer is energy.

at the point where you get the electricity, there's no carbon being generated. There are costs built into building the plants, but less than if you were generating from fossil fuels. So with net zero targets coming very much into focus and the high cost of gas, that's given nuclear power in Europe in particular new impetus after it really, really fell out of favour in the wake, particularly of the Fukushima disaster. And Caroline, so it's nuclear and here for people listening around the world. It's not it on its own.

Yeah. So, yes, I guess the net zero target that you have to, I mean, it's complicated to, it's going to be a challenge to have, you know, nuclear reactors and then you have all these renewables as well, you know.

on the grid and, and it's very hard for them to coexist. So you'll have to, we'll have to find a way to have them coexist because, you know, as you said, it's a nuclear is great because it's very stable, very steady and, and, and you can, you know, produce power anytime, you know, all the time while in renewables, you have these issues with, uh, uh, power that you produce only when, when there is a sun and when there is a lot of wind. So, so that's a bit of a challenge. Um, and so they have to coexist together, um,

It's one of the issues in France is, you know, we have a lot of nuclear power and it has to give some space to renewables now that we have more and more renewables. So it has to reduce its production. Balancing that spending as well when you're talking about the type of money that both of you have been talking about. Fascinating area, fascinating discussion. Thanks both for your time. Caroline Paez there, Paris Energy correspondent at Montel News, Theo Leggett here in the studio with us. Well, let's turn to Fiona Sincott, a senior market analyst at Citi Index here to look through

with us moving financial markets today fiona welcome back to the program great to have you with us thank you um shares of tesla first of all something we've talked about a lot in the program uh took a pounding last week didn't they look like they're bouncing back a little bit or pairing some of those losses perhaps yes that's better way of putting it definitely i mean yes they we saw that tesla you know dropped it was almost 15 percent um uh on last week when we saw that um

sort of very public fallout with President Trump. But we have seen the shares recover slightly. They're up to around 313 last time I checked. That's still down though from around 370 where they were trading before that very public spat. We saw President Trump has adopted a slightly more neutral tone

when talking about Musk in a press conference. And I think that's just helped to ease concerns a little bit. Yeah, and the year to date, still down 16 and a bit percent as well. Quick other look around Disney. Bob Iger, the boss there, talking about potentially stopping giving out subscriber numbers. We've talked a bit about streaming wars. Why would that be a move, do you think?

Yeah, so that's interesting. So that'd be very much following in the footsteps of Netflix. We've seen that Netflix have stopped in their latest quarterly results. That was the first time that they no longer were giving out subscriber numbers. And I guess this is just part of that process of maybe just switching investors and the market's attention much more to numbers such as revenue, profit margins, which are

which is what we would focus on with most stocks anyway. And seeing that pressure as well, aren't we? Paramount, one of its big rivals, saying it's going to cut its US workforce by 3.5%. We were talking about Warner and Discovery yesterday in spin-outs. There's so much going on in there at the moment, isn't there? Fiona, thanks as always for your time. Fiona Sincotta there, Senior Market Analyst at Citi Index.

Well, here's a story that we talked about a few times on the programme. Japan is experiencing a pretty acute shortage of one of the country's staple foods, rice. Prices have soared and supply is short as a result. The problem, so troublesome in fact, that the government has had to tap into its emergency rice stockpile, which is normally reserved for natural disasters. It's also considering taking another unusual step by importing rice, a plan not everyone agrees with. As our Tokyo correspondent, Shaima Halil, has been hearing.

It's a busy afternoon in Akedai, a small local supermarket chain here in Tokyo. It's been a tough couple of years for Japanese households. They've struggled with inflation, high prices, stagnant wages and a sluggish economy. And yet, not many could see the rice crisis coming. Hiromichi Akiba is the owner of the Akedai supermarket chain. Honestly speaking, our customers are in trouble. Many other things like food prices had gone up.

Then the rice, which had been inexpensive, went up so sharply. I'm looking at the rice shelves close to the till. Unlike other supermarkets, this one still has some bags left. But like all other supermarkets, the prices have doubled since last year. Images of long lines of people queuing up to get their hands on a bag of rice shocked the public here. Momoko Abe is here shopping with her four-month-old baby. As you know, it's a staple in our lives. It's not a ticket for granted and it was quite...

The government has started releasing rice from its emergency natural disaster reserve, but it's been very slow getting to consumers. They're also considering importing rice.

But Mr. Akiba doesn't think this is a good idea. Japan is a nation of rice. We take pride in that. I'm worried that one import of rice would make the rice producer weak here and become a new threat for Japanese farmers. The current agriculture minister Shinji Rukoi Izumi has vowed to bring the prices down and to modify the supply chain.

The problem is more structural here. For decades, Japan has tightly regulated rice production to avoid supply overflow and to control prices. But this policy backfired, with one expert describing it as disastrous. The rice crisis is symptomatic of the country's broader struggle to revitalize the economy and contain inflation. Japan imports over half of its food, but the Japanese are very particular about their rice. For many here, this is about much more than putting food on the table.

Yeah, funny, isn't it? Sometimes how food means a lot more than just being exactly that, a staple, isn't it? Shana Halil, our Tokyo correspondent there on the crisis with rice in Japan, bringing us just about to the close of this edition of World Business Report. Just time to say thanks to our team today. It's been Lexi, Catherine and Luke and Leanne. Thanks so much for listening.