What's in Vietnam's trade deal with America?
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Hey, let's talk about your expense report. I didn't submit an expense report. You will. Custom saddles and dog training services are not within policy. What are you talking about? SAP Concur uses advanced AI to audit and automatically detect out-of-policy expenses. It's the breakthrough I needed to focus more on our future.

These are my future expenses? Yes, and self-defense classes are out of policy. I'll need self-defense classes? You will. For what? It's a big dog. SAP Concur helps your business move forward faster. Learn more at Concur.com. Hello and welcome to World Business Report from the BBC World Service. I'm Roger Hearing and on this edition, the latest from Washington as legislators continue to wrestle over Donald Trump's finance bill.

Vietnam secures a trade deal from Washington. How advantageous is it for them? A big fall in remittances to Mexico from workers from there in the US. And why air passengers in India remain jittery after the Ahmedabad crash? This is the first hull loss of 787, which is very worrisome for people. And we have not had an answer in the last 18 odd days since the crash on what happened.

That's all coming up, but first, let's get the latest from Washington, where members of Congress are still debating Donald Trump's major finance bill. The discussion is centering on both the impact on the US national debt and the effect on the cost of health care for the lower paid. Here's Glenn Grothman, a Republican from Wisconsin, speaking about the impact of the proposed Medicaid cut and if people are justified in their concerns.

I don't think that's going to be a problem. You've got to remember, we exempted people who are disabled. So people disabled, children, all people like that are going to continue to get their health coverage. All we've done is we have put a requirement on there that if you're able-bodied, not disabled,

You have to work at least 20 hours a week. And that's not going to kick in for another year and a half. I think people should work to a given degree for their health care, right? A lot of people in America who are working maybe have a $10,000 deductible.

a $20,000 deductible on their health insurance. And right now we're giving poor people, quite frankly, a much better deal than working people. Glenn Grothman there talking about that bill that's now back before the House of Representatives. Let's get the latest on what's happening about the bill from our North American business correspondent, Erin Delmore. Erin, thanks for joining us. OK, where are we in terms of where this bill is and its path potentially towards becoming law?

Well, Roger, broadly, Republicans want to get this bill passed and over to the president's desk before the July 4th holiday. But narrowly speaking, they are in a fight to get this thing through the House again today. Right now, it's in a third procedural vote. And that's because it did pass the House once in one version. Then it went to the Senate for passage. But the Senate marked it out, changed the bill a bit.

and are sending it back to the House. And hardline Conservatives, people who are right in Donald Trump's camp, are saying that the Senate version is not acceptable to them. You know, the big problem here is that the bill is meeting opposition from moderates and from Conservatives that's leaving it with a tight, narrow majority to pass. So as we sit, I mean, it's well known that Donald Trump wants it passed before 4th of July, a massive date in the US calendar, Independence Day. Is that looking a bit unlikely?

You know, the Speaker, Mike Johnson, has shown that he has an ability to whip members and get their votes in his favor. So we are going to see what kind of negotiations and machinations are going on behind closed doors right now. But, you know, the broad strokes here are that the hardline Republicans are

really believe that its ability, this bill's ability to add to the deficit is problematic. Now, the bill, the estimate now is that the bill would add about $3.4 trillion to the deficit over the course of a decade. That is something that Congress members have shown to be a bit weak on, frankly. You know, that is a long-term problem. It's something that affects

younger Americans. It could affect everything from, you know, their taxes, the tax rate that they pay in the future, to their mortgage rates. But it is something that Congress has shown it's willing to kick down the can, kick the can down the line, frankly. We also have some other members who are more moderate saying that they oppose the number of uninsured people that this would create. You know, that estimate is about 12 million new people who are uninsured. That means that they don't have health care.

But, you know, frankly, those people don't tend to vote in very large numbers. They are not the top constituent that Republicans are trying to court. And so to see Republican members cross over and end up passing this bill, it could be seen. So certainly the House is sounding optimistic, but they are sounding like the bill in its current form is not enough to their liking. So if it isn't to their liking and they vote against it, is that the end of it?

No, they would go and try to reach a better conclusion now. They would go and mark it up again. And that's why bills get traded back and forth between the House and the Senate. You know, it's up to the president to really exert some influence at moments like this. And certainly Donald Trump has as much, if not more influence than we've seen from other presidents. But, you know, it's part of how the machinations are done on Capitol Hill, where generally a speaker will not bring something to a vote until they're confident they can get it passed. They really don't want to see this volley back and forth as a bill gets marked up.

because it just shows that the chambers are in disarray. Certainly, Mike Johnson is eager to present a unified Congress here. And that's when you start to see some side deal cutting. You know, a lot of these meetings aren't just about what's strictly in the bill. Sometimes it gets down to what can be offered for individual districts or individual Congress members. You know, in the past,

I've been reporting on Capitol Hill for more than a decade now. Committee assignments for the next term, things like that are always on the table as well. So there really is a pretty broad swath of different pieces of bait and lure that can be used on Congress members here.

Well, we'll see how it all plays through. It's certainly still there in the grounds of uncertainty. Thanks for being with us, Erin. Erin Delmore there speaking to us live on the line from you. Let's bring in Susan Schmidt, who's with us throughout the programme, Portfolio Manager at Exchange Capital Resources in Chicago. Susan, thanks for being with us. I mean, we're going to talk to you in a moment about various things going on in the markets, but I guess the markets are keeping quite an eye on this bill.

They are keeping quite an eye on it, but they don't seem to be too concerned about it. So as the various bill renditions have gone through, the markets are talking about it, but

plowing through regardless, thinking apparently that things are very positive overall and that tariffs become more important, I think, in the bigger picture. The market's hitting new highs today with the S&P 500 at a new high, surpassing those January levels. Again, NASDAQ, that tech-heavy index, fully recovered, surpassing January levels. So the markets are taking this bill as extra news, but certainly not a negative. And another thing that might be pushing the markets quite a bit

Susan, at least certainly the Nasdaq, I think, is a deal, a trade deal that's come through. I mean, it's the one with Vietnam. Now, we're going to talk in a moment about how effective it is and the wisdom of it, perhaps, for Vietnam itself. But the market likes it, doesn't it?

The market does like it because it's a 20% tariff at Vietnam, but the market is taking that very positively. Remember that Vietnam was a big topic for CEOs and a place where a lot of CEOs shifted manufacturing out of China into Vietnam during the last Trump administration. So seeing this settle brings some relief to CEOs who built new manufacturing plants there and

develop new manufacturing and supply sources there after the last administration and allows for some sense of calm over supplies going forward as they are able to bring and find in a new source and a stable supply source from Asia now that this deal has been set.

Susan, thanks for that for the moment. Stay with us. We're going to talk a lot more about what's been going on in the markets. But let's concentrate a bit more in detail on that deal with Vietnam, because just to remind you, the deadline for the heavy tariffs to come into operation for bringing goods into the U.S. is now just a week away.

But this one country, Vietnam, at least seems to have convinced the Trump administration it can forge a trade agreement to forestall the tariffs. It's my great honor to announce I've just made a trade deal with the Socialist Republic of Vietnam, Donald Trump wrote on social media earlier today. Now, he said Vietnamese goods will now face a 20% tariff and any transshipments from third countries through Vietnam will face a 40% levy.

Vietnam would, for its part, accept U.S. products with a 0% tariff.

Well, the official details on this, we should say, haven't yet been published. Back in April, when President Trump announced his tariff plan, we talked to business owners in many of the countries on his list, and one of those was Pham Quang Anh, who's the CEO of Dooni, which is a garment factory in Vietnam. At the time, he said he had agreed with his customers to share the cost of tariffs, and he told us how important the U.S. was as an export destination. The U.S. market is a very good market.

So we always try to find another way to continue selling to U.S. market. More than 40% of our revenue is to U.S. So I feel it's not safe. How we can survive? So we have to find another market.

As soon as possible. Pham Quang Anh there speaking to us back in April. So now there is a deal, but who gains from it? Let's talk to Adam Sitkoff. He's executive director of Amcham Hanoi, the American Chamber of Commerce in Vietnam. Adam, thanks so much for joining us here on World Business Report. What's your feeling about this deal? Is it good for America? Is it good for Vietnam?

Well, thanks for having me, Roger. The answer is, is that no one really knows right now. It's important to remember that like the agreement that President Trump struck with Britain back in May, the new deal with Vietnam resembles more of a framework than a finalized trade pact.

And I think all the viewers out there know that Donald Trump thinks that anything he negotiates is great and wonderful and the best deal ever. And he's also been known, especially through his posts on social media, to exaggerate a bit or pick and choose or what we call cherry pick negotiations.

the best parts for him. And so we're really waiting to see more details right now. On the face of it, if you say, wow, 20% tariff is a big number. And what does that 40% on transshipment even mean? There could be people that would look at this from a negative standpoint. But the Vietnamese are very good negotiators.

And they went into these negotiations with the Trump administration, knowing that they had to come out on the other end in a very competitive position, like your last guest just talked about. You know, the companies want the certainty and people did move supply chain and manufacturing into Vietnam from China during the first Trump administration.

And so I'm confident that at the end of the day, once we do see all the details, that Vietnam's going to be in a more certain position and a good position, and that the companies that ship all this stuff from there to the U.S. are going to keep doing so. Well, let's drill into that a bit, Adam, because for those who don't know, I mean, what is it that the U.S. imports from Vietnam? We know that certain companies, Nike, Gap, Lululemon, are clearly doing well. They're pretty involved in apparel. That's what comes from Vietnam.

Oh, sure. I mean, much of what Vietnam exports to the U.S. is produced by foreign companies, and many of those are American, who manufacture in Vietnam, ship goods to the U.S., and more than half of U.S. imports from Vietnam are electronic products and apparel.

And, you know, I'd say that basic economics tell us that the U.S. is always going to run big deficits in goods with countries such as Vietnam and China because America's competitive advantages lie elsewhere. You know, let's say there's a smartphone that's labeled made in Vietnam and sold for

$500 in the U.S., that might only yield $25 of actual value retained by Vietnam, and the rest is flowing back to the design and the research and development, the branding, the distribution, much of which happens in the U.S. So the trade balance might show a surplus for Vietnam, but the value chain can often tell a very different story and one where the U.S. gains more. So

I kind of think the idea of judging a commercial relationship just based on one number, that trade deficit, is a little bit silly in that the American people have largely benefited from a globalized economy. And what about this transshipment thing? Because Howard Lutnick, the U.S. Commerce Secretary, said to the Senate, in fact –

that there's an awful lot of China transshipments. The Vietnamese buy stuff from China, they mark it up and send it to us, he said. So, I mean, this is why that heavy 46% tariff on things they can prove are that.

Well, yes. I mean, transshipping is a vague and often politicized term in trade enforcement. And how it's defined and how it's applied in practice is really what's going to matter here. And so it's unclear how much illegal rerouting Vietnamese officials will even be able to catch or how much exists. And, you know, nor is Vietnam eager to –

embrace a major rewriting of origin rule for trade because that might upset relations or reduce commerce with China, who's Vietnam's largest trading partner. So when we look at what just happened, which products are going to fall under that threatened 40% higher tariff rate is unclear. It could refer to goods imported to the U.S. from Vietnam that actually originated in China, like you just said.

but it could also apply to Vietnamese products that use a certain amount of Chinese parts. Yeah. It's a really complicated thing to unravel, but thanks for helping us do that. Adam, Adam Sitkoff there of AmCham Hanoi. You're with World Business Report from the BBC World Service. Well, let's now go back to Susan Schmidt, who's been waiting patiently, portfolio manager at Exchange Capital Resources. Um, Susan, uh, well, we were, I was talking there about Nike, uh, Nike doing pretty well, uh,

as a result, perhaps, of this trade deal with Vietnam. Is it something which is going to increase now that we, you know, when we get the details, I suppose, of this deal and what it really means as a kind of alternative, I suppose, to China as far as a lot of the markets are concerned?

I think it will. And I think we've already seen Vietnam take the place of China in many instances as a beneficiary, as U.S. firms have tried to diversify manufacturing outside of China, given the trade tensions the U.S. has had with China over the last 10 years. Vietnam has definitely benefited from that. Having them come forward as one of the first Asian trade deals that's

been talked about from the Trump administration and seems to be at a much lower level than many were fearing has boosted the market confidence and investor confidence that these suppliers and sourcing issues that U.S. companies have faced, such as Nike, are not going to impact the profitability as much as was initially feared.

Let's talk about Tesla, Susan, because we talked on the programme yesterday about it a bit and some of the issues are coming out of the row now between Elon Musk and Donald Trump. But Tesla's had some pretty bad figures today.

It has. Now, these are just preliminary numbers from Tesla, and it talks about overall car sales. Unfortunately for Tesla, the second quarter car sales on a unit basis were down almost 14% year over year. So this continues the decline in overall sales for the Tesla brand and the vehicles. It does call into question what the rest of the year brings. Elon Musk has been prominent in the news globally, commenting whether Tesla

promoting President Trump and the Trump administration or now being negative around the Trump administration. But it certainly caused a lot. And then a concern, of course, over subsidies for that electric vehicle industry in the U.S. that are disappearing and causing it to be overall more expensive. Now, Susan, one other thing that's caught my eye from the U.S. today is jobs figures. Now, we know the nonfarm payroll is coming at the end of the week, I think. But we're getting a sense that the job, the labor market perhaps slowing down a bit.

But confusing data today. So we had the private payroll data out today. That nonfarm payroll government number will come out tomorrow. Private payroll data today showed that private payrolls actually decreased in June. That's the first decrease we've seen since 2025. And importantly, it happened mostly among small businesses, implying that confidence from those small business CEOs is still waning and concerned over the impact of tariffs.

larger businesses did much better. However, wage growth was still solid. So differing info is hard to get a takeaway. Susan, thanks very much. Stay with us. We're coming back in just a moment. Let's talk now about remittances. Now, they're a vital part of the economics of poorer countries. They are the money that nationals send home from earnings in place like Europe and the U.S. Remittances sent to Mexico from the United States have slumped in recent months compared to the previous years.

That's according to the Mexican central bank data. It's thought to be connected to fears amongst Mexican immigrants to the United States over Donald Trump's threat to remove all illegal migrants. Alberto Ramos is chief Latin America economist at Goldman Sachs...

I spoke to him earlier and asked him to tell me about the scale of the remittance decline. On a 12-month trailing window, remittances have peaked at about £65 billion in November of last year, November 2024. They are now down a billion to about £64 billion.

It's still a pretty substantial amount of money, but definitely after two or three years of very robust growth, we have now seen some tapering of remittances flows for a number of factors. Well, let's look at some of those factors. I mean, just tell me what you think is the dominant reason that there is a decline. There are several factors at play. After having increased in double digits for two or three years, it's only natural that at a certain point the growth rate moderates.

But there were some changes in policies in the U.S. with regards to immigration enforcement that have stoked fear in the community and that may have a behavioral impact. You know, I would imagine that if you are an illegal immigrant in the U.S., you don't want to go to an office of Western Union sending 200 bucks back home out of the fear that when you leave

that are the ICE agents will be waiting for you. You may also not wish to leave a financial footprint of a transaction. You may wait for maybe a better opportunity to do so, or you may start to send money home through channels

that are not traceable, that are not tracked by the official statistics. Someone goes to Mexico and you give them cash so that they can give to your family or you may even put bills, cash on an envelope. So there are many ways that remittances and that type of money would actually reach home undetected by the official statistics. The other issue, it's probably also related to the toughening up of measures around illicit drugs and money laundering.

We don't know, nobody knows, you know, how much of the flow of remittances is related to that, to illicit activities. If you tighten up the screws on those types of flows and if there is more surveillance, both in Mexico and in the US, this could also have a damper effect on some of the remittances as published by the Central Bank. And we're talking about Mexico at the moment, but of course there are other Latin American countries involved in this, smaller ones. Are we seeing the same trend there?

The data has been volatile, let me put it that way. There is not like a discernible trend. When you look at the other economies, the ones that are most linked to the U.S. are basically the Central American, the Caribbean economies, where remittances as a share of GDP are actually a lot more important than they are for Mexico. We have not detected a clear deceleration trend. When you go to South America, you know, to Ecuador, to Colombia, Chile or other countries,

then their remittances base is a lot more diversified. For instance, in Colombia, they also received a lot of money from immigrants in Europe, in Spain in particular. So it is Mexico and the Caribbean and the Central American economies that depend first and foremost, you know, the remittance from the U.S. dominate the entire universe of remittances. Looking forward, do you expect, given the pressure that the U.S. government is putting on

a lot of migrant workers, that this could actually become a trend and that we could see a major problem for a lot of these economies, which, as you say, depend on remittances? Look, it could, depending how effective those policies are. We have seen probably a net decline in immigration flows. Better control at the border means that the inflow of arrivals

has collapsed in a very significant way. If you add to that deportations and voluntary decisions to return home, this could impact remittances going forward. So it depends on how effective is the enforcement of immigration policy and how effective are the measures that U.S. Treasury and other agencies on the flow of illicit drugs and money laundering. Yes, you could see a more significant decline.

Alberto Ramos there of Goldman Sachs. Well, let's go back now to Susan because I wanted to ask you, Susan, about a very interesting development, really, which is to do with Constellation Brands. This is a U.S. developer, a U.S. producer mainly involved to do with alcohol and drink. And they missed their first quarter sales and profit estimates on Tuesday. Fears of rising tariffs and economic uncertainty there.

but suggestions that people really, perhaps some people, at least young people in the US, aren't buying as much beer and wine.

That's right. We saw a decline in sales for Constellation, particularly in the beer segment, which is the largest segment for them. Also impacted by tariffs because Constellation happens to specialize in two brands, Corona and Modelo, which are known as being Mexican beer brands with that Mexican brewery being the source of supply. It's a tough, tough market for them right now. And they're seeing a lot of pressure given the uncertainty around relations with Mexico.

Yeah, Mexico and the U.S., interesting on lots of different levels, as we heard there with the remittances as well. Susan, thanks so much for being with us here on World Business Report.

Now, it's been more than two weeks since the crash of Air India Flight 171, which killed at least 270 people. Investigators are ramping up efforts to determine what went wrong. An interim report is expected soon, which may provide some answers. Meanwhile, Air India is working to stabilise and reorganise its operations. The tragedy has cast a long shadow over the airline and the country's aviation industry, which is the world's third largest. Akana Shukla reports now from Mumbai.

I'm at a travel agency in central Mumbai and today it seems business as usual here. Travellers are chatting, discussing, agents are busy locking in itineraries. But just two weeks ago, this office was nearly deserted. The devastating Air India crash shook confidence. Trips that were planned for weeks were suddenly off.

The agency says bookings plunged by more than a third and Air India took the biggest hit. Even as some travellers are now revisiting plans, the nervousness lingers.

And some turned to professional help for their flying anxiety. I spoke to retired Air Force officer Dinesh K. in Bengaluru. He runs a $500 therapy program that combines counselling with flight simulation to deal with the fear of flying. He says there's been a surge in demand.

Now there is a spike tenfold. So I get about 100 people who are wanting to do this course. And the big difference is that all of them want immediate resolution for their fear of flying program. This is the first hull loss of a 787, which is very worrisome for people. And over and above all this, we have not had an answer in the last 18 odd days since the crash on what happened.

All this as pressure mounts on Air India. There are stricter fleet checks, there's suspension over pilot scheduling lapses, add to that shrinking airspace over parts of Middle East and Europe. The airline has had to cut nearly a fifth of its flights, mostly international.

The top boss here at the Tata Sons is in full charge now, steering Air India through its toughest phase yet. It was already in a very challenging turnaround, weighed down by patchy service and ageing aircrafts. But the change was visible after Tata Group took over three years ago with new planes coming in and market share growing. But the crash has hit momentum.

And Air India's stumble also casts a shadow on India's big aviation ambitions. Billions are being spent on airport upgrades and multiple new ones are coming up. In 2023, Air India and rival airline Indigo ordered nearly a thousand planes. All of this riding on the fastest growing passenger traffic.

All operators of Dreamliner aircraft are equal... For Jitendra Bhargav, an aviation consultant and former Air India executive, regulations need to firm up. So whichever benchmark you may take, you will find aviation industry growing. We have to identify a weak link.

There were regulation worries even before the crash. A report is expected soon, which may offer answers on what went wrong and checks needed to rebuild trust.

Arshana Shukla there reporting from Mumbai on that crash and a panel of Indian lawmakers is going to review safety in the country's civil aviation sector. The upper house of India's parliament, in fact, has asked airport operators, air traffic controllers and airlines, including Air India and Indigo, to take part in a comprehensive review of passenger safety. His concerns, of course, still very much surround that awful crash and its consequences. Well, that's it from World Business Report from me and the rest of the team here. Bye-bye.