The first tariffs deal between US and UK - who will be next?
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Toyota, let's go places.

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Hello, and welcome to World Business Report from the BBC World Service. I'm Roger Hearing, and on this edition, the UK cuts a deal with the US on trade. But is it as important as Donald Trump and Keir Starmer say it is?

There's a new pope. How will Leo XIV tackle the financial problems gripping the Vatican? Also, the Spanish parliament about to debate a law to reduce the working week by two and a half hours. A good idea? What is a very bad idea is to put the same working time for all the wage bargaining. By introducing this law, it's a very bad idea and very inefficient. And Bill Gates wants to give away his fortune before he dies.

how easy is it to make his billions of dollars achieve what he wants for the world's poorest?

But let's start with the trade deal between the US and the UK. When Donald Trump launched his head-spinning run of tariff imposition and tariff suspension, it was billed as a way of resetting unfair trading arrangements, of forcing nations he said were taking the US for a ride to strike new and fairer deals. Well, the UK seems to be the first American trade partner to have completed that journey. The President and the British Prime Minister, Keir Starmer, have jointly announced an agreement.

President Trump said the agreement will provide increased market access for American exports worth billions of dollars, especially products like American beef and ethanol.

The deal includes billions of dollars of increased market access for American exports, especially in agriculture, dramatically increasing access for American beef, ethanol, and virtually all of the products produced by our great farmers. And our secretary, as you know, of agriculture is here. Brooke, thank you very much for being here. Thank you, sir. You'll let the farmers know.

In addition, the U.K. will reduce or eliminate numerous non-tariff barriers that unfairly discriminated against American products. But this is now turning out, I think, really to be a great deal for both countries because it'll be really great for the U.K. also. President Trump, well, what is in the agreement? I'm joined by our North America business correspondent, Erin Delmore. Erin, thanks for being with us. OK, what does the U.K. get out of this?

Yeah, this is quite the complicated thing to unpack. And so just to start now, you know, President Trump placed those 10% minimum across the board tariffs on anyone. And while we haven't seen that removed from the U.K., some tariffs are reduced or removed on some of the U.K.'s exports. So we're looking now at cars and steel and aluminum. So remember, Roger, cars are the U.K.'s biggest export to the U.S. That's worth some £9 billion just last year.

And we had seen President Trump place 25 percent tariffs on cars and parts coming into the U.S. So this is now a 10 percent max tariff for 100,000 U.K. cars that come into the U.S. And that, in fact, is the number of cars that the U.S. exported last year. Anything above that gets hit with a 25 percent plus the existing 2.5 percent tariff.

subject to a 27.5% tariff on those additional imports, over 100,000 in full. But, you know, Rolls-Royce engines and plane parts are tariff-free, and the U.K. – well, this is something in it for the U.S. now, but the U.K. is buying some $10 billion worth of Boeing planes from the U.S. Well, I was going to ask him. A lot to unpack.

Yeah, yeah, indeed. And I was going to ask about what is it the U.S. gets from this? Because I've seen a few angry sort of messages from Detroit auto workers and people like that. But I mean, there is something obviously for it in the U.S.,

Yeah, I mean, there's a little something for everybody here. And a lot of times those lines can get a little bit blurred, especially when we talk about quotas on the amount of products coming in or, I mean, get a load of the next example I'll bring you. It's about steel and aluminum imports. You know, one of the good things here for the U.K., no tariffs on steel or aluminum imports into the U.S., right? Right.

But at the same time, we don't know what that has to do with component goods, you know, goods that are manufactured in the U.K. with steel that comes from somewhere else. How will that be calculated? And, Robert, that really takes us back to the biggest point of the day here. A lot of interesting things to unpack, but we don't have pens to paper yet. We don't have legal documents. We don't have Congress, you know, weighing in on anything that's quite so large now. So we are looking at some of these more narrow, more targeted things.

and negotiations that the president says have been achieved with the UK. But big question marks remain, right? We don't know about pharma. That's a huge industry where we see pharmaceutical products going back and forth over UK and US borders. They said that work will continue on that sector and some others that are remaining. So,

We don't know. We don't know about that at all. And one other thing I'll add, no change on the digital services tax. That came as a bit of a surprise. That is interesting, isn't it? Yeah, because that's such a big thing. A lot of the big companies like, well, the big tech companies really pushing hard on that. Erin, stay with us. We're going to come back to you in a moment when we talk about wider trade issues. But first of all, let's examine how good this deal is for Britain. David Hennick, director of the UK Trade Policy Project Group.

at the European Centre for International Economic Policy. Tell me what he thought. Well, when you're an economy that is struggling for growth and you're facing a negative hit because of potentially lost trade with the US, this deal is pretty useful to offset some of this. It's not going to turn around the UK economy. It's not going to be transformational for the UK economy. But...

Every little bit counts, really, is the way I would look at it. And it's the same as I would look at the India trade deal earlier in the week. It's a sign collectively that the government is doing the right sort of things to bring growth back into the economy. These aren't full deals, are they? I mean, they're things that cover a certain amount of time and a certain number of things rather than being fully fledged.

I think with President Trump, you weren't going to get a fully-fledged trade deal in any case. I think you have to just take the president as he is, that he'd been bouncing around erratically on tariffs, and to try and pick some of the things that were hurting you most, cars, Rolls-Royce engines, being the obvious two, and get deals on...

on those. I mean, again, with India, it's small amounts of tariff reduction, but it's worth having. So these things, I think, are worth having. And they're never going to be trade deals with absolutely huge economic benefits. I think that there's also a sign here for the UK of learning to accept limited but positive deals.

But one of the things flagged up, at least on the right of politics in the UK, is that this is somehow a benefit of Brexit, that because Britain negotiates directly with the US and because of the links that Donald Trump's acknowledged, that's what's got Britain a better deal than the EU is going to get. Is that true? Yes, I think it's true that this trade deal with the US is a benefit of Brexit, and this trade deal will deliver a very small economic

benefit as compared to the perhaps 4% GDP hit from Brexit. So yes, you can have benefits, but still be much worse off overall. How is it going to be regarded in Europe, though? Because the EU is, it says, planning a number of retaliations against the US by a July deadline, I'm told. And they would look at this, perhaps, and say, well, that's what we want? Or do they look at this and see it as perhaps a bit of a betrayal?

A little bit of both, I think, in terms of the way the EU looks at the UK right now. A little bit of jealousy that the UK got a deal, but equally hope that when the EU comes to do a deal with the US, and this may well happen, that it gets a better deal than the UK got, because the UK just set a new benchmark that the EU and others will now want to beat. I think overall it won't dramatically affect UK-EU relations. The UK hasn't really accepted...

anything that would upset the trade relations, the deepening of trade relations with the EU. So I think that that was quite well played by the government. So what you're saying, just to clarify that point, is that the negotiations between London and Brussels, which we know are ongoing and a willingness certainly by the Keir Starmer government to move closer than has been the case, that's not going to be stymied by any of this?

I don't see that the negotiations between the UK and the EU are going to be stymied by the UK-US deal. If anything, I think that the negotiations, the summit that will be next week with the EU, will have a slightly limited ambition because the UK government had set a limited ambition for it. I don't think the US trade deal makes a difference to that. David Hennig. So we've got the EU hoping for something down the line. But Erin, let's join you again. Erin Delmore there. Thank you.

The big thing, I think, on the US calendar, at least next, is Howard Lutnick, the Commerce Secretary, heading to Switzerland to talk to the Chinese. So maybe there's a deal coming there as well?

You know, I believe it's Treasury Secretary Scott Besant. And let's hold our horses for a moment, because while we do think that there could be a deal in the works with the Chinese, oh, my goodness, has the language been careful. To hear them speak about it, Trump administration officials earlier in the week, they said that there would be talks about what to talk about in initial talks.

So, yes, indeed, Roger, they are talking about talking about having talks. And then the conversation would then be on de-escalation before we would get to actual affirmative trade negotiations. So if we can unpack all that for now, the biggest headline here is just that we are going to have folks from the Trump administration and folks from Chinese leadership coming together to actually begin to discuss an issue that has ballooned into tariffs in the triple digits on imports from these two countries crossing borders. And I think that's going to be a big thing.

And it's something that we're acutely aware of here in the U.S., especially because, you know, we have so much trade with China, but certainly Americans have become very dependent on being able to get goods quickly and cheaply. And anything that threatens consumer spending here in the U.S. really threatens to shake some of the stronger points of the U.S. economy. Yeah, it's going to be interesting, Erin. Thanks so much. You're absolutely right. It's not Howard Lutton, the Commerce Secretary, who was talking about it, but it's actually Scott Besson, even more interesting in a way,

heading to Switzerland towards the end of this week. And we'll catch up with you, Erin, when we get some news out of that. Thanks so much for being with us. Well, let's have a look at what the markets did in response to that. Kerry Leahy, independent consultant and adjunct professor of economics at Columbia University, joins us now. Kerry, thanks for being with us. The markets liked this deal, didn't they?

They certainly did. They were less concerned that the agreement that was drawn up today might not be very large or very specific, but they liked the fact something's happening. And one of the dominoes, at least, is fallen that is pro-market, meaning that

The U.K. and the U.S. made an agreement. Maybe there'll be an agreement between the Eurozone and the U.S. And then finally, almost as importantly, the fact that they're at least talking about talking with China when the delegation goes to Switzerland. So all those things are quite positive. And the market really can't.

justify doing as well as it's been doing, reversing all the losses from early in April unless we get some major rollbacks and walkbacks by the president on most of the tariffs. I don't think the market will do well at all three months from now if the tariff structure in the U.S. is much higher than about 10 to 12 percent effective rate. If it's up to 25 to 30 percent, which some people will worry about might actually happen.

And I think that would be devastating to the market and ultimately the U.S. economy. Well, yeah, and the economy, you know, there's some big question marks. We had, interestingly, the Fed, of course, holding on interest rates. Interestingly, the Bank of England coming down a bit on that. And at the same time, we've got these suggestions that Donald Trump is trying to push Congress into approving something that would actually heighten, raise taxes a bit on some of the richest in America. I mean, all this looks like a lot more like...

perhaps the economics we've got used to rather than the whirlwind we've had in the last couple of months. That's right. And particularly on the tax on high incomes, that is not an inconsistent position by the president. 25 years ago, when he put his foot in the water by thinking about running for president, he advocated a millionaire's tax saying I'd be hurt by that like a lot of other rich people just like me. So talking about taxes on the wealthy is not something new for Trump. And it's kind of a little bit of his reason for his

Yeah. And interesting. And finally, uh, Carrie, um, Bitcoin over a hundred thousand dollars for the first time. What's going on? Well, the, the fact that the president is behind this and he's making progress on trade is probably thinking investors, they'll spill over and make, uh,

Bitcoin and other cryptocurrencies even more attractive. There's supposedly a governmental reserve that's going to be working in that area. But I just want to remind all our listeners out there, this is a highly speculative vehicle. So use it with care if you decide to use it at all. Yep, there we are. Yes, public announcement and one worth making. Thanks so much, Kerry. Kerry Leahy there of Columbia University.

Now, papam habemus, the words that were uttered to the world's 1.4 billion Catholics, who now have a new leader just over two weeks since the death of Pope Francis. Mark Lohan, the BBC reporter, captured the elation of that moment in St Peter's Square about four hours ago. Unfortunately, I do not have a direct line of communication to the cardinals inside the Sistine Chapel. Any cardinal that breaks, we have smoke. CHEERING

There we are, the sound in St Peter's Square. Pope Leo XIV was elected to the throne of St Peter by the College of Cardinals in the Vatican. The Vatican's finances are unlikely to be at the top of his very full to-do list, but perhaps they should be. There is a significant budget deficit...

and the Vatican's pension fund is apparently facing a gaping structural shortfall. Plus, there's a history of disastrous financial deals by some of the cardinals and corruption and misconduct within the Vatican itself. Well, let's talk to Gerald Posner. He's author of the book God's Bankers, A History of Money and Power at the Vatican, and joins us now. Gerald, how bad is the financial, how bad are the books, essentially, I suppose, when Leo XIV gets to have a look at them?

Yeah, unfortunately, Roger, it is a bad set of books coming in. And that's notwithstanding Francis's really prodigious efforts to reform Vatican finances, to bring some transparency to them, to try to change it. But look at the deficit that the Vatican is running tripled under Francis. So his efforts were not successful in the end. And so we have the new Pope coming in, and he's facing some crises. He's also some personal issues that those who are

working with him might look forward to him changing. For instance, Francis slashed the salaries of the cardinals that today elected the new pope three times in the last few years. None of them were very happy about that. And he also, in 2023, Francis nixed the very rich subsidies for the Vatican elite workers inside Vatican City. So they might be looking for some of those to be restored. So they're buffeting

pressures here on the new pope bring the financial house into order at the same time maybe give a little bit more leeway to some of the old favors that used to be done for the elite hierarchy inside vatican city interesting that those sort of pressures are there but but i mean generally on the surface you think this is a church that has enormous wealth i mean just staggering amounts of wealth how come it's found itself in this position

Because it doesn't run itself as a business, which is to its credit if you're in the 1600s or 1700s and you sort of had a papal states empire and you collected taxes and had fees that's like any other colonial empire fed the coffers.

Once that disappeared in the late 1800s, and then they got their sovereignty back as a small postage stamp piece of sovereign land by Mussolini in the 1920s, they really have existed based upon tourism and upon selling of so-called indulgences and bringing in money from the faithful and contributions and charity. Not a very good way to run the government.

They've done it that way for a long time, but it's not predictable. And so financial managers don't like it. They're trying to bring themselves into the 21st century. They do have investments in a lot of property, including a much controversial property on 60 Stone Street in the heart of London that was at the heart of a corruption trial the last few years. But they still need to put their house in order.

And there's also a bit of corruption in the background. It's not just mismanagement. There's certainly been some scandals. I know the Vatican Bank has joined the EU's single euro payments area initially. The idea is for cross-border payments, I suppose, to avoid money laundering. But there's still quite a bit of that kind of stuff going on.

Yeah. There, there was never a law against money laundering until 2011. That might be rather remarkable for most people who are listening to this because you would think that they would have had it long ago. The Vatican bank, which was only created in the middle of world war two operated for decades in all types of scandals, just a series of them. And as a matter of fact, one of the most famous of the so-called God's bankers who worked with the Vatican bank and was indicted by the Italians and sought for corruption was found hanging under black friars bridge in London in 1982. Uh,

first deemed a suicide and later deemed a murder. So the bank has been embroiled in all types of controversy. They are kicking and screaming coming into what I call 21st century normal financial standards. And they're only doing that because once they decided to adopt the euro as their currency, they had to give it up after the... They had to do that after the Italians adopted the euro and they no longer...

could use the Italian lira. That meant that they were open to Brussels sending in teams of regulators to make sure that they really were guarding against money laundering and the financing of terror operations and other things. So they have slowly come around to meeting the standards. They still have more work to do. And that's why I hope this pope coming in, Leo XIV, does not take his eye off those reforms because they're only about 70% of the way through.

Gerald, thank you so much for being with us. It'll be fascinating to see what the new Pope does do. Gerald Posner there speaking to me about the finances of the Vatican. You're with World Business Report from the BBC World Service.

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Toyota, let's go places. Now, how long is your working week? Well, if you live in Spain, there's a chance it's going to get a bit shorter. A bill is going to the Spanish Parliament to reduce the current work week, 40 hours, to 37.5 hours, and that would apply to over 12 million people.

The Ministry of Labour says the measure is expected to improve productivity and reduce absenteeism. Today we are modernising the world of labour and helping people to be a little happier, it says. But not everyone's happy with the plan. I've been talking to Inigo Fernandez de Mesa, who's vice-president of the Spanish business owners group CEOE.

In Spain, the effective working time is 32 hours. The government is proposing 37.7. We negotiate more than 4,500 wage bargaining across Spain. There are two key elements in this wage bargaining that we negotiate. One is the salaries.

Second is the time. So it is something to be negotiated through the different sectors, through the different firms. Every company, every sector can adapt themselves. I mean, it is something should not be decentralized to a regulation. I think the government should respect the negotiation between the trade unions and the business association. So you don't want there to be an overall rule. You just think it should be a case by case almost.

Well, one of the assets we have is the wage bargaining in Spain. It works pretty well. We negotiate more than 4,500 wage bargaining. What is a very bad idea is to put the same working time for all the wage bargaining. The trade unions and the business association to agree. I mean, in this particular case, the time hours that a worker should work.

I mean, trying to gain a political advantage by introducing this law is a very bad idea and very inefficient. Well, you say political advantage, but it's an advantage for the people who work in these industries, because if it's a general idea that you should work 37 and a half hours rather than 40, that will make life easier for people. And, you know, if it's a universal thing, it will be much easier to do.

It depends. I mean, the Spanish economy is very diverse. I mean, there are sectors that they work even less hours. So it should be negotiated in a more global basis. And probably the most affected companies by reducing these two hours, the very small companies, companies with one, two workers.

which probably are very difficult to manage this reduction. So I think what makes sense is to negotiate with the trade unions, sector by sector, with companies, so that those that can adapt to this change could do it. By doing it by law, I think it's a very bright idea. Inigo Fernandes de Mesa speaking to me earlier.

Now, not all of us have $200 billion to give away, but Bill Gates does, and he says he will. The Microsoft founder says he'll give away almost his entire fortune over the next two decades before closing down his foundation. Now, his targets are global health, agriculture and education programmes.

He's been speaking to Regine Veger-Nathan on BBC News Hour. Well, I'm turning 70 this year and because of the 25th anniversary, I got to look back on the incredible results that we've had in our work and say that I'd like to double down. I'd like to take the incredible team at the foundation, the partners we have, and eradicate a number of diseases, including polio and malaria, and get these unnecessary deaths eradicated.

Bill Gates there. But what is the mechanism for this kind of mammoth giving?

Maurice Pearl chairs the board of directors at Patriotic Millionaire. That's an organisation which campaigns, among other things, for wealthy people to pay a greater share of their income in taxes. He joins me now from New York. Maurice, thanks for being with us here on World Business Report. Great to be on. It's an interesting situation. £200 billion is an awful lot of money.

How easy is it to give it to the kind of causes that Bill Gates wants? Because you imagine that, you know, it's awfully easy also for it to go astray, be used in overheads or perhaps find its way in other areas. Can you actually direct it easily to where you want it to be?

Well, the way his foundation does it, they go through massive amounts of detailed, granular details of things. That's why it's going to take them years to do this, the course of 20 years. What I think is that, first of all, it's not really good for democracy that one person has so much wealth that they're really doing things that the government should be doing, that should be done through the democratic process in the first place.

And so we think that it'd be much easier for them to give away massive amounts of money to the obvious needs of

if they would use some of their money to advocate for changing government policies so that we don't have such massive amounts of wealth in a few private hands while so many people here in the United States and in your country too are struggling to get by. So what you think almost is that he should give it, if he's giving it away or the foundation is giving it away, it should be given perhaps direct to governments to use it that way rather than in this private capacity.

Well, I think he should be giving some of it to be used by his people to advocate for changing government policies. The government spends far more than that much money every year. And frankly, we're seeing government policies that are not going to the exact things that he's trying to do. So he could be using some of his fortune.

to change government policies and direct far more money than he has in to do some of the exact things he wants to do about improving people's health, eradicating diseases. And just by using his advocacy to replace, just as Elon Musk used some of his fortune to change the government, he could be doing the same thing to change the government in the way that he is advocating for.

to do some of the things that he wants to do to improve the health of people. Yeah, you might think that would be quite a tall order actually in the face of the current administration's attitude to things like USAID, of course. But Maurice, I'm interested in the technicalities of this. I mean, if you have that much money, is it the best thing to do rather than to spend it, to invest it, and then the interest on that money could then be for a much longer period what actually can make things happen?

Well, he's been doing that for years and he's finally now decided that having this pot of money just growing and growing and growing is not doing as much good as spending it. So I applaud his decision to actually spend some of the money or spend the money over the course of the next 20 years as opposed to having it growing. I mean in theory, if you never spend the money, then it will grow forever and you'll have even more money. But you could spend the interest rather than the capital, couldn't you I suppose? Well, he's been doing that for years.

And I think that eventually you have to spend all the money or it's not really going to benefit your country.

or anyone's country. But we think he should be spending some of it on advocating for changing policies so that we don't have so much wealth in so few hands to begin with. So money for politics, really, rather than directly for aid, is what you're saying? Well, I mean, you saw how successful Elon Musk has been in using really only a few hundred million dollars

fairly small amount in the scheme we're talking about. And he's getting a massive amount of changes of government policies that he wants. And I think that we should take a lesson from that. Yes. And we know what he's done for his business background as well. Interesting one as well. Maurice, thanks so much for being with us. Maurice Pearl there of Patriotic Millionaire joining us here on World Business Report. And that is it from World Business Report. Thanks for being with us. Bye-bye.

Toyota is the best resale value brand for 2025, according to kellybluebookskbb.com. And with a wide range of dependable vehicles for any lifestyle, you can get everything you need in a vehicle today while investing in tomorrow. So choose Toyota and choose value. Shop via toyota.com for great deals and more. Vehicles projected resale value is specific to the 2025 model year. For more information, visit kellybluebookskbb.com. Kelly Blue Book is a registered trademark of Kelly Blue Book Co. Inc.

Toyota, let's go places.