Trump hopes to hold a phone call with China’s Xi to discuss tariffs
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How many great bosses have you had? Try counting them on your fingers. Your hand may well remain balled into a fist. It doesn't have to be this way. From The Economist, I'm Andrew Palmer, and I'm back with a second season of Boss Class. We've gathered management tips from the world's best performing companies, from Levi's to Lego to Google. To hear all of Boss Class, you'll need to be a subscriber. Search Economist Podcasts Plus for our best offer.

Hello and welcome to World Business Report from the BBC World Service. I'm Rahul Tandon. Plenty coming up on this edition. Canada's provincial leaders meet with the national government to try and push ahead with bold nation-building projects. So what do businesses want to see? I love the boldness of this. So as port authorities through the years, we've been talking a lot about this. We need to stimulate the economy through bold measures. So we think there's tons of opportunity. And we'll take you to Paraguay. Can it become a tech

But we're going to start the program once again by talking about relations between the world's two largest economies. We are, of course, talking about China and the U.S. Speaking on Face the Nation on the U.S. network CBS over the weekend, this is what the U.S. Treasury Secretary Scott Besant had to say. We do need to de-risk, as we saw during COVID, whether it was with semiconductors,

medicines, the other products, we are in the process of de-risking. And the whole world, the whole world, because what China is doing is they are holding back products that are essential for the industrial supply chains of India, of Europe.

And, you know, that is not what a reliable partner does. Strong words there from Scott Besson. But the CEO of JPMorgan, Jamie Dimon, had this warning for the U.S. government after his recent trip to China. I just got back from China last week. They're not scared, folks. This notion they're going to come back to America, I wouldn't count on that. You know, and when they have a problem, they put 100,000 engineers on it. And, you know, they've been preparing for this for years.

And now, in the last few hours, the White House spokeswoman, Caroline Leavitt, has had this to say. She asked about the potential call with President Xi. I can confirm that the two leaders will likely talk this week. And as always, when there are foreign leader calls, we will provide a readout of those calls.

Right. We have no confirmation from Beijing. So what's going to happen? We're bringing in now Nazar Nagata, who was a former assistant secretary for industry and analysis in the first Trump administration, our partner at Wiley Law, where she advises clients on international trade. Nazar, thanks so much for joining us. That's quite a job at the moment. Let us start with that question. If Donald Trump picks up the phone and calls President Xi, you know the Chinese very well from your time in the first administration. Will he pick up? Yes.

Yeah. In fact, actually, I've been working on China trade and national security issues for the last 25 years, ever since really China joined the World Trade Organization. And so look,

Xi Jinping is not the same leader as he was back in 2018 when the U.S. government pushed and he responded. He has indigenized critical capabilities within China. He has pulled in and fortified his control over some pretty significant supply chains, including rare earth elements and magnets.

And he is not willing to negotiate. There's nothing that indicates to me that he is willing to negotiate with the president, with the United States or any country for that matter. Now, with respect to the call, will that happen? Certainly, I think he's going to pick up

the phone, but he's not going to pick up the phone, I don't believe, to negotiate. He's going to pick up the phone to listen to Trump's voice, to listen to the president and what he's saying, to figure out how much more leverage he has over the United States. What amount of leverage does presidency have over the United States? Because you were involved in export controls and we're talking about rare earths here, those magnets.

which are crucial to so many industrial sectors, particularly defense. What sort of damage is being done to that sector at the moment as China withholds some of those products? Absolutely. I've been doing the critical minerals supply chain for the last eight years. In fact, my office produced the first whole of government strategy on critical minerals back in 2019. And I drafted the executive order that came out in 2020. So lots of knowledge in this space.

So China controls global processing of critical minerals, including rare earths, right? The separation and the metal making and has a stranglehold also over the magnet supply chain. The reason we need magnets, this is really about magnets. It's for our defense industrial base. Every defense...

capability that the United States, the UK, the rest of the world has depends on magnets. Our automakers need magnets. A number of electronic goods need magnets. And without China's

exports of these magnets. The US, no other country in the world can make any of these equipment that I just talked about, many with respect to national security. So how close are we to those industries, national security, defence, cars, automakers, having to stop what they're doing because of China's control? If President Xi says no more to you in the US, no more to you in Europe, is that it?

It's really tricky. There's a number, this is really depending on each company and how much they've sort of

stockpiled or kept magnets, how much they can recycle the permanent magnets. So for every company, it's a little bit different. I think we are pretty close to a really, really problematic inflection point where companies are going to really start hurting without the supply chains of China. They've been trying to quietly work with the administration to resolve this, but we're really...

probably very close to the heightened pain point for domestic industries. And this is going to be the same type of pressure point every industry around the world has if it reaches the same sort of ultimatum with China, right, where China decides to exit.

control the exports of magnets and rare earths until unless the other country bends to the Chinese government's will. You were there in the first Trump administration. Have you been surprised at the policies with China this time? Has he gone further than you thought that he might when you talk about the leverage that China has?

Yeah, I mean, I think there's a lot of folks, a lot of domestic industry members who have been substantially hurt by China's unfair trading practices who are pushing for tariffs. What I find really surprising in the United States is with these tariff escalations on China, domestic industry hasn't really asked the U.S. government to respond.

pressure down its tariffs on China. So they've kind of accepted the fact that we're trending towards this decoupling phase. The big issue right now is, you know, what the president can do, what kind of leverage he has. Look, the president still has some sanctions authorities

not suggesting that the president sanctioned China, but at least the threat of imposing sanctions can really get the Chinese government to back down. The Chinese are rapidly racing to de-dollarize. But if the U.S. government could at least consider, talk about imposing sanctions, carving out our allies outside the sanctions so we don't hurt our allies, I think we're

The president can get Xi Jinping to back down. I don't believe that they've made that threat yet, but I wouldn't be surprised if they do in the near future because the pain is getting so worse, so significant on the U.S. side. Nazik, real pleasure speaking to you. We look forward to talking to you again. They're giving her insight there into that key issue of critical minerals and why we may see this telephone call it.

could take place this week. Peter Jankowskis, Vice President of Research and Analysis at Arbor Financial Services in Chicago. And the markets would like to see that call, wouldn't they? They'd like to see some progress being made here between the US and China because it is so volatile at the moment.

Absolutely. I think anything that would smooth relations there would be very welcome in the market and trigger a fairly substantial rally. Let us see what happens. Peter, stay with us. So uncertainty on what's happening between China and the United States. And of course, on Friday, Donald Trump announced further tariffs on steel and aluminium. We are going to be imposing...

a 25% increase. We're going to bring it from 25% to 50% the tariffs on steel into the United States of America. So how are businesses coping with these ever-changing tariff policies? Chuck Dardis is COO of Alpha USA in Detroit, which provides car parks to the big three. We've spoken to Chuck on a number of occasions. Thanks for joining us once again. So there you were, thinking you were facing 25% tariffs.

Come Wednesday night, you could be facing 50% tariffs. What does that mean for your business, Chuck? Well, it's horrible. Again, I'd like to thank you for allowing us to speak our mind here, but it's terrible for us. We're taking one of the major components to our products and we're

We're going to be paying 50% more now. I know it was alluded to on Friday, but it sounds like it's going to have some teeth on Wednesday. And it's devastating to us and many like us. We are in the auto supply base. We're not large mega companies. We're a bunch of family-owned companies. And we can't withstand this onslaught like this. And to continue a barrage of this has been very difficult for many of us.

In terms of your products, you obviously will use some steel, won't you, and some other products that are coming in. Where does that come from? Is it Canada for you? Is it Mexico? Can you not use U.S. steel more or U.S.-based products more?

Well, in our stamp products, it is all U.S. steel. But where our steel comes in, it's through the derivatives. It's in the fasteners that we use. So coming through Canada, if the products are made out of Canadian steel, of course, that gets hit with the tariff. But then if there's other products, such as nuts that we get through Canada, they might be coming from Asia. They might be coming from Taiwan.

and they're a derivative product. So they're considered steel. So they will be subject to that tariff. It's a very large number for us that we're very concerned about. In terms of, I know we've spoken to you before, a 25% tariff adds a huge bill to

to your company, doesn't it, in terms of what you have to pay? Have you done the numbers for 50% or have you just given up on those numbers? Oh, no, no, no. That's what we're doing today. And what we're doing is we're calculating it by customer so we can tell them exactly what the impact is plus to their platform level. So, you know, which one of their car platforms is going to impact. But the number obviously within a short period of time doubled. It doubled from Friday night till today.

Stay with us. I want to bring Peter Jankowski in here. And this is the problem, isn't it, Peter, that many industries are facing. Others will say, look, Donald Trump's protecting U.S. industries here. But for businesses like Chuck, it's hard to plan, isn't it? Yes, it is. It's creating a lot of uncertainty. And there is some concern that it's going to cause people to put off on investment plans and hiring plans. And this could all start weighing on the economy here in the near future. How...

Soon is the near future, Peter, when you use that term. Are we talking weeks? Are we talking months? Are we talking a year? I think we're probably looking at months, realistically. Typically, these things start to take hold more in the fall. That's when I'd expect to see that showing up in the economic numbers.

Chuck, in terms of decisions that you are making, in terms of investment, in terms of staffing, are these things you're having to think about now? Do you come in and think, I can't keep so many staff anymore?

Well, it's quite a conundrum for us because, as you know, in the United States, all over the world, it's very hard to get employees. And so as we have been seeking out employees in key positions, if we do find one in this time period, we want to hire him or her.

We don't want to hold back because we still need those positions filled. And like the other gentleman said, we think that this, we're hopefully looking at a matter of months. Hopefully there's enough pressure put on the administration to back off on the capital side. We've got some capital commitments that we must complete. But as far as capital commitments beyond those, no, we're holding back. We're not going to make any more commitments until this settles out.

Chuck Wiggin, I keep talking to you. Thank you for joining us on the programme and bringing us up to date. We, of course, will be looking more at the issues of steel and aluminium as we get closer to that Wednesday deadline.

Hey, it's Ryan Seacrest for Jewel Osco. Now through June 24th, score hot summer savings and earn four times the points. Look for in-store tags on items like Starbucks Ground Coffee, Red Bull Energy Drinks, Spam Classic, Planet Oat Milk, Charmin Bath Tissue, Totino's Pizza Rolls, and Frito-Lay Chips. Then clip the offer in the app for automatic event-long savings. Shop in-store or online for easy drive-up and go-pick-up or delivery. Subject to availability. Restrictions apply.

Visit Jewelosco.com for more details. How many great bosses have you had? Try counting them on your fingers. Your hand may well remain balled into a fist. It doesn't have to be this way. From The Economist, I'm Andrew Palmer, and I'm back with a second season of Boss Class. We've gathered management tips from the world's best performing companies, from Levi's to Lego to Google.

To hear all of Boss Class, you'll need to be a subscriber. Search Economist Podcasts Plus for our best offer.

You're with World Business Report from the BBC World Service. We're talking a lot about the US. Let's hop over the border now, go to Canada, because the Canadian Prime Minister, Mark Carney, is expected to start a press conference shortly discussing some important issues he campaigned on before the last election. He's going to talk about removing internal trade barriers after meeting with regional premiers. Craig Bell-Morris.

Easterbrooks is the president and chief executive of one of Canada's largest ports. That's the port of St. John's on the Atlantic Ocean coast in the state of New Brunswick. He's been talking about these plans with my colleague Will Bain. I love the boldness of this. We need to stimulate the economy through bold measures. We offer great import export routes for all sorts of different commodities. And if we can be bold and connect

the country and have our regions working together, we're stronger. So what sort of begs the obvious question a little bit, what has been blocking up? What has been stymieing that opportunity to this point in terms of the urgency for that then, Craig, as well, but for the country more broadly?

Do you sense that there is a real urgency to this this time to get something done? I do. And I think there's a number of different factors. I think it's easy to point to the tariffs as being that moment where Canadians and governments are looking to be bold and looking to unite the country. I think that is the primary point. But I also think the pandemic

and the supply chain disruption of the last five years is a part of this. I've worked at the port for 13 and a half years. I never had a colleague or a friend, family member asked me about what I did until the pandemic, because there wasn't enough food during the pandemic on shelves and there was panic and a run on napkins and different things that you never thought you'd run out of in your corner store.

Yep. I'm sure we all remember those tastes, don't we? I'm going to bring in somebody from Canada in a second. Back to Peter Jankowski. We've been talking a lot about trade and tariffs over the last few months, haven't we? Here's another example. Canada looking at trying to tackle an internal problem. But some of that is to do with Donald Trump's policies and maybe that U.S. market being shut off to some of its products.

Indeed, it's certainly having a very large impact on many of the firms that rely on exports to the U.S. I've heard some cases that orders are down by a third from what they would normally expect them to be. Yeah. Let's bring in Ryan Mnuchin, who's an interprovincial trade expert, author of Booze, Cigarettes and Constitutional Dust-Ups, Canada's Quest for Interprovincial Fairtrade.

free trade. He's also a research fellow at the C.D. Howe Institute. Ryan, thanks so much for joining us on the program. A lot of people will be slightly confused by this. Canada is a country. When we're talking about interprovincial free trade, that doesn't mean it doesn't exist. So if you move your products from one Canadian province to another, what happens?

Wow. We're talking about some blockages to people, services and labor. And, you know, it's about these sorts of things that have been lingering really since Confederation 1867. We're talking about the movement of meat, the definition of high visibility safety apparel, construction codes and electrical codes. The fact that our patchwork rules for interprovincial trucking means that the price of trucking goes up by 8.3 percent on average across the country, hitting consumers. These are real numbers.

So in simple terms, if you move your product from one province to another, there are costs in place. You have to pay to cross those borders sometimes. Yeah, and we're projecting that it holds back the Canadian economy by about $200 billion a year, equivalent to about 8% of our GDP, which is all within our reach. We don't have to fly down to Washington, D.C. or Mar-a-Lago. Why are those barriers in place? What was the reasoning behind it in the first place?

It stems back to when Canada got its independence from Britain in 1867, a constitution that gave a great deal of control to the provinces. Because we're the world's second largest country by landmass, you need an element of local control. But with that came the erection of, let's say, 13 fiefdoms over the course of time.

And that's what that's where we are now. So this is the being the biggest opportunity to take a look at our own house since Confederation, arguably. And this has been to protect some of the the less economically developed provinces. As you said, Canada is a huge country. Ontario is a very well developed provinces is to make sure that all the money doesn't flow into one place.

There's certainly that. And then there's stakeholder groups against one another. Even the UK went through this when larger and heavier lorries were permitted in the early 2000s. That was at the expense of the railways. So you'll get industry groups that are at, you know, see it as a zero sum game, whereas Canadians benefit as a whole if there's a more vibrant domestic economy.

And stay with us. Peter Jankowski is still with us. And it's a conversation we've had on this program, Peter, where we've spoken to some Canadian businesses who say, look, sometimes it's easier to move those products into the U.S. But I remember speaking to a beer manufacturer about this, then actually moving some of those products into different Canadian provinces. Yes, it certainly has made the U.S. an attractive market from that perspective. Yeah.

So it's interesting that it's causing them to reconsider now that they should be trading more internally within Canada rather than, you know, taking that path of least resistance, if you will. Ryan, we know that this is something that Mark Carney talks about, you know, as one of his election pledges. So is it going to be easy to put in place? Will some provinces resist these plans?

No, it won't be easy. And, you know, he's got this, but he's got every reason to win right now, right? With the tariffs going up, you know, Canadians question yourself since the pandemic, as your previous guest said, you know, are we a sovereign nation? Do we have East-West trade or are we merely an appendage?

Are we merely another player? And so this is the real question. All the low-hanging fruit is gone. It's the difficult stuff ahead. And the question is, do we have the buy-in from our first ministers to actually move the needle this time? And do you think there isn't the buy-in there yet? And what could cause that buy-in to come in place then?

I think that right now there is. I think we're seeing legislation at the provincial level going into place that's going to spark a great wave of reform. I think we're seeing the federal government taking a real strong stand and articulating a deadline for themselves, July 1st, which everyone can measure them against. They're a new government, so it'll be easy in their early days to see whether or not they're even able to level up to what they've declared for themselves. So I'm the most hopeful I think anyone can be. Well, you sound very positive, but...

even if that does happen, but there are still trade problems with the US, that's not going to be able to replace that, is it, Ryan? No. I mean, in normal times, a Canadian politician's head would have to be inspected if they focused on the 40 million person economy versus the 340 million person behemoth south of the border.

Yeah, listen, Ryan, we're going to keep in touch with you on this story later in Business Matters. We'll hopefully bring you some of what Mark Carney had to say about that. Peter Jankowskis, Vice President of Research and Analysis at Arbor Financial Services in Chicago, is still with us. The dollar, Peter, falling and falling. What, at a low, low for what, the lowest it's been for three years? Why is it continuing to fall?

Well, there continues to be concern about the level of government spending in the U.S., the deficit growing with the new budget proposal that's been put forth. That's put pressure both on the dollar and certainly on long-term bond yields here in the U.S. Yeah, and we saw Scott Besson, the Treasury Secretary, we heard from him earlier in the program, talking about that over the weekend saying, look, hey, the U.S. is not going to default on its debt. That's quite a statement from the Treasury Secretary, isn't it?

Yeah.

Yep, certainly some people in the markets who are worried, particularly when you look at those long-term bond yields. Right, the South American nation of Paraguay has big ambitions to become a tech and innovation hub. It has a reliable source of renewable energy, thanks to a huge hydroelectric dam on its border with Brazil, which politicians and business leaders hope will be a selling point to those tech businesses. Jane Chambers has been meeting the people hoping to turn the country into the Silicon Valley of the region.

I'm surrounded by greenfields, buildings and uniformed officers. This is currently an army barracks in the capital of Soncion, but the government's planning to build a digital park here. What the president wants is to transform the country, transform it into a place where the innovation grows with some ingredients that we have here that is not common in every place. Gustavo Villate is Paraguay's Minister of Technology and Communications.

and he's passionate about the opportunities the site could provide and what the country can offer digital industries. We have the youngest population, we have a lot of green and renewable energy, we have lower taxes.

They were unwrapping maps in front of us with some plans. The idea is to have the students, the public sector and the private sector all in one place. The minister thinks the private and public sectors working together is a key ingredient to help the country grow as a digital hub. And there are plans to build a technology university to train young workers. But Yate thinks the digital part will be ready in the next two years.

So how much will it cost and how will it be financed? Paraguay's natural resources are another unique selling point for the country.

The Itaipu Dam is a huge hydroelectric dam between Brazil and Paraguay. This abundant and affordable energy is an important consideration for tech companies looking for sustainable and low-cost energy solutions for the massive energy demands used in AI and computing.

I've come to meet Paraguayan Italian Sebastia Nortes Chomoro, the director of emerging industries for Tiberi Corporation, a Finnish software and service company. If you want to install a technology investment like AI data centers, that source of renewable energy is very steady.

Keep in mind that the hydroelectric power is both renewable and is steady. That comparing to other renewable energy sources like wind or solar that have its ups and downs makes it much more attractive for creating data centers or any other electro-intensive activity that requires a steady electricity source.

He thinks Paraguay's quest to be South America's Silicon Valley needs to be part of a wider collaboration across the region. I think it's very important to look at Paraguay not as an isolated entity. What you have is different countries that are not necessarily competing with one another, but that have different strengths and that complement each other. Gabriela Sibles manages the venture capital division for Cybersons.

a global investment and technology group founded by her parents in Paraguay. She worked for various start-ups in Silicon Valley after graduating as a computer and neuroscientist from nearby University of California, Berkeley. In Latin America, because there still are a lot of infrastructure problems in the region, you don't necessarily have to build this super revolutionary technology or app. But because so many industries are still developing

managed in a very traditional way. There are a lot of opportunities where by adding a small layer of technology you can have an impact. The people I spoke to are pragmatic and accept that Paraguay has some way to go to build the necessary infrastructure and training for their young workforce in order to put their country on the map. But they're united in their determination to capitalise on their assets and attract opportunities to the country.

Jane Chambers reporting. The difficulty is Peter Jankowski is still with us. A lot of countries emulate, hope to emulate a sort of Silicon Valley. But it's not just about resources and power. It's about getting the right staff. And that's where the US has been able to bring in the best and the brightest in the world. And other countries have struggled, Peter.

Yes, indeed. It's very important to have that central core of people, you know, that are bouncing ideas off of each other, et cetera, to move the industry forward. And that's been a great strength, of course, of Silicon Valley is, you know, you can walk across the street and talk to somebody that's innovating in a field and come up with a new way to use whatever that person's been working on.

It certainly has. Right. Some news that we've had today. We knew that Bill Gates, Microsoft's Bill Gates, has said he's going to give most of his fortune away. Now he said he's going to give it to Africa. We're talking about $200 billion here. So that could have a huge impact on the continent, couldn't it, Peter?

It could, and it does coincide. I think he's long had an interest in eliminating malaria, which has caused him to work a lot in that area. I think it'll be key to make sure that it's monitored very effectively as to how it's used and prevent the possibility of corruption there.

know, gobbling up a lot of those funds. I think the administration of it is going to be a very important part of it. It certainly is. Peter Jankowski, as always, thank you for joining us on the program, guiding us through some of those issues. Most of that money, Bill Gates has said, will be spent on improving health and education services in Africa. He intends to give most of his fortune away by 2045. We'll be back with Business Matters looking at South Korea.

Hey, it's Ryan Seacrest for Jewel Osco. Now through June 24th, score hot summer savings and earn four times the points. Look for in-store tags on items like Starbucks Ground Coffee, Red Bull Energy Drinks, Spam Classic, Planet Oatmeal, Charmin Bath Tissue, Totino's Pizza Rolls, and Frito-Lay Chips. Then clip the offer in the app for automatic event-long savings. Shop in-store or online for easy drive-up and go-pick-up or delivery. Subject to availability. Restrictions apply.

Visit Jewel Osco dot com for more details.