Global Trade Shifts

The global trade chessboard is being dramatically reshaped as nations navigate economic relationships against a backdrop of geopolitical tension and protectionist policies. This week's Chain Reaction Pulse examines how Trump's tariff strategies continue to send ripples through international commerce, from his desire to "protect" the US film industry with new tariffs to the surprising reduction of China tariffs from 145% to 80% ahead of talks with President Xi Jinping.

We dive deep into the UK's landmark post-Brexit trade deal with India, projected to add £5 billion annually to Britain's economy by 2040. This agreement strategically reduces tariffs on key British exports like whiskey and automobiles while offering UK consumers access to cheaper clothing and goods. However, the timing coincides with India-Pakistan tensions and faces criticism regarding tax exemptions for migrant workers, highlighting the complex interplay between trade policy and broader geopolitical concerns.

The impact of trade policies on physical supply chains becomes starkly evident as the Port of Los Angeles reports shipping traffic at approximately 50% of normal levels, with executives not anticipating recovery without substantial tariff reductions. Meanwhile, Canadian Prime Minister Mark Carney's White House visit demonstrated diplomatic resilience as he maintained that "Canada is not for sale" while securing exemptions from some of Trump's global tariff policies.

Nobel economist Joseph Stiglitz provides a sobering perspective, warning that agreements with Trump "aren't worth the paper they're written on" and suggesting that the American president employs a divide-and-conquer strategy in his negotiations. This expert scrutiny raises important questions about the longevity and reliability of current trade arrangements.

Whether you're a business leader, policy analyst, or simply interested in how global economic shifts affect your daily life, this episode provides crucial context for understanding the evolving landscape of international commerce. Subscribe to Chain Reaction for weekly insights into the

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Chapters

• 0:00 Introduction to Chain Reaction Pulse
• 0:53 Trump's Film Industry Protection Plans
• 2:21 Global Conflicts Affecting Supply Chains
• 4:10 UK-India Trade Deal Analysis
• 5:57 Canada-US Relations and Tariff Talks
• 9:30 UK Economic Indicators and Car Sales
• 10:01 Special Report: UK Trade Deals
• 19:45 Nobel Economist Criticizes Trump's Approach
• 21:14 Closing Thoughts and Program Wrap-up

Transcript

Tony Hines: 0:00

Hello, you're listening to Chain Reaction. Thanks for stopping by. Great episode coming your way in just a few moments. So stick around, stay tuned, find out more and don't forget to subscribe to Chain Reaction. You'll be first to know when new episodes arrive.

Tony Hines: 0:15

This is the Pulse, the heartbeat of business. It's our weekly edition. It comes out on Saturday. I don't know when you're listening to it, but that's when it comes out. Chain Reaction out on Saturday. I don't know when you're listening to it, but that's when it comes out. And if you subscribed, of course, you're probably one of the first to come and listen. So that's great.

Tony Hines: 0:33

Well, let's get to it. What's been happening this week? Hello, tony Hines here, good to have you along. Well, let's get to it. What's happening in supply chains this week, or what's happening outside of supply chains that will impact supply chains this week? That's probably the question.

Tony Hines: 0:53

Well, this week, donald Trump said he wants to protect the US film industry. He thinks they're getting a bad deal and he wants to see more films made in the US. It's like turning the clock back a century, isn't it? He wants to go back all the time, to where they were 100 years ago. I think many nations have tried to do this over time, but it doesn't work out good. I think you have to move forward and go with the flow and move to the new era and work out what the present situation is and what you can do better to get that competitive advantage. And he should be thinking about those things. And we all know what he means by protect the industry. Yes, that word that he loves tariffs. He wants to put tariffs on all productions made elsewhere, so any film studios that employ foreign filmmakers, they'll have tariffs on them 100%. He says Well, is this going to be carried through? We'll have to wait and see. They haven't heard all the detail yet. He's not a detailed person, of course, is he? He's just an ideas person. The trouble is he puts ideas out when they're not properly formed. I think that's one of the big problems and we all have to pick up the pieces.

Tony Hines: 2:09

Well, india have attacked Pakistan that's one of the big news items of the week and of course that's going to have implications for global supply chains if that war gets any more serious. Or whether it's just a skirmish, it's a bit sad really. The world seems full of problems at the moment, with nation-states fighting each other. We've still got the Russia Ukraine situation, we've still got trouble in Gaza with Israel and we've still got, of course, this one just breaking out here. The United States said this week it would stop attacking the Houthi rebels after the Houthis said that they don't want to attack any more ships. So at least that's some good news if that's going to reduce those attacks on civilian ships carrying goods and services through the Straits of Hormuz.

Tony Hines: 3:01

It was reported this week that the United Kingdom has done its biggest trade deal with India, but they're facing some criticism with regard to the tax breaks for migrant workers. The Prime Minister said it's the biggest trade deal since Brexit and is expected to add nearly £5 billion a year to Britain's economy by 2040. That's a long time, isn't it? That's 15 years and tariffs on exports such as whiskey and cars, so it seems to be about the exports to India whiskey and cars. That's hopeful. Uk consumers are said to benefit from cheaper clothing, footwear and frozen prawns. That's a funny mix, isn't it? But Labour's facing a lot of criticism after reform and the Tories said the deal is allowing Indian workers in the UK to be exempted from employer and employee national insurance contributions for three years. The trade deal, of course, comes in a week that's unfortunate for the British government because India has attacked Pakistan. More on trade deals in the report later in the program.

Tony Hines: 4:10

In a visit to the White House, mark Carney told President Trump Canada's not for sale and it will never be for sale. It was quite a convivial meeting, but it's quite clear that Mark Carney's not standing for any nonsense. But it's quite clear that Mark Carney's not standing for any nonsense. In 2024, the US deficit with Canada in goods was $70.6 billion and the figure is lowered to just $35.7 billion if the trade in goods and services between the two countries is factored in. The US president had unveiled a 25% tariff on all steel and aluminium imports coming into America before announcing an additional 25% on cars and car parts. Trump, however, did exempt Canada from the 10% tariff on US imports that will be levied globally. Mark Carney, of course, is the Prime Minister of Canada voted in a few days ago and a former governor of the Bank of England. He won the Canadian general election on 28th of April. Trump did repeat that the 5,525-mile border between the two nations is an artificial line that prevents them from forming a beautiful country, but he also gave Canada lots of complimentary comments and he did say that Canada had chosen a very talented person, a very good person.

Tony Hines: 5:35

The S&P Global UK Services Purchasing Managers Index PMI has dropped to 49 last month from the March number of 52.5. It's the fastest and steepest decline since January 2023. There's an expectation that the Bank of England will lower interest rates this week, despite the economic figures not being particularly good. The Bank of England did indeed lower interest rates this week by just a quarter of 1% 0.25 percentage points. That will make mortgages cheaper and it will make savings accounts earn less. So anyone with a loan could benefit, but will they benefit the full quarter percent? Well, that remains to be seen. Bankers can be slow when it comes to looking at lowering rates for borrowers, but they're swift of hand when it comes to lowering rates for savers. I think that's called a win-win for banks. They always win, don't they? 22% of service companies have said that they expect a decline in activity in the next 12 months, and that's up from 14% back in March. When the current government in the UK was elected in July 2024, it was just 6%.

Tony Hines: 6:56

New car sales in the United Kingdom have fallen to 10%. In April they fell by 10.4% last month. The figures show they fell by 10.4% last month. The figures show Tesla cars have continued to decline, falling to just 512 from 1,352 in the same month a year ago. The SMMT, the Society of Motor Manufacturers and Traders, said that 120,331 new cars were registered in April and last April it was 134,274 new cars that were registered. They blame vehicle excise duty rules and electric vehicles losing their vehicle excise duty exemption on the 1st of April. Pure battery EVs have grown by 8.1% in April and they have a 20.4% market share. That's up from 16.9% a year earlier. 28% of new cars sold by each carmaker in the UK this year have to be zero emissions.

Tony Hines: 8:01

Well, president Trump has said that he thinks tariffs ought to be lowered on China to 80%, that's from the existing tariffs of 145%, and this could be a gesture prior to talks with Xi Jinping later in the week. Now it was interesting to look at the ships sailing to Los Angeles. They're about 50% down on what they would normally be at this time of the year and, according to the port of Los Angeles, they're not expecting it to upturn any time soon unless the tariffs are reduced on those China sailings to the United States and this will put pressure on the port. It will increase their costs, it will reduce the amount of labour that they need, it will reduce truckers' contracts to and from the port and it's likely to turn downwards in terms of comparison to last year. And that comes from the chief executive at the port of Los Angeles, gene Soroka. So we need to keep an eye on that one and see if Trump backpedals on these China tariffs, as we've heard. Those China tariffs. He wants to reduce them, but by how much will it be enough? Will it be significant? Will it keep the port trade going, and what other ports are likely to also witness downturns if they deal in China trade? The data for March trade with China in the United States showed a downturn overall at all ports by 21%. Well, here's that special report I promised you on the UK-India trade deal and the UK-US trade deal.

Tony Hines: 10:03

United Kingdom has been actively negotiating and signing trade agreements to strengthen global trade ties and boost its economy. Recent deals with India and the United States are set to reshape industries, benefiting businesses and consumers alike. Let's explore how these agreements impact the UK's trade balance and its major import-export sectors, along with additional insights on emerging trends and future strategies. The UK maintains strong trade relationships with key global economies, with imports and exports shaping the nation's economic landscape, with imports and exports shaping the nation's economic landscape and if you go to my blog you'll see various tables there that will give you some more information in detail. But essentially, india in total is worth about 8.2% of total trade. That includes imports and exports. Imports are about £15.3 pounds and exports about 65 billion. If you look at the United States, uk imports are about 92 billion 93 billion and exports about 60 billion, and it represents about 15.3% of total trade. So these are not insignificant numbers. The United States, china and Germany are the UK's largest trading partners, with high volumes of imports and exports, while the EU remains an integral trading bloc and is very significant to UK trade.

Tony Hines: 11:42

If we take a look at the UK-India free trade agreement, which aims to strengthen trade, particularly in automotives, whisky, pharmaceuticals and textiles, india benefits from zero duty access for most exports, while the UK business gains lower tariffs on cars, whisky and medical equipment. If we look in detail at some of the sectors that will be impacted, the big sectors are machinery and equipment, pharmaceuticals, automobiles, textiles and clothing, financial and IT services, food and beverages and chemicals, and I think almost in every category apart from textiles and clothing, and perhaps food and beverages. The UK exports more to India than it imports from India. In the automotive industry, indian tariffs on UK cars drop from 100% to 10%, and that will help brands like Jaguar and Land Rover to expand. Whiskey and alcohol UK distillers will benefit from halved whiskey tariffs, increasing exports and India consumes quite a bit of whiskey, I think. According to the data Financial services, indian businesses gain greater access to that particular sector, and that will provide investment opportunities too. Indian businesses gain greater access to that particular sector, and that will provide investment opportunities too. Technology and IT services are also important. Uk firms will collaborate with Indian tech companies, boosting innovation. And in the area of sustainability, india and the UK are working towards green energy partnerships, particularly in solar technology and electric vehicle development.

Tony Hines: 13:32

Now, turning to the UK-US trade deal, that's a big one too. It's bigger than the India deal in many respects, because the UK does more business with the United States, and the UK-US trade deal eliminates tariffs on steel, aluminum, aluminium, automobiles and agricultural products, and it will secure thousands of UK jobs, improving competitiveness. And if we look at the big sectors here, once again, it's machinery and equipment, pharmaceuticals, automobiles, chemicals, financial and IT services, food and beverages and steel and aluminum. But the biggest beneficiary this week was probably the automobile industry. By lowering the tariffs on automobiles, that ensures the exports of many British cars to the United States and, according to the UK government, it actually helped to save jobs in the industry. They said they were only days away from losing many jobs because of the tariffs placed on automobiles by President Trump.

Tony Hines: 14:33

So steel and aluminum tariffs removed. That benefits steel manufacturers. They can send steel and aluminum products to the United States and if you look at the imports of steel and aluminium, that's also an important sector. I think we export about 5% of steel and aluminium products to the US and they send us about 3%. So you can see it's significant Automobiles. Uk-built cars now face lower tariffs. It was to be 25% but it's now 10%. It's still worse than it was a fortnight ago or a few weeks back, but it's certainly better than it would have been at 25%. British beef and whiskey exports to the United States will increase significantly, but the story the other way around is that US beef and other products will also come to the UK. But the government was clear to point out that they wouldn't lower food standards that the food that came into the UK would have to meet UK standards. Uk-us digital businesses will collaborate more efficiently because of this agreement and, as for AI and tech innovations, the UK and US are exploring AI governance, quantum computing partnerships and joint digital security agreements.

Tony Hines: 15:59

So, all in all, I think the trade deals are good news for both parties and we'll have to see, as it progresses, how the practicalities work out of the arrangements that have been made. The US deal has to be filled out yet and the communication to the public has to be made clear and to Parliament, of course, in the UK, because there are many sceptics. In the meantime, the UK is continuing to negotiate trade deals with Australia, canada and the Pacific region, and they're focusing on energy and sustainability, looking at green hydrogen, offshore wind energy and carbon neutrality. They're also looking at supply chain resilience, reducing dependency on single country suppliers to boost UK domestic production. Now I think that's a very important and significant move to actually build resilience and digital economy expansion. Creating frameworks to secure data exchange and artificial intelligence collaborations is also a very good prospect. So, if we look at this in the round, these trade deals look promising, with key agreements boosting exports, job creation and business expansion.

Tony Hines: 17:17

I thought it was interesting this week to listen to Joseph Stiglitz and he, of course, is the Nobel economist and he said that any agreement with Trump isn't worth the paper it's written on. So that's a warning, I suppose, to people negotiating trade deals with the president. And he also said that he'll pick off the weaker nations first, because he's looking for divide and rule in any negotiations that he has, and of course, china, who he really wants to get at, will be last in the list. Now, whether that's true or not is another matter, but of course, it is important to realize that this president is unreliable and, as Stiglitz said, he's the master of uncertainty. He's created chaos and Stiglitz, remember, is an American economist. And the other important thing I thought he said in his comments were about Trump's criticisms that everybody has ripped off the United States with trade deals, when he said the reality is that the United States constructed the current world trade system over the past 80 years to benefit the large corporations in the United States, and he acknowledged the fact that it wasn't constructed for working people, it was constructed for big corporations.

Tony Hines: 18:42

Stiglitz was asked directly whether he thought that Keir Stalmer had acted as an appeaser in relation to his discussions with President Trump, and he said, yes, he thought that was the case and that it wasn't good to appease Donald Trump. Others have said that Britain's negotiating stance was one of appeasement, and that's where the question came from. Stiglitz went on to say that this appeasement is playing into Trump's strategy, which is one of divide and conquer, where he picks off the weakest to get what he wants. In defense of the Prime Minister's stance, I would just say it's a very difficult situation and he probably acted in the best interests of the United Kingdom at this point in time, but whether it's the right decision or not is another matter. So there we are, just an alternative view of how people are seeing the trade deals, and that's a very informed view from Joseph Stiglitz, of course, as a Nobel prize-winning economist.

Tony Hines: 19:54

And here on Chain Reaction, make sure you subscribe so you'll be first to know how these trade arrangements will affect your daily life and your business. Well, I think there's some good news, as we just about seal today's program, and it's just come through that India and Pakistan have agreed to a ceasefire, so hopefully that war that we thought might have started has come to an end. Let's hope it's a permanent end and things settle down. I have to agree that wars are often very senseless acts of aggression, and diplomacy should always be the first move. President Trump, I think, was instrumental in helping to agree that permanent ceasefire. Perhaps President Putin could do the same. It's about time that the war in Ukraine was at an end, and it would be good to see an end to the war in Gaza too. It's time that people lived in harmony rather than conflict.

Tony Hines: 21:13

Well, that's it for this week. I hope you've enjoyed Chain Reaction and I hope you've learned something you didn't know before listening. I'll be back with another episode of Chain Reaction next week, and I hope you'll join me then when we'll have some other things happening in supply chains and perhaps we'll learn about some of the positive things that are happening too. In the meantime, you can always stop by and listen to previous episodes of Chain Reaction. We've got over 300 episodes. We've got listeners in 95 countries, 1131 cities over six continents, and I think it's now over 11,000 listeners that we have. So come and join us then. Oh, and this week I did also learn that we are a top supply chain management podcast in Feedspot. So until next time, I'm Tony Hines. I'm signing off. Take care. Bye for now.