tv BBC Business Live BBC News May 24, 2018 8:30am-9:01am BST
this is business live from bbc news with ben thompson and sally bundock. trade tensions accelerate, as the united states says it's investigating foreign car imports. live from london, that's our top story on thursday 24th may. first it was steel and aluminium, now donald trump has suggested foreign cars could be the next target for possible us tariffs. he's started a national security investigation into vehicle imports. also in the programme: it's a $200 billion relationship. german chancellor merkel talks business with president xi jinping amid growing trade tensions with the us. and this is what the markets are doing in the first few minutes of trade. european car—makers have taken a hit, down about 2%,
following the warning that they could be hit with new tariffs. and we'll be getting the inside track on the toy industry. after a big player like toys‘r'us collapsed, how are some of its smaller rivals faring and turning a profit in a changing industry? we'll speak to the boss of the entertainer. as a string of high street restaurants bite the dust, today we want to know are meal delivery apps hurting your favourite restaurants? are you eating in much more than you eat out? let us know. just use the hashtag bbcbizlive. hello and welcome to business live. lots to get through. we start in the us where global trade tensions could be about to shift up a gear. the trump administration has launched a national security investigation into car and truck imports. it could lead to new us tariffs similar to those imposed on imported steel and aluminium back in march. to do that, they're relying
on an act from 1962. it's called the trade expansion act. it means the us can investigate whether vehicle and parts imports are threatening the health of the us car industry. it could mean a tariff on vehicles of up to 25%, similar to the tariffs on steel imports imposed earlier this year. and it could have huge repercussions. mr trump described the us car industry as "critical to the strength of the nation". around 12 million cars and trucks were produced in the united states last year while the country imported 8.3 million vehicles worth $192 billion. let's unpack this further. karishma vaswani is our asia business correspondent in singapore. this is an interesting turn of events in this trade war story, as it were, and it could have huge applications for the world's biggest
car—makers. applications for the world's biggest car-makers. absolutely. some of those car—makers are in this part of the world, japan. we did see an impact on japanese car—maker shares today as a result of that announcement. companies like toyota, honda, nissan, all under pressure today, which is not surprising. of course the japanese economy, the world's third—largest, relies heavily on exports to the united states, particularly car exports, and it is a big driver of growth for the country. just give you a sense of how important this export market is forjapan, passenger cars make up 30% of japan's total exports to the united states. we have already heard from japan's trade minister. he says that the tariffs under consideration are reportedly as high as 25%, and that would disrupt the global market and go against the rules of the world trade organisation. he also said it is extremely regrettable. a
of concern in this part of the world that yet again the us is looking to escalate, or appearing to look like it is escalating trade tensions with its major trading partners. when we heard about the steel tariffs, president trump got all the headlines but looking at the fine print and detail, there were exceptions and exemptions. could that happen here as well? it is anyone's guess, to be honest. when the steel tariffs first gaming, there were lots of negotiations behind the scenes by people like japanese. but it will be hard to see how quickly this particular set of ta riffs how quickly this particular set of tariffs comes into place, because it will have to go through the investigations that the commerce department is launching. the commerce secretary has already said there is evidence suggesting that there is evidence suggesting that the decades imports from abroad have eroded the domestic industry in the united states and he wants to find out exactly how that has happened
and how it has impacted national security. a lot of the analysts that i have been speaking with have said that imposing these tariffs could actually be an act of self harm, if you will, for american consumers. effectively prices would rise pretty much immediately. car—makers in the us would scramble to find suppliers outside of the countries that they are currently getting them from, and they would have to pay a lot more for this product as well. american ca i’s for this product as well. american cars would end up becoming more expensive and asian cars as well, sending their goods over to the united states would become more expensive as well. either way, americans effectively end up paying more for cars. one to watch. thank you very much. those proposed tariffs could well be on the agenda in beijing where the german chancellor, angela merkel, is holding talks with chinese president xi jinping. she'll be pushing china to further open up its economy to foreign investment. she may also find an ally against the increasingly protectionist policies of president trump.
germany and china have a huge trading relationship. germany's trade with china jumped to an all—time high of $218 billion last year, making china its biggest trading partner. that outstrips its trade with the us which is worth $200 billion. german carmakers are among the big winners. they are now the biggest foreign players in china with almost 21% of the car market. for luxury cars it's more than two thirds. mikko huotari is head of the foreign relations programme at the mercator institute for china studies. good to see you. from your perspective, listening to this in germany, how important is this trip right now for angela merkel? the contrast couldn't be more stark. on the one side you have the united states with new threats of tariffs for the core part of the industry,
and on the other side we have china promising to open up to reduce ta riffs promising to open up to reduce tariffs for imports of cars, particularly from germany, by the ist ofjuly. the timing of this visit is extremely important. it is clearly not business as usual with the context of the looming trade war oi’ the context of the looming trade war or the ongoing unfolding trade war between china and united states. germany is certainly trying to navigate in congregated minefield. we touched on there that angela merkel might find an ally in xi jinping, against protectionist policies of mr trump. we have established by that relationship is important but there is a natural ally there as well in terms of doing trade and business and excluding the us from that relationship. on the one hand that is true. and books are filled for german companies and it is probably going to be a record yearin is probably going to be a record year in 2018 for a lot of german companies in terms of their business in china. but on the other hand there has been a huge alignment of
interest with regard to food and market openings and intellectual property with washington. it is a complicated situation for angela merkel to navigate and she is not signalling to be totally on board with the chinese side, because we share the same concerns as the united states. what do you think would be the reaction of angela merkel and the european union if the us were to impose 25% tariffs on imported cars? it would be a major shockin imported cars? it would be a major shock in terms of our transatlantic relationship. we already have on our desks the steel and aluminium tariffs, and it is not to be expected that we will be exempt from these. and in addition to that, those threats of auto tariffs, it is a major congregated in our relationship. we will keep a close eye on it. —— it is a major complication in our relationship. thank you. let's take a look at some of the other stories making the news.
us cable tv giant comcast has confirmed it's preparing a new cash bid for the media assets of 21st century fox, setting up a bidding war with rival disney. fox has already agreed a $52 billion deal to sell its film and tv businesses to disney, and shareholders are due to vote on it this summer. the once—dominant media groups are all battling it our against the rise of streaming services like netflix. uber has pulled the plug on its self—driving car operation in arizona two months after a woman was killed in an accident involving one of its cars. however, the ride—hailing company said it hopes to resume tests in pennsylvania this summer and was committed to self—driving technology. deutsche bank has said it will slash its global workforce by 7000 as part of a restructuring effort to cut costs and boost profits. the bank said that it will lose up to 25% of staff in its equities and trading business. let's show you a quick flash of the
numbers. tokyo down for the third consecutive session. no surprises that it consecutive session. no surprises thatitis consecutive session. no surprises that it is the car—makers falling on that it is the car—makers falling on that news from washington that they could be considering that tariff on car imports. just a snapshot for you. renault and peugeot in france down 1% or 2%, but it is the german car—makers, particularly important for angela merkel as she meets xi jinping. dave and volkswagen all down, about 2.3% this morning. —— daimler. and now the european markets, which struggled yesterday following the trade talks with china. and also what could happen with the italian government following shenanigans there. disappointing data from france and germany in terms of the service sector. we will talk about that in more detail with our markets guest who is standing by for us. but now the details about the day ahead in wall street. on thursday it is all aboutjobs. the
wall street. on thursday it is all about jobs. the us wall street. on thursday it is all aboutjobs. the us labor department will likely reports that america's workforce is continuing to expand as initial jobless claims workforce is continuing to expand as initialjobless claims for workforce is continuing to expand as initial jobless claims for state unemployment benefits decreased to 220,000 last week, from 222,000 the week before. the data comes after the federal reserve indicated it was relaxed. and move one point by investors who think it will be less likely that the central bank will increase interest rates more than three times this year. gap is said to have benefited from an increase in sales of its old navy brand. they will wait and see if they can increase their impressive performance in the last quarter. joining us is russ mould, investment director at aj bell. it is fairly busy. we have mentioned some of the big movers. a lot of
pressure today in asia and europe, so no pressure today in asia and europe, so no big surprise. markets took a bit of a tumble yesterday as president trump's latest policy flip—flop became apparent and we still don't know where we stand on tariffs. the big question is how far will this go? china has made some moves, offering to cut their tariffs on imported cars, as an olive branch in the talks. the president has ignored that and is threatening an escalation of the dispute. 70 million cars a year, america, so a huge market and it is no surprise that car—makers are getting worried. stocks have tumbled and we will see what the mexican stocks will do later in the day. after talks, huge number of cars are made in mexico and imported into the united states, so and imported into the united states, $03 and imported into the united states, so a big challenge for that country as well. the north american free trade agreement between mexico, canada and us. yes. we had this same conversation in march with the steel talks. nobody wins from tariffs.
that is what the history books tell you. but president trump is adamant this will win him votes and that is what he is doing. politically he seesit what he is doing. politically he sees it as a win and i am sure he believes it is an economic win, but he must have a different history books to me. but everything from 1931 shows that nobody wins from ta riffs 1931 shows that nobody wins from tariffs in the end. georgia back, they are announcing thousands ofjob losses. —— deutsche bank. they have been trying to win in this business for a couple of decades. are they admitting defeat? yes, the shareholders are unhappy and the bank has expanded its balance sheets and it is now widely complex organisation with a volatile profit and loss account, particular because of the investment banking business, which is a huge capital. to get the regulator happy you need to hold a lot of cash to protect investors. those are new rules. yes. and looking from an investor's point of view, they will be delighted if deutsche bank is withdrawing from this business. it is volatile and
all the money goes on is cash bonuses when they do make money. investment banks are great like football clu bs, investment banks are great like football clubs, fantastic for employees but not good for shareholders and not inherently profitable, unless they have enormous scale like goldman sachs. we will talk about goldman sachs later. $200 million in a day. we will be back to talk through their stories. still to come: fun times. we speak to the owner of the uk's largest independent toy retailer and find out how his business is thriving, despite a downturn in the industry that saw toy‘r'us go under. you're with business live from bbc news. telecoms and broadband firm talktalk has slumped to a loss of £73 million for the last year. it's blamed that on the cost of a turnaround plan. but at the same time, the number of new customers jumped by 192,000
compared to a fall of 119,000 the year before. joining us now is karen egan, senior telecoms analyst at enders analysis. give us your take on these results, big loss but the customer base increasing? guess in many ways these are the best results for several quarters for talktalk coming in in line with guidance and they are executing their top priority which has been to grow the subscriber base. the cost of this growth has been quite staggering. in particular the disappointment on the broadband side is that although they are growing the subscriber base by around 4% the revenue they are getting is going down even more than that so they are still not quite managing to grow revenues. the cost
in terms of profitability of the greater subscribers is substantial. as far as top dog is concerned, it will never top any lists for customer service, we know it is frequently in the list for poor customer service but customers still find a reason to go back, is it still just about cost? find a reason to go back, is it stilljust about cost? as you say, talktalk don't do desperately well on customer service metrics but as pa rt on customer service metrics but as part of the reset a year ago they are spending more money on that which is part of the reason probability is down. they are looking to turn it around. they know broadband is not just looking to turn it around. they know broadband is notjust about price. in many ways a lot of these new companies a few years ago in telecoms were all about being cheaper than the alternative but because broadband is such an integral part of our lives people are looking for more than just cheap prices, they want to know it will be reliable and if anything goes wrong they have some they can talk to who will sort it out for them. they are investing in it, in the meantime
they are having to buy in customers to get them on board. thank you very much. just to say, talktalk shares up much. just to say, talktalk shares up quitea much. just to say, talktalk shares up quite a bit. yes, up 8.4% after revealing that customer numbers were back up. you're watching business live — our top story trade tensions accelerate as the united states says it's investigating foreign car imports. donald trump has suggested foreign cars could be the next target for possible us tariffs — he's started a national security investigation into auto imports. a quick look at how markets are faring. no surprise that car—makers are falling all around europe, dropping down 1—2%. you might think selling toys
was a simple business. work out what kids want, sell it at a reasonable price and that's it. well, the demise of toys'r'us earlier this year proves it's anything but simple. it was plagued by a large amount of debt, and a victim of the internet age — especially amazon. in fact, since 2012, the number of toy stores in the uk has fallen by over 11%. but toy sales via the internet have soared by more than 60%, that's now over a third of the market. but not all bricks and mortar toy shops have been struggling. the entertainer is the largest independent toy retailer in the uk with 45 stores on high streets and shopping centres. so it's had to think differently to stay profitable, including its website, click and collect services; giving staff profit—related bonuses; and cutting down ‘back of house' stock. i'm nowjoined by gary grant, founder and managing director
of the entertainer. welcome to the programme. and you brought in some toys. some of the bestsellers. have spoken before about how you are doing it differently, i have been to some of your stores and it is differently. we have been led to believe by the demise of toys ‘r' us and others that you cannot make money on the high street but you are the perfect example that if you get it right you can. yes and the entertainer works well in high streets and in shopping centres so we are in easy to get to places. i think it's about the environment in the store and customer service. we endeavour to have the latest products at their pricing with good customer service. we have said that sounds simple but it's not. you are competing not only with the likes of amazon, talking about big toys and boxes, it's a sort of things you want to get delivered but there is a fast turnaround to get these things from china they are traditionally made there, to their shop. most items are
made in china, there is about a 16 week lead time so when children decide they like a particular range and demand exceeds availability it ta kes to and demand exceeds availability it takes to replenish the toys. but overall the market is doing well, the entertainer is doing well. i think there was a stores and 25 more opening as landlords backfill shopping centres with some of the stores closing. you are getting an amazing deal? they must be biting the hand of? it is a partnership, it's not just by the hand of? it is a partnership, it's notjust by the landlords losing everything to the retailer. what we are trying to do for our staff and business is built a business sustainable over many yea rs. business sustainable over many years. when you say it's about the experience in the store, unpack that, in the last 48 hours we have had news of marks & spencer having to close, tesco direct closing down,
the online delivery of non—food items, all retailers having to think strategy but you just seem to be growing exponentially. when you talk about the experience in the store what do you mean? i hope when you go m, what do you mean? i hope when you go in, for those of you who remember old—fashioned retailing in, for those of you who remember old —fashioned retailing we in, for those of you who remember old—fashioned retailing we are an old—fashioned retailing we are an old—fashioned retailer in a modern world, we greet you when you come in. but we are more than a functional seller, we have toys out of boxes, we like to engage with children so maybe some children will play with lego, others with other things, it's a fun place to be. play with lego, others with other things, it's a fun place to belj have things, it's a fun place to be.” have got three little boys and your chain of stores is very prevalent where we live in buckinghamshire because that is where you live and where you started it all and my boys are where you started it all and my boys a re often where you started it all and my boys are often in your stores and it's true, iam relaxed, they are often in your stores and it's true, i am relaxed, they can run around and play, not smash, we're not been hounded or harassed, and i do like that. the boys stick around
and play with stuff. thank you. you touched on the issue of rent and landlords, it's a lot about landlords, it's a lot about landlords and retailers negotiating that at the moment, it's not a level playing field. it sets up a them versus us playing field. it sets up a them versus us then, you want less money... it is because when we negotiate with landlords generally speaking they tell us what the tone of the location is and it's what previous people have paid. you join in with the wave of the tone and then it's changed by doing a cva, but the element in the room is not the rent, it's the business rates. that's the biggest bloc to us opening more stores. briefly, will you miss toys ‘r' us? opening more stores. briefly, will you miss toys 'r' us? i am sad they are going but it will benefit our business. thank you very much, every cloud. in a moment we'll take a look
through the business pages but first here's a quick reminder of how to get in touch with us. stay up—to—date on the bbc business live page, insight and analysis from our team of editors around the globe. and we want to hear from you as well, get involved on the bbc business live web page will you have been in touch, we asked at the beginning of the programme for your views on the apps which enable your views on the apps which enable you to get food delivered to your home, to what extent is that affecting your behaviour, are you going out less, that kind of thing? it is interesting, because if you orderfrom the apple it is interesting, because if you order from the apple us and it comes from the restaurant on your high
street, but it comes from dark kitchens on industrial estates. one person saying that the chain may work on is getting more interest to get football but they are not warned ready. another says there is nothing like the atmosphere of eating out in a nice restaurant. oliver says i bet the chefs are laughing, the father away customers are, the less complaints. not necessarily the case! we had a chef getting in touch you said it is tough because he cannot predict many orders will get. when you have a restaurant with so many seats you can figure out the maximum but when you have people ordering from all over... we have an interesting story coming from bbc news beat online, facebook once you're naked photos to stop revenge pawn. that sends a shiver down my spine.
not a problem i am likely to encounter, but if you are in the throes of passion and take a photograph without any clothes on, then things can go sour, this is to stop people sending that naked photograph and publishing it all over at social media. facebook has had a lot of bad press for breaching privacy but here it is trying to help. people find it strange that you send it to facebook? you have to send it to facebook yourself, so somebody will see it, it could be a select number of employees, they give the photograph a code, delete the photograph and keep the code. so if somebody else tries to send it to social media it will be blocked and it will not be displayed. very interesting, well done for explaining it in 20 seconds. someone's got an interesting job at facebook! that said, we will see later. some warm weather to come over the
next few days, but today we're going to throw something else into the forecast, thundery showers which have moved an overnight across southern parts of england and south wales, they will stick around for much of the day, further north looking at the sunshine continuing. you can see here on the pressure start, this weather feature you can see here on the pressure start, this weatherfeature moving in from france, through the morning which brought us those showers, those will continue into the afternoon. elsewhere some low cloud, yesterday, it will burn back towards the coast as we go into the afternoon. the east of scotland will remain cloudy, quite misty and as a result quite cool. further north and west across scotland and much of northern england looking at warm sunshine. across wales and into southern england showers becoming a bit more isolated but still one or two could be heavy on thundery, sunshine developing across the midlands and east anglia. despite
cloudier skies and rain across the south it will feel warm and maguey. temperatures in the high teens and 20s. through tonight the showers becoming widespread across the midlands, wales and southern england, more coastal fog and low cloud moving its way further inland. temperatures overnight down to about 7-14. temperatures overnight down to about 7—14. during friday it could be a wet start to the day across northern england, the midlands, through wales and eastern england, some heavy and thundery rain. further south cloud breaking up to give sunny spells, sunshine across much of northern england, scotland also an northern ireland. temperatures into the 20s but even across england and wales it will be a warm and muggy day. it will be a warm and muggy day. it will get warmer into the weekend, the aircoming in will get warmer into the weekend, the air coming in from the mediterranean, some of it from the east and when it comes from the east and south that's a very warm
direction at this time of year. temperatures on the rise but worth it weather fronts being thrown up and it's these weather fronts which will produce moisture, energy and that will bring in some thunderstorms. the risk of more thunderstorms. the risk of more thunderstorms over the next few days into bank holiday monday, those temperatures will be rising, many other into the mid—20s, could be a size 20 seven, 28 in one or two spots on hello. it's thursday. it's nine o'clock. i'm chloe tilley. welcome to the programme. a decade of misery is being forecast for the nhs unless taxes rise to historically high levels to pay for more investment in the health service. we are going to see almost doubling of the number of people aged over 85 over the next ten to 15 years. we will not have the services in place to stop them going in and out of hospital as they are at the moment. a new report by an influential group of economists says each household could have to pay an extra £1200 a year in tax. would you be willing to pay that if you knew it would be used to pay for the nhs?