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A search for the truth behind an international drug smuggling plot.How are we going to unravel this all?From the BBC World Service, this is World of Secrets, Season 5, Finding Mr Fox.Search for World of Secrets wherever you get your BBC podcasts.
Hello and welcome to World Business Report from the BBC World Service.I'm Roger Hearing and on this edition, is Donald Trump going to reappoint the man who pushed protectionist trade policies during his first term in the White House?
And if the next president fulfils his promise to expel undocumented migrants, what will that do to the US economy?
We'll also look at how reinsurance is dealing with the aftermath of hurricane season in South Carolina and Florida, and why Sweden is moving to force those who have flash cars and bling jewellery to show how they afforded them.
It's a big step in fighting organised crime, in fighting the illegal economy.And you can speak to us about all this on WhatsApp, send us a message, or a voice note in fact.It's plus 44 330 678 3033.That's plus 44 330 678 3033.
Now we don't know what Trump will do in the White House when he gets there in January.Despite his pledges, it's really not clear what's going to happen.But he has begun to choose his team.
The Financial Times is reporting that he's asked Robert Lighthizer, his trade representative in his first presidency, to take over the role again.
He was a major player in the trade war with China and the renegotiation of the North America Free Trade Agreement, or NAFTA, with Mexico and Canada.Here he is speaking to our economics editor Faisal Islam back in 2020 about that approach.
has had a lopsided trade relationship with an awful lot of people.And changing that is something that we really have to do.And I think the president has done that.I wouldn't really say that we started a lot of trade wars.
I don't think that's accurate.I think if anything, we proved
that the old way of trade policy being largely dictated by large corporations, multilateral corporations, and that working people in developed countries just falling by the wayside, that that was a foolish, bad policy.
Robert Lighthizer.Well, Bob Davis is a reporter who covered US-China economic relations for decades in the Wall Street Journal, also author of the book Superpower Showdown, how the battle between Trump and Xi threatens a new Cold War.
He joins me now.Bob, thanks for being with us.Thank you.Robert Lighthizer, I mean, we know in a sense what he might be like if indeed he is appointed once more.Do you think his way of doing things might be different this time?
No, I don't think so.Lighthizer was merely reflecting what Trump wanted and putting into effect the kind of general ideas and the general sensibility that Trump had.He's a very, very good lawyer.
And I think he will do exactly what he did the last time, which is push to impose tariffs as a way to get other countries to change their trade practices.
Well, a number of economists have suggested that that kind of policy, at least on the kind of scale that Donald Trump's been talking about, 20% tariffs pretty much across the board, would actually bring pretty much chaos to the global economy.
Robert Lighthizer presumably doesn't see it that way.
No, he clearly doesn't see it that way.I think you have to take with a grain of salt the numbers that have been thrown out there.I mean, Trump talked about a 20% tariffs on everybody, and then 60% on China.I mean, maybe, maybe not.
I think what you can take away is that he will use tariffs as the first instrument of international economic policy, and that he will start by dealing with China. which was where they ended when Trump was out of office.
Yeah, because I mean, it was effectively a trade war.It wasn't described as such, I think, at the time, but it effectively was that.Is that going to be the central part, do you think, of a Trump trade policy then?
Oh, I think it'll be very, very similar tactics.I mean, look, when the last administration, when the Trump administration ended, they had negotiated a trade deal with China.China has lived up to certain parts of it, but didn't come close to buying
the amount of goods that China promised it would.Now, a lot of that was COVID and a lot of it was unrealistic in terms of how much China actually promised to buy.
But if you're Lighthizer coming in and you're Trump coming into office, once again, you have a trade deal that was largely unenforced under the Biden administration.
It's a way that, you know, that Lighthizer can start and Trump can start with China and say, look, you guys didn't You didn't carry out what you said you were going to do.
We got to talk and, you know, not 25 percent tariffs this time, but maybe 60 percent, maybe 100 percent.So I think that would be a very realistic way in which they'll start.
And what about Europe?Because, I mean, that's the other relationship in a way in the trade world.Would he want to do take a similarly tough line with the EU?
Oh, I think so.I don't think, I mean, Trump put China as, you know, sort of target number one.But the way he looks at the world is countries with whom, with which the U.S.has a large trade deficit are taking advantage of the United States.
And Germany has an enormous trade deficit.I mean, Germany's trade, I mean, trade surplus, the trade surplus is tied up with the rest of the European Union. But Germany in particular has a very large trade surplus, and that would also become a target.
Now, it's a very different kind of relationship, obviously, because China is a competitor, an enormous competitor of the US.Germany is an ally of the US.But still, yes, I would think clearly that
he would have a target on any country that has a very large and sustained trade surplus with the United States.
But isn't the effect of all this going to be inflationary?I mean, in a way, part of the reason perhaps one could say that Donald Trump got in was Americans' concern and anger at the way prices had risen.But isn't this likely to have a similar effect?
And I mean, someone like Robert Lighthizer would know that.
I'm not saying this will work out.Yes, if they actually put into effect 60% tariffs on a range of goods across the board, sure, it would have an inflationary effect, but they don't see it that way.
When Lighthizer says that tariffs, the inflationary effect of tariffs are greatly overstated, he means it.He thinks that way.So does Trump.They think, and it's possible after all, if you are selling cars to the United States,
And all of a sudden, there's a 40% tariff on it, or whatever the number is.You, Volkswagen, or BMW, whoever you are, can take that hit.I mean, it can come out of your profits.
It doesn't necessarily mean that you're going to raise prices 40% to the United States.Now, probably it would mean that.Probably consumers in the US would pay more.
If you're coming into it the way Lighthizer and Trump come into it, they don't necessarily think that the increased prices would be passed along to the U.S.consumers.
OK.Bob, thank you very much for being with us.Bob Davis there talking about the man who may be Donald Trump's trade representative when he takes over in the White House in January.We will see.
Meanwhile, let's talk about another policy area that Donald Trump has been pushing quite hard.We still obviously, as I say, don't know what he's going to do.
But while campaigning, he promised the biggest mass deportations of undocumented migrants in US history.
In an interview with NBC on Thursday, President-elect repeated the pledge and said his administration would have no choice but to carry out the deportations.How would this work at the sharp end?
Sheriff Mark Lamb polices the Arizona border with Mexico.
I was a sheriff under President Trump.I was a sheriff under this administration.Night and day difference.Once you start holding people accountable, securing the border, you're going to start to see a lot of these folks will go back on their own.
And then we can start to go after, I think we go after the criminals, people that are causing problems in communities, gang members, people that were vetted or weren't vetted.We find those.And I think really that's how you have to start.
Sheriff Mark Lamb in Arizona.But how practical is this approach and how would it affect the U.S.economy as well?Julia Gilat is Associate Director of the U.S.Immigration Policy Program at the Migration Policy Institute based in Washington.
Julia, thanks for being with us here on World Business Report.I suppose the issue here is how important are the people who might well be deported to the U.S.
economy as it works at the moment, the people who work in a lot of industries but simply wouldn't be there if this went through?
Unauthorised immigrants in the United States make up probably about 5% of the US workforce, but they're particularly concentrated in some important industries like agriculture, food processing, construction to build new homes, cleaning buildings, home health care for our ageing population.
So they contribute a lot to our labour force and to our economy in many ways.
And these jobs couldn't be just picked up by Americans who don't have jobs, for example.
Some of them could be.I mean, often these are jobs that are filled by unauthorized immigrants because they don't offer the wages or the working conditions that U.S.workers would like.
It's possible that if it were theoretically possible to deport all, you know, 11 plus million unauthorized immigrants in the country, some of these jobs might see higher wages.They might become more attractive for U.S.
workers, but they might also just disappear.The agricultural industry is using automation more where it can. And Americans might just eat less at restaurants and stay less at hotels if the prices went up because the wages went up.
So it's not clear that if the immigrants were removed, there would be jobs left over for US-born workers.
So what you're saying is if this policy went through initially, at that point, if these people were simply removed, I mean, America really wouldn't be able to function.
I mean, OK, as you say, restaurants perhaps not the key of it, but they'd certainly impact the economy.But farming is absolutely crucial, isn't it?
It certainly is.I mean, we already import a lot of our fresh fruits and vegetables from other countries, especially from Mexico.That goes right back to a tariffs conversation.
You know, those might be more expensive for American consumers in a high tariff world.But it's also not good for our food security as a country to be so dependent on other countries to grow the food that we eat.
Well, I suppose the argument from the Trump side will be it's not good to depend on people who actually are there illegally because they can be exploited with very low wages, of course, but also they simply taking up jobs that should go to other people.
That's certainly true.I think, you know, Americans across the aisle can agree that our immigration system is broken and that we need more legal ways for people to come and work and fill some of these critical industries.
We do have temporary work visas for agricultural workers and those are used increasingly heavily by growers.If you look at Project 2025, that calls for reducing the use of these visas.
I don't know if that is really in the cards in the next Trump administration, but there's some inconsistent, I think, arguments around visas for farm workers.
Yes, so Julia, this system as it sits at the moment that doesn't, as you say, really properly work, but it is very much certain areas of the economy that seem to depend on it.
If they have to depend on workers who have higher wages, presumably that is going to be potentially inflationary because they'll have to put their prices up.
I think that's right, and you know, American voters have been the most upset about, or mentioned the most, the cost of the grocery store.We've seen the cost of our food go up quite a bit.
If we're raising the wages for farmworkers, that's good for the farmworkers, but it's not good for our grocery bills.
And where will these people go if they are forced to leave, deported in effect?Will they go up to Canada?
I've certainly seen reports suggesting that Canada is getting ready for an influx, or over the border which they came, probably, which was down to Mexico.
Right.That's one of the implementation challenges that lies ahead for a mass deportation effort.Most of the majority of unauthorized immigrants in the United States are from Mexico.
But of course, in recent years, we've seen large numbers coming from Venezuela, Colombia, Ecuador, Cuba, you know, many countries in the hemisphere and even around the world.It's very difficult for the U.S.to remove migrants to these other countries.
It's expensive.And when we don't have good relationships like with the Venezuelan government, we're sometimes not able to remove people.
So that's a real barrier to the implementation of this unless we somehow convince Mexico to take people from countries outside of Mexico and accept them anyway.
And in practical terms, how would you even define who or find out who are the people who need to be deported?In practical terms, what would you do?Have police going from house to house?Is that the way it would work?
The way that most people today end up in deportation proceedings is if they come into contact with local police, if they're picked up for driving without a license, not using a turn signal, committing theft or something even more serious, and then they might be held for federal immigration enforcement agents.
It can also happen that the federal government knows that someone's here without status and they have been told to leave the country and they haven't.That involves an expensive operation to locate that person and then arrest them. and deport them.
You know, we can imagine scenarios where there's something more extensive, where there are checkpoints, or the use of the military, or, you know, people who are maybe being profiled based on how they look, and then having their documents checked.
But it's a little bit hard to imagine under current law, a clearly justifiable way of really expanding deportation. other than sort of resourcing the current system that exists that mostly relies on local law enforcement.
Julia, thank you for being with us.Julia Gillette there of the Migration Policy Institute in Washington, D.C.So we've talked about the economic impact potentially of some Trump policies that may come in when he goes into the White House in January.
But how are things working out at the moment?Well, U.S.share markets have given their verdict on the election result.It has to be said it's pretty much a thumbs up.I'm speaking now to Chris Lowe of FHN Financial in New York.
Chris, thanks for being with us again.The markets liked it, didn't they?
Hello, Roger.Yes, well, certainly the stock market did, the bond market not so much.In terms of stocks, I think the reason stocks have done so well since the election is a focus on two pieces of the Trump policy agenda.One is a proposed tax cut.
for corporations, for their operations here in the United States.The other is a concerted effort to reduce red tape, and that will include eliminating certain regulations.
But I think even more important than that is streamlining the regulatory application process.If you're building a manufacturing facility in the U.S.in just about any state at the moment, it can take 10 to 15 years to get permits.
And there is a plan to make that much easier, basically one application to a clearinghouse, which would speed up the process.And you can imagine how, if it's successful, that could lead to significant economic gains.
Yeah, so clearly the markets, as you said, liking that.The S&P 500 went over the 6,000 mark, actually close to its biggest weekly percentage gain in a year.I mean, also, I guess there are other things going on.
I mean, the expectations were further Fed interest rate cut, isn't there?
Yeah, that's right.The Fed cut rates this week, and it did, toward the end of the week, take some of the pressure off of market interest rates.
But nevertheless, when you look at 10-year treasury yields, which is the yield that's used by banks to set mortgage rates here in the US, it is almost three-quarters of a point higher than it was in the middle of September.
And that is a response to inflation fears related to what Julia was talking about, potential mass migration ending and to tax hike cuts.
See what happens if that comes through.We will find out about that.Mark, it's probably not quite so happy, I guess, on that basis.Chris Lowe, thanks so much for being with us.Chris Lowe of FHN Financial there in New York.
You're with World Business Report from the BBC.
An adventure of a lifetime.Sailing around the world.Delivering a renovated yacht thousands of miles around the globe, from Brazil to Europe.
It was an opportunity to gain a lot of experience.My path to my dream was beginning.
But for the sailors selected, this dream job quickly turned into a nightmare.
Rodrigo, the police are here.There's something on this boat.
Whoa.But then, no cocaine.And a key suspect was miles away.
Fox called the shots.He was in charge.
Brazilian police say that you are an international drug trafficker.Well, I'm not.
From the BBC World Service, World of Secrets, Season 5, Finding Mr Fox.Search for World of Secrets wherever you get your BBC podcasts.
World Service.Now just as Americans in the southeast of the country are clearing up after hurricanes Helen and Milton, Hurricane Rafael is barrelling in towards Florida at the moment after damaging Cuba.
The total damage so far in the hurricane season in the US is unclear.There are estimates as high as $100 billion or more if you take into account ripple effects like the closure of mines and factories which serve global supply chains.
A big part of that is going to be covered, of course, by insurance.And yet major insurance companies are likely to be able to absorb this without a problem.And that's thanks to something called re-insurance.Marketplace's Sabri Beratua reports.
Sarah Wells-Roland started the Village Potters Art Collective in Asheville, North Carolina, in 2011.
We probably teach approximately 80 to 100 students a week, and people come from all over the country.
Well, they did until Hurricane Helene sent 26 feet of water through the building and flooded all the way up to the second floor.
37 wheels, 17 kilns, tables, slab rollers.I mean, it's it's astronomical.
One of the very few silver linings here is that Wells Roland had insurance through FEMA, which is covering some of the damage.
We lost about $500,000 worth of equipment, and it's $166,000, but it's sure going to help.
Welles-Roland and her husband have set up a GoFundMe and are applying for grants and meanwhile trying to repair mud-caked motors in a borrowed barn.
We don't actually yet know exactly how much insurance companies are going to be on the hook for from the recent hurricanes, but there are estimates.
So for Hurricane Helene, we have put a range of $6 billion to $11 billion. And for Hurricane Milton, we've put a range of $30 billion to $50 billion.
Rob Newbold is president of the Extreme Events Solutions team at Verisk, which provides analytics to the insurance industry.And as huge as these numbers are, the biggest insurers will probably have no problem covering it.
There are different types of loss events for the insurance industry.One is a so-called earnings event.
An earnings event is the sterile term in insurance world for a disaster or situation that might reduce an insurance company's profits, might eat up a lot of the premiums they take in, but it's manageable.
Hurricanes Helene and Milton were that for big insurers.They're that big.It's possible for smaller insurers, though, they were another kind of disaster.The so-called solvency event.
That is when the damage is so bad, it affects the insurance company's actual viability as a business.And it is in these situations that insurance companies need insurance themselves.Insurance for insurance companies.
James Eck is a senior credit officer at Moody's Ratings.The word for this is re-insurance.Even FEMA buys re-insurance.It works because re-insurance only kicks in at a certain level of desperation.
Re-insurers are not constantly paying out to insurance companies. And reinsurance firms can spread out their risk by selling policies all over the world.
So a reinsurer might have property exposure in Florida, but it could also have exposure in Japan for earthquakes or typhoons.
The size of the global reinsurance market was $585 billion in 2023, according to Spherical Insights, and it's predicted to grow to $1.3 trillion by 2033.
Like for a lot of regular insurance, the premiums for reinsurance have been rising the past few years, in part because of the cost of the damage done by storms and wildfires.
Tim Zawacki is a principal research analyst at S&P Global Market Intelligence.
After 2022, when Hurricane Ian hit Florida, the 2023 reinsurance renewals were particularly challenging for the industry.
Reinsurance rates that insurance companies have to pay can go up as much as reinsurers say they need to.But insurance rates that we pay are often limited by state regulators, which puts some insurance companies in a bind.
North Carolina insurance companies recently asked for permission to raise home insurance rates by more than 50 percent.They probably won't get all of it, but they'll get some.
whatever the outcome of that filing happens to be, I think will have a meaningful impact on homeowners in the state.
Meanwhile, reinsurance companies have been less and less inclined to cover regular weather, leaving insurance companies to deal with it themselves.
So sometimes insurers will then cover less and less or they can't make the math work and then they just stop operating in certain places.At least one insurer in North Carolina said it was closing down shop even before the recent hurricanes.
Sabri Ben Ashur.Now, if you're in Sweden, you've got a flash car, a giant gold watch, or a huge yacht, look out.From now on, you might have to prove how you managed to afford them.
Sweden's passed a new law which will allow the police to seize luxury goods if their owners can't explain.The legislation's explicitly aimed at gang members.I spoke to Alex Maria Axia in Gothenburg, and he explained what the law would do.
Big change is that up until now you needed to be charged or at least formally suspected of a crime in order for police to be able to take your goods.
In this case the law changes if you possess some goods and you cannot explain how you got them or how you afforded them then they could take them. away even if you have not committed a crime.
But that doesn't mean obviously the average person on the street.
But say for example if the police stop someone who's driving around in a very luxurious car, who's got luxury clothing and luxury watches, but declare to the tax agency that they have no income at all, then it is suspicious.
But up until yesterday the police couldn't do anything about it.It was suspicious but they knew that most likely that person obtained money in a dodgy way, but they could not do anything about it.
And the reason why this is important is not so much for the economical aspect of
Taking these goods away, but it's it's a big step in fighting organized crime in fighting the illegal economy So if I have a luxury car and I can't immediately prove to the police or the courts How I managed to afford it that can be taken off me.
Well, I think that there is going to be a series of circumstances to be considered.There will be process in doing that too.There will be a judge involved.
It is a tool that the police can use in order to take action in cases that some people highly suspected potentially of being involved in organised crime, but there has not been any evidence.
Maybe they were the people that have not committed, executed a crime, or maybe they're the people behind the scenes, but there has been no proof that they are involved in this.
Well, Alex, tell me, is this a major problem?
If you're wandering around in Stockholm or Gothenburg or somewhere, would you be likely to see lots of people in suspiciously expensive cars or wearing suspiciously expensive gear and make an assumption that they are involved in gang crime?
Tough question to ask but expensive cars it is not something that I see on my day-to-day routes here in Gothenburg but that there are people that have a lot of money and make from the organized crime and also if you've got these luxurious you know luxury clothes and luxury watches and so on it's also a way of bragging and a way also of showing how cool it is to be a gangster
And maybe it's also a way of recruiting new people into criminality.
And that is also a problem, because you have really young teenagers, up to 13 years old sometimes, that get involved in serious crimes, recruited by gangs, with the sort of illusion that they will get into this sort of gangster world with money and luxury goods and so forth.
So definitely that is a big part of the image of a
of a gangster, having that flow of money and of luxury, and not having to work really hard for it, just having to, you know, sell some drugs here, do something there, you know, small things here and there.
They make it look like an easy way of making big money fast and living a good life.So if you take that away from them, they're definitely going to hit a bit of the image that they're trying to show.
We say gangster propaganda in some way, that is being flooded on social media, and that ultimately helps also recruiting, I would say.
I was going to say, I mean, is gang crime a really major problem in Sweden at the moment?
Well, it has been a major problem, and it's a problem in many aspects, because it's something that Sweden has not been used to.It's something that many experts still can't get their heads around, can't explain.
How come some kids that are really young raise their hand up and are willing to commit very serious crimes, including murders and intimidations?Even like a week ago, just not very far from where I'm standing here in central Gothenburg,
there was an explosion in a building.It was an act.No one got hurt.There was just some damage to the building, but it was an act to intimidate someone.And that happened at midnight, so people were still walking around.It was Halloween.
And this method, this idea of taking luxury goods, is something that was inspired by the USA and by Italy.Italy has had, obviously, a much more long battle against mafia and organized crime.And so some of these ideas, including also the one of
allowing witnesses to witness in court cases anonymously.These ideas have been inspired by the work that the Italian justice system has.
That was journalist Alex Macchia speaking to me from Gothenburg, and that's World Business Report.
An adventure of a lifetime.Sailing around the world.Delivering a renovated yacht thousands of miles around the globe, from Brazil to Europe.
It was an opportunity to gain a lot of experience.My path to my dream was beginning.
But for the sailors selected, this dream job quickly turned into a nightmare.
Rodrigo, the police are here.There's something on this boat.Whoa, a can of cocaine.
And a key suspect was miles away.
Fox called the shots.He was in charge.
Brazilian police say that you are an international drug trafficker.Well, I'm not.
From the BBC World Service, World of Secrets, Season 5, Finding Mr Fox.Search for World of Secrets wherever you get your BBC podcasts.
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