New Zealand exporters to the United States might be at greater risk of being disrupted than those exporting to China, according to one trade expert.
Despite talk about the need to diversify away from China due to geopolitical differences, it may be the United States that hits Kiwi businesses with tariffs intended to shut them out.
Stephen Jacobi, the executive director of the NZ International Business Forum, said a second Trump presidency was a “sword of Damocles hanging over the global economy”.
Speaking on the Of Interest podcast, Jacobi said the 45th president had imposed “enormous tariffs” during his first term and plans to go further if elected for a second time in November.
“This time, the big thing is the 10% tariff he keeps talking about. If a 10% tariff was imposed on New Zealand exports to the United States across the board, a lot of trade would be killed off,” he said.
As part of his election campaign, Donald Trump has proposed a 10% tariff on all imports and a 60% tariff on imports from China. This would go much further than what he did after 2016.
Earlier tariffs of between 10% and 15% were applied to a specific list of goods, which were largely targeted at China but also included various other countries.
New Zealand was subjected to a 15% tariff on steel and aluminium, for example. This was bad enough, but a blanket tariff would hit much more important exports such as beef and dairy.
Jacobi said these sectors already faced strong competition from local US producers and there was also a risk that some international competitors might be able to dodge the tariff.
For example, Australia was exempted from the steel and aluminium tariffs because it had a free trade agreement with the United States — which NZ does not have.
“Go figure. This is the country that won't give us a trade agreement,” Jacobi said.
“I spent 10 years of my life trying to argue for an FTA with the United States and thought we had it in TPP, only to see them leave when President Trump got elected”.
It was this lack of guaranteed market access that makes the United States look like a riskier bet than China, where NZ does have a free trade agreement.
“Look, it's not always easy doing business with China, let's face it. But they have opened the market to us and it has transformed our economy”.
Chinese consumers were often the only ones who wanted to buy Kiwi products at the volumes and prices businesses require, he said.
Jacobi said he was not supportive of efforts to shift trade away from China, or join the AUKUS security agreement — which was clearly directed at China.
“Well, the risk [of disruption] is greater from the United States, potentially with a change of government”.
*You can find all episodes of the Of Interest podcast here.
21 Comments
No to Hans, no to you too.
Trump is a symptom - not a cause.
The thing he's a symptom of, is humanity hitting the Limits to Growth. Globalism has peaked, and we are seeing a gradual recoiling. Totally unsurprising - and SOME of us have been pointing the inevitability of this out, for some time.
That means Asia is not a goal either - we need to think about being self-sufficient. And quickly.
Because by the time the Limits to Growth dust settles, 'local' will be all there is.
Of course if the USA imposes blanket tariffs on their imports from us we would return the favour by imposing blanket tariffs on their exports here - which would - in the case of technical goods - drive us even fuurther into expanding trade with China. Sttrange world..
it's not always easy doing business with China, let's face it. But they have opened the market to us and it has transformed our economy
The US at least will tell you the tariffs, China does it differently, for example, my suppliers will charge me more to take delivery inside China than if I take delivery in NZ. As for 'opened the market to us', try asking the dozens of infant formula brands that were stopped exporting from NZ to China. The free trade is only for as long as it suits them - there is always a rule/registration to lean on when it doesn't.
Chinese consumers were often the only ones who wanted to buy Kiwi products at the volumes and prices businesses require
That our "businesses require"? In the case of a farm, most of that requirement comes from debt servicing. Maybe we should shift our model away from debt and then find we can sell for less and into additional markets.
"New Zealand was subjected to a 15% tariff on steel and aluminium, for example."
Are you sure its not NZ is subject to a 15% tariff? ie it's still in existence.
The US is circling the wagons around NAFTA anyway. Trump would just put that move on steroids... in a whacky, erratic way.
As an insignificant trading nation in a 'post-globalisation' world we have no choice but to do our best to be friendly with everybody. My concern is whether we have the talent within MFAT (inter alia) to be able to pave the way.
apizap, I think along the same lines. As "an insignificant trading nation" we need to be very careful how we tread into the future. We are Acually living between the boundries of Asia and Nth America . And really Nth America has very little to offer except military bases. They have little interest in buying our stuff and that goes for the Europe area as well.
As I have said before we are an Asian Nation and our future is with that.
Quelle horreur - a leader who acts in the best interests of his country's citizens and not the citizens of foreign nations. How "anti-woke".
Its not 2016. Trump is not an unknown quantity. The USA not only survived four years of a Trump presidency, but it did rather well. For all the condemnation of Trump's China Tariffs, Biden elected not only to continue them but to expand them. I'm quite sure the USA will survive another 4 years of Trump, and would not be surprised if things work out well enough that the next incoming President simply continues his policies as well.
The way I see it, this election is quite a simple one. Americans have experienced 4 years under Trump, and 4 years under Biden. All they need to do is ask themselves "under which President was I better off?"
Say you had a mole on your left cheek, since you were a nipper. Say you believed the mole was responsible for your getting bigger every year. Your rationale would have been vindicated - until you stopped growing.
Same here - don't blame either persona, for the physical trajectory we are all on. It is tending 'worse' per time. So from here on, the incumbents will be voted out (every year will be worse than the last).
Cause, causal.
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