Ben Speedy: ASB's General Manager of Commercial Banking on businesses' uncertainty regarding the impact of Trump's tariffs

Kiwi business leaders fear the impact of Donald Trump's tariffs will be more severe than the impact of the Global Financial Crisis and the Covid pandemic. 

ASB and Talbot Mills have been surveying more than 300 business leaders, including CEOs and founders. 

Two-thirds of businesses are concerned about the impacts, including almost 80% of exporters. 

Meat, dairy and wine are expected to be hit harder, while the wool and seafood sectors are expected to fare better. 

ASB's General Manager of Commercial Banking, Ben Speedy, told Kerre Woodham that the results highlight that businesses are really struggling with the uncertainty that’s playing out in the environment at the moment. 

He says businesses not only need to navigate tariffs, but also the difficult business and economic environment in New Zealand. 

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Kerrywood and Morning's podcast from News
Talk SEDB.

Speaker 2 (00:11):
As I mentioned earlier, can we business leaders fear the
impact of Donald Trump's tariffs will be more severe than
the impact of the GFC and the COVID pandemic? Which
seems absolutely extraordinary? ASB and Torbert Mills surveyed more than
three hundred business leaders, including CEOs and founders, two thirds
of businesses are concerned about the impacts, including almost eighty

(00:34):
percent of exporters. Asb's general manager of Commercial Banking, Ben
Speedy joins me, now.

Speaker 3 (00:39):
Good morning to you, Good morning, Kerry.

Speaker 2 (00:42):
That does seem extraordinary. Do you think they are just
punch drunk after going through the GFC and COVID?

Speaker 3 (00:50):
What is really highlighting is that businesses are really struggling
with the uncertainty that's playing out of the environment at
the moment, and we only need to look at what's
happening with the tariffs and the changes that happen on
a daily basis, which provides more concern and really cements
the fact that there is a lot of uncertainty in
the world. And what's challenging for business is that they
not only need to navigate what's happening with tariffs. But

(01:12):
we've also got a difficult business and environment, difficult business
environment at the moment, which is providing challenges.

Speaker 2 (01:20):
But COVID was kind of uncertain, was it. Is it
just that this is day to day uncertainty rather than
month by month uncertainty.

Speaker 3 (01:29):
Yeah, it is. It's, you know, a combination of a
couple of things. Really. I mean, I think if we
ran to serve at the same time with COVID, we
would have got very similar responses. But you know that's
been in the past. But you know, the raality is
is that we've got the threat of tariffs. And whilst
he feels like there's some stability coming with the New
Zealand's position at ten percent, you know this is coming
off the back of a couple of years of very

(01:50):
difficult trading environment for New Zealand businesses.

Speaker 2 (01:53):
It was interesting too, I see that the exporters are
looking closer to home, so that they're looking at China, Australia,
Southeast Asia. Our doors opening to them saying look, we
need stuff because we're not getting it from America. Can
you supply us? Or are they going looking and knocking
on doors.

Speaker 3 (02:14):
There's probably two things there. I mean, businesses that trade
with US will continue to trade with us, and you
know they'll look to implement strategies that actually you know,
smooth the new relationship farm that they'll need to form there.
We've always had a good trade relationship with both Australia,
Southeast Asia and up into China, so it's actually all
about how can we take advantage of those previous relationships

(02:36):
and strengthen them. But also those countries are experiencing the
same thing with tariffs and so ultimately that will create
both purchasing opportunities for companies but also do markets to
export them too as well.

Speaker 2 (02:47):
So if you are in a relatively good position as
a business, you can see this as an opportunity for
growth for new markets.

Speaker 3 (02:57):
It definitely will, and there will be strong support that
happens through government around trying to open more doors. There's
also big opportunities to play out with our larger companies
in New Zealand and actually how they can open more
doors for New Zealand businesses and ultimately, you know, create
opportunities for the broader business segment as opposed to just themselves.

Speaker 2 (03:17):
Interesting though that more than according to the survey, more
than three quarters of key we exports expect the cost
of doing business with the US to increase by ten
percent or more in the next year. How is that
going to impact their businesses? Are they going to have
to pass that on through price increases or not grow
or cull start?

Speaker 3 (03:37):
Yeah, I mean the primary strategy for most companies at
the moment will be to pass that those costs through
to customers in the US. But ultimately, you know, there
are a couple of strategies that strategies that they'll look
to implement. I mean, part of that will be a
degree of cost reduction that will need to happen here.
There'll be investment around, you know, taking costs out of
supply chain. There will be a mix of where sales

(04:01):
go to in different different countries, so you know, there
is lots to focus on. I think the sort of
the challenging part that we've seen through the research is
that whilst two thirds of companies do understand the challenges
around tariff's, only ten percent of companies have actually made
changes to their business to be able to address this volatility.
And so that's what we really encourage businesses to do

(04:24):
is actually to start thinking through that strategy. And we
know that businesses that perform very well have high conviction
in their strategy and execute accordingly.

Speaker 2 (04:32):
How on earth do you accommodate the tariff increases and
also the fact that you don't know what the president
is going to do on a day to day basis,
I mean, how do you implement a strategy?

Speaker 3 (04:46):
Yeah, I mean it is difficult. I mean we've already
seen this morning, haven't we that still tariffs have been
increased from twenty five to fifty fifty percent, So.

Speaker 2 (04:54):
Your strategy that looked good yesterday might not look so
flash today.

Speaker 3 (04:59):
Yeah. I mean, what we know New Zealand's very good
at is that we produce very good products. We need
to confuc continue to focus around having premium products that
are able to absorb and and make these tariffs a
little bit less impactful with regard to the total cost
of the product. But ultimately it's you know, having a
lot of clarity with regard to you know, who is

(05:20):
your market in the US, what opportunities will exist elsewhere,
and how do you start making steps towards doing that?
And you know, what we really encourage customers to think
about is, you know, come and talk to us at
the bank around what is your strategy. There's lots of
new products that exist now to be able to support
trade into new markets. There's a lot of with regard

(05:41):
to so. Actually the Export Credit Office is a really
good example whereby what they do is they work with
the banks and customers to be able to support financing
of trade into new markets. And so they are wonderful
opportunities that that customers can benefit from by having a
good conversation with your bank. And then fundamentally, you know
what volatility also creates as you know a lot of

(06:03):
exchange rate pressure as well, so you know, having a
hedging strategy around effects is a really important thing to do.
So there are many steps that can be taken.

Speaker 2 (06:12):
Isn't hedging relatively expensive? You have to be in quite
a good position as a company before you can afford it.

Speaker 3 (06:20):
It's if you value certainty around what you want to do,
then I guess the costs and the eye of the beholder.

Speaker 2 (06:28):
Yeah, that's true, that's quite true. Interesting. Thank you very much, Ben,
do appreciate it. Ben Speedy, ASP's general manager of Commercial Banking.

Speaker 1 (06:36):
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