March 4, 2025 • 11 mins
Divisions are deepening between the US and other western countries over Ukraine, and now trade.
The US President's slapped a 25% tariff on all Canadian and Mexican imports, and 20% on some from China.
Canada's responded by imposing the same amount back, which Donald Trump says he'll match again.
Former Trade Minister and Ambassador to the US Tim Groser told Kerre Woodham countries like Canada are fighting the US on trade, while trying to form closer security ties.
He says that the two strategies are inherently in conflict with each other – you can’t start a trade war with someone you want to curry favour with.
Groser told Woodham he argues that even if Trump was next to them right now, he also wouldn’t be able to say what the end game is.
He says it’s difficult to sift through and find the real logic of the situation, resulting in unprecedented uncertainty.
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Episode Transcript
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Speaker 1 (00:06):
You're listening to the carry wood of morning's podcast from
News Talks, he'd be.
Speaker 2 (00:11):
Canada, Mexico, and China are pledging to fight against America's
new tariffs. Donald Trump has pushed ahead, as promised, with
imposing twenty five percent tariffs on all imports from Canada
and Mexico and twenty percent tariffs or duties on some
Chinese imports. All three countries are introducing retaliatory tariffs and duties.
(00:35):
To discuss how this will affect the global economy and
indeed those of us In New Zealand, I'm joined by
former trade minister and former New Zealand Ambassador to the
US Tim Grosser. Good morning to you.
Speaker 3 (00:49):
Sorry, what's good about it?
Speaker 2 (00:50):
Well, Q, I was just going to say, I bet
you glad you're not there now.
Speaker 4 (00:57):
Well, I mean it is if for once, Cary justifies
the cliche a poly crisis, I mean, yeah, just enumerate
the key elements in this poly crisis. You have the
poly crisis you've just been referring to on trade, and
we should focus on that. You have at the same time,
actually the more serious immediate poly crisis in terms of
(01:17):
the security of Europe and the argument over Ukraine. But
you also have still got a crisis unfolding in the
Middle East, and you have domestic crisis at the center
of this in the United States over extraordinary, unprecedented moves
against the federal government bureaucracy. At the same time, the
(01:43):
massive difference involved in the Continuing Resolution, which provides budgetary
support to the United States. And you have all of
this around this gentleman, the President of the United States,
who appears to adore chaos.
Speaker 3 (01:57):
Well, he's certainly got that.
Speaker 4 (01:59):
So and there's some very important linkages here between these crises.
For example, the most acute difficult one is involves what
on earth is Canada and Europe, who are at the
center of the trade retaliation issue at the same time
trying to bring the United States frankly to its census
(02:20):
in terms of not walking away from European security. And
how do you marry those two strategies because they are
inherently in conflict, one with the other. You can't start
a trade war with somebody you want to curry favor with.
Speaker 2 (02:35):
I suppose the Italian one of the Italian ministers who
was quoted said we could plicate Trump by promising to
buy more defense equipment as part of our commitment to
increasing security in Europe, rather than relying on the US.
That would be a way to upset the trade.
Speaker 4 (02:57):
There's a whole variety of things they can do, and
I wouldn't, although however disgusting it might seem, given his
heroic stature over the last years, I wouldn't take Zelenski's
resignation off the table just because the Europeans say it's unthinkable.
Speaker 3 (03:13):
So there's a whole lot of things that can happen.
Speaker 4 (03:15):
But let's just sort of disaggregate this, first of all
into the trade issue, which is the immediate issue for
New Zealand. So there's no question there's going to be retaliation.
So the question is whether this mini trade war will
accelerate and what will be the implications for New Zealand.
At the same time, one could mean there's so much
(03:38):
speculation around here.
Speaker 3 (03:40):
I've been arguing in various interviews.
Speaker 4 (03:42):
I've been giving that even if we had President Trump
beside us right now, he could not tell us what
the endgame is because I don't think they really know
where this is going to end up. For example, on trade,
this is completely confused by the issue of Fenton or
methamphetamine flows into the United States. Of course, every reasonable
(04:07):
person in our country would agree that that was a
worthwhile objective, but stopping smuggling, as we know from our
own efforts, is an enormously problematic issue. So he is
still linking retaliat massive tariffs on Canada and on Mexico
and on China on the basis of the fentanyl and
(04:29):
metamphetamine issue. But at the same time he's also talking
about using this to try and stimulate domestic production in
the United States.
Speaker 3 (04:39):
So, I mean, we just.
Speaker 4 (04:40):
It's very difficult to sift through and see what the
real logic of this is, and therefore we are into
unprecedented uncertainty.
Speaker 3 (04:50):
That's the reality.
Speaker 4 (04:52):
And when you think about can you just imagine the
United States as they did three days ago, voting on
the Security resolution with respect to Ukraine, voting with Russia,
North Korea, and Iran. They didn't even join China sensibly
abstained on the issue.
Speaker 2 (05:09):
It's interesting when you talk about stimulating production. I think
the last time we had the tariff for the trade
war before COVID interrupted it, news US production could not
keep up with the baseball bats and the sneakers and.
Speaker 4 (05:24):
The like that precisely carry and the best. Instead of
talking in general terms, let me use an example that
has been brilliantly analyzed by the Wall Street Journal.
Speaker 3 (05:37):
Aluminium.
Speaker 4 (05:38):
So, aluminium is a vital input to low tech industries
in the United States, like soft drink cans through to
the most sophisticated high technology products right across the American
economy and well over one hundred and fifty thousand Americans
jobs depend on security of supply of aluminium. Now, sixty
(06:01):
percent of the aluminium consumed in the United States comes
from imports, and Canada is the major source of it.
Now they cannot substitute domestic production of aluminium because there
isn't any well, I mean, there is the fact that
domestic production provides of consumption in the US, but apparently
it takes on average twelve years to.
Speaker 3 (06:23):
Build a new smelter aluminium smelter.
Speaker 4 (06:26):
So the idea that suddenly you can cut the head
of Canada's huge exports of alument, which are all are
byproducts of extraordinary renewable hydro electric power, because you use
monumental amounts of electricity and producing aluminum. That's the reason
we have ty point, which.
Speaker 2 (06:45):
I was just going to say, could we stay depend
and provide a little bit.
Speaker 4 (06:49):
Well, well, last time when I was in the ambassador
in the United States, they imposed.
Speaker 3 (06:55):
Tariffs and using aluminum. So the point is.
Speaker 4 (06:58):
I'm trying to make there is complete incoherence here. They
cannot possibly expect US industry to respond by increasing production
of a thing like aluminium.
Speaker 3 (07:10):
We're talking about a lead time.
Speaker 4 (07:11):
Of over a decade, so all of this is going
to be I don't think there. I don't think there
is a master mind behind this. I think he's relying
on his instincts and he just throws everything up in
the air and let's see where it lands.
Speaker 3 (07:27):
That's my interpretation.
Speaker 2 (07:29):
How on earth do you deal with someone like that
who could just as easily tomorrow change his mind.
Speaker 4 (07:35):
Well, that's precisely what you do. Is I think the
European leaders, the larger countries than US, have done exactly
the right thing, a graduated response.
Speaker 3 (07:44):
So what.
Speaker 4 (07:46):
Europe and Canada Mexico have done is put in and
China limited retaliation with threats of further retaliation, because I
think they've worked it out exactly as our discussion has
gone and realized that reality may reimpose itself, and if
the stock market, which has went down forget the figure
(08:06):
I think two or three percent yesterday.
Speaker 3 (08:10):
You know, if that starts to.
Speaker 4 (08:12):
Intrude on the political consciousness of the administration. We could
yet get back to sanity, but there'll be a lot
of collateral damage done in the process.
Speaker 2 (08:24):
It's interesting too, because the business community within the US
were really going at Biden saying, you've got to lift
the tariffs, because it's all very well to say Trump's
mayt's putting tariffs on China. Well, Biden didn't lift them
because China didn't come close to meeting the pledge it
made when Trump was president, So under Biden they didn't
get close to that commitment of spending either, so he
(08:46):
kept the tariffs on. The business community was at Biden
saying you've got to lift them. How are they going
to respond to the Trump administration going still further?
Speaker 4 (08:57):
I think that depends on what happens out there in
the real economy. The head of either FORD or GM
said a week ago, we could close down production within
two weeks.
Speaker 3 (09:09):
So you know, if I mean.
Speaker 4 (09:12):
What I feel is there are guardrails around the president.
Speaker 3 (09:18):
They are both they are legal guardrails.
Speaker 4 (09:22):
They are political guardrails, and there are economic guardrails. But
it takes time for the guardrails to impose somebody who
thinks they are invincible. So the judicial guardrails, they could
take a year. You know, the complicated legal process of
all the challenges to these multiple executive orders that will
(09:43):
wend its way through the court in court system of
the United States in slow time.
Speaker 3 (09:47):
That's not going to help us in the next month
or two.
Speaker 4 (09:50):
The political guardrails, actually, although they are technically out there
two years from now because of the midterm elections. When
you know this wayfir thin majority that the Republicans hold
in the House is up for reelection across all four
hundred and five four seats. But I don't think that
means that the political implications of this don't feed through quickly,
(10:14):
because what you will see is if people get thrown
out of work through tariffs, as they will in places
like Michigan, you will see great nervousness on the part
of Republican House members and senators who are up for
the election, and that'll start to feed through well well
before two years from now. But finally, on the economic side,
(10:36):
I mean if we lead to total disruption of global
supply chains, and it feeds through into increasing moments about
the United States economy weakening because of consumer sentiment turning south.
I mean that could impact rather more quickly than the
conversation you and I are having would suggest.
Speaker 2 (10:58):
Brilliant, very very good to get your insights. I really
appreciate it. Thank you so much for your time. That
is our former US New Zealand Ambassador to the US
and former trade minister for seven years under the Key government,
Tim Grosser.
Speaker 1 (11:14):
For more from Kerry Wood and Mornings, listen live to
News Talks a B from nine am weekdays, or follow
the podcast on iHeartRadio.
You're listening to the carry wood of morning's podcast from
News Talks, he'd be.
Speaker 2 (00:11):
Canada, Mexico, and China are pledging to fight against America's
new tariffs. Donald Trump has pushed ahead, as promised, with
imposing twenty five percent tariffs on all imports from Canada
and Mexico and twenty percent tariffs or duties on some
Chinese imports. All three countries are introducing retaliatory tariffs and duties.
(00:35):
To discuss how this will affect the global economy and
indeed those of us In New Zealand, I'm joined by
former trade minister and former New Zealand Ambassador to the
US Tim Grosser. Good morning to you.
Speaker 3 (00:49):
Sorry, what's good about it?
Speaker 2 (00:50):
Well, Q, I was just going to say, I bet
you glad you're not there now.
Speaker 4 (00:57):
Well, I mean it is if for once, Cary justifies
the cliche a poly crisis, I mean, yeah, just enumerate
the key elements in this poly crisis. You have the
poly crisis you've just been referring to on trade, and
we should focus on that. You have at the same time,
actually the more serious immediate poly crisis in terms of
(01:17):
the security of Europe and the argument over Ukraine. But
you also have still got a crisis unfolding in the
Middle East, and you have domestic crisis at the center
of this in the United States over extraordinary, unprecedented moves
against the federal government bureaucracy. At the same time, the
(01:43):
massive difference involved in the Continuing Resolution, which provides budgetary
support to the United States. And you have all of
this around this gentleman, the President of the United States,
who appears to adore chaos.
Speaker 3 (01:57):
Well, he's certainly got that.
Speaker 4 (01:59):
So and there's some very important linkages here between these crises.
For example, the most acute difficult one is involves what
on earth is Canada and Europe, who are at the
center of the trade retaliation issue at the same time
trying to bring the United States frankly to its census
(02:20):
in terms of not walking away from European security. And
how do you marry those two strategies because they are
inherently in conflict, one with the other. You can't start
a trade war with somebody you want to curry favor with.
Speaker 2 (02:35):
I suppose the Italian one of the Italian ministers who
was quoted said we could plicate Trump by promising to
buy more defense equipment as part of our commitment to
increasing security in Europe, rather than relying on the US.
That would be a way to upset the trade.
Speaker 4 (02:57):
There's a whole variety of things they can do, and
I wouldn't, although however disgusting it might seem, given his
heroic stature over the last years, I wouldn't take Zelenski's
resignation off the table just because the Europeans say it's unthinkable.
Speaker 3 (03:13):
So there's a whole lot of things that can happen.
Speaker 4 (03:15):
But let's just sort of disaggregate this, first of all
into the trade issue, which is the immediate issue for
New Zealand. So there's no question there's going to be retaliation.
So the question is whether this mini trade war will
accelerate and what will be the implications for New Zealand.
At the same time, one could mean there's so much
(03:38):
speculation around here.
Speaker 3 (03:40):
I've been arguing in various interviews.
Speaker 4 (03:42):
I've been giving that even if we had President Trump
beside us right now, he could not tell us what
the endgame is because I don't think they really know
where this is going to end up. For example, on trade,
this is completely confused by the issue of Fenton or
methamphetamine flows into the United States. Of course, every reasonable
(04:07):
person in our country would agree that that was a
worthwhile objective, but stopping smuggling, as we know from our
own efforts, is an enormously problematic issue. So he is
still linking retaliat massive tariffs on Canada and on Mexico
and on China on the basis of the fentanyl and
(04:29):
metamphetamine issue. But at the same time he's also talking
about using this to try and stimulate domestic production in
the United States.
Speaker 3 (04:39):
So, I mean, we just.
Speaker 4 (04:40):
It's very difficult to sift through and see what the
real logic of this is, and therefore we are into
unprecedented uncertainty.
Speaker 3 (04:50):
That's the reality.
Speaker 4 (04:52):
And when you think about can you just imagine the
United States as they did three days ago, voting on
the Security resolution with respect to Ukraine, voting with Russia,
North Korea, and Iran. They didn't even join China sensibly
abstained on the issue.
Speaker 2 (05:09):
It's interesting when you talk about stimulating production. I think
the last time we had the tariff for the trade
war before COVID interrupted it, news US production could not
keep up with the baseball bats and the sneakers and.
Speaker 4 (05:24):
The like that precisely carry and the best. Instead of
talking in general terms, let me use an example that
has been brilliantly analyzed by the Wall Street Journal.
Speaker 3 (05:37):
Aluminium.
Speaker 4 (05:38):
So, aluminium is a vital input to low tech industries
in the United States, like soft drink cans through to
the most sophisticated high technology products right across the American
economy and well over one hundred and fifty thousand Americans
jobs depend on security of supply of aluminium. Now, sixty
(06:01):
percent of the aluminium consumed in the United States comes
from imports, and Canada is the major source of it.
Now they cannot substitute domestic production of aluminium because there
isn't any well, I mean, there is the fact that
domestic production provides of consumption in the US, but apparently
it takes on average twelve years to.
Speaker 3 (06:23):
Build a new smelter aluminium smelter.
Speaker 4 (06:26):
So the idea that suddenly you can cut the head
of Canada's huge exports of alument, which are all are
byproducts of extraordinary renewable hydro electric power, because you use
monumental amounts of electricity and producing aluminum. That's the reason
we have ty point, which.
Speaker 2 (06:45):
I was just going to say, could we stay depend
and provide a little bit.
Speaker 4 (06:49):
Well, well, last time when I was in the ambassador
in the United States, they imposed.
Speaker 3 (06:55):
Tariffs and using aluminum. So the point is.
Speaker 4 (06:58):
I'm trying to make there is complete incoherence here. They
cannot possibly expect US industry to respond by increasing production
of a thing like aluminium.
Speaker 3 (07:10):
We're talking about a lead time.
Speaker 4 (07:11):
Of over a decade, so all of this is going
to be I don't think there. I don't think there
is a master mind behind this. I think he's relying
on his instincts and he just throws everything up in
the air and let's see where it lands.
Speaker 3 (07:27):
That's my interpretation.
Speaker 2 (07:29):
How on earth do you deal with someone like that
who could just as easily tomorrow change his mind.
Speaker 4 (07:35):
Well, that's precisely what you do. Is I think the
European leaders, the larger countries than US, have done exactly
the right thing, a graduated response.
Speaker 3 (07:44):
So what.
Speaker 4 (07:46):
Europe and Canada Mexico have done is put in and
China limited retaliation with threats of further retaliation, because I
think they've worked it out exactly as our discussion has
gone and realized that reality may reimpose itself, and if
the stock market, which has went down forget the figure
(08:06):
I think two or three percent yesterday.
Speaker 3 (08:10):
You know, if that starts to.
Speaker 4 (08:12):
Intrude on the political consciousness of the administration. We could
yet get back to sanity, but there'll be a lot
of collateral damage done in the process.
Speaker 2 (08:24):
It's interesting too, because the business community within the US
were really going at Biden saying, you've got to lift
the tariffs, because it's all very well to say Trump's
mayt's putting tariffs on China. Well, Biden didn't lift them
because China didn't come close to meeting the pledge it
made when Trump was president, So under Biden they didn't
get close to that commitment of spending either, so he
(08:46):
kept the tariffs on. The business community was at Biden
saying you've got to lift them. How are they going
to respond to the Trump administration going still further?
Speaker 4 (08:57):
I think that depends on what happens out there in
the real economy. The head of either FORD or GM
said a week ago, we could close down production within
two weeks.
Speaker 3 (09:09):
So you know, if I mean.
Speaker 4 (09:12):
What I feel is there are guardrails around the president.
Speaker 3 (09:18):
They are both they are legal guardrails.
Speaker 4 (09:22):
They are political guardrails, and there are economic guardrails. But
it takes time for the guardrails to impose somebody who
thinks they are invincible. So the judicial guardrails, they could
take a year. You know, the complicated legal process of
all the challenges to these multiple executive orders that will
(09:43):
wend its way through the court in court system of
the United States in slow time.
Speaker 3 (09:47):
That's not going to help us in the next month
or two.
Speaker 4 (09:50):
The political guardrails, actually, although they are technically out there
two years from now because of the midterm elections. When
you know this wayfir thin majority that the Republicans hold
in the House is up for reelection across all four
hundred and five four seats. But I don't think that
means that the political implications of this don't feed through quickly,
(10:14):
because what you will see is if people get thrown
out of work through tariffs, as they will in places
like Michigan, you will see great nervousness on the part
of Republican House members and senators who are up for
the election, and that'll start to feed through well well
before two years from now. But finally, on the economic side,
(10:36):
I mean if we lead to total disruption of global
supply chains, and it feeds through into increasing moments about
the United States economy weakening because of consumer sentiment turning south.
I mean that could impact rather more quickly than the
conversation you and I are having would suggest.
Speaker 2 (10:58):
Brilliant, very very good to get your insights. I really
appreciate it. Thank you so much for your time. That
is our former US New Zealand Ambassador to the US
and former trade minister for seven years under the Key government,
Tim Grosser.
Speaker 1 (11:14):
For more from Kerry Wood and Mornings, listen live to
News Talks a B from nine am weekdays, or follow
the podcast on iHeartRadio.
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