The Country 01/04/25: Cameron Bagrie talks to Jamie Mackay

Independent economist and keynote speaker at the SIDE conference next week. Today, he previews Trump’s “Liberation Day” and Thursday’s much-awaited tariff announcement.

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Episode Transcript

Speaker 1 (00:00):
His name is Cameron Bagrin Independent Economists. Back in the day,
he was the chief economist for the a n Z
amongst other things. He will be one of the keynote
speakers at next week's side conference. In fact, Cameron, you're
up at Sparrows Fart because you're hosting the side breakfast
Wednesday week. What's going to be in your presentation?

Speaker 2 (00:21):
Well, I think most attention the moment is obviously what's
going on around the globe, and you know we're seeing
more flip flops and probably what walked the beach at Bondi.
In regard to you, what is looking to you Trump's
pariff policy, economic pair offf prey uncertainty is pretty high
in you Zeeland as a small player at the international table.

(00:45):
But we need a friendly, least protectionist global environment. What
we're starting to see more and more of is that
whether it be tariffs or non tariff bearers, you it's
getting a little bit paper out there. So you see
onstay executing an awful lot better. Behind the scenes are
a little bit more penetration in regard to existing trade partners,
but also opening up new trade partners through trade dealers,

(01:08):
and that's the big challenge John fourth.

Speaker 1 (01:09):
Liberation Day is what Trump's calling it. It's April the
second US time, so that's Thursday, our time. What do
you think he's going to come out with, Will anyone
get an exemption or a free ride?

Speaker 2 (01:22):
Well, we don't know, and that's the big issue at
the moment. If we knew you could bank on this
sort of stuff with certainty, then that you're not going
to get surprised potentially going to see on so called
liberation Dayble. What you got to think about here, Tammy,
is just to step back and think about the bigger picture.
And the bigger picture is that for thirty years we've

(01:45):
been in an environment we're trade barriers, we're basically brought
down and it was a friendly environment for a small,
open trading nation such New Zealand. We called it the
Golden Era. You know what we are now into globally
is it's not the Golden Era. It's a tougher eraror

(02:06):
your trade barriers are going up, whether that be of
the tariff or the non tariff sort of side, and
that's going to make life a little bit more difficult
for trading nations such in Ze. I'm going forward. Yeah,
So we've got to be a little bit more selective.
We've got the a lot more direct in regard to
what are we doing in regard to executing on the ground,

(02:27):
because the global environment is going to be a lot
less friendly you. Evangelis for Talas, who is in New
Zealand's chief Trade and go shadow is openly referred to
it as the end of the golden era. So we're
going to have to work an awful lot harder over
the extra ten years if we're going to get.

Speaker 1 (02:41):
Ahead, Cameron, I was just reading online a story from
Connor English, who's done some interesting and good commentary around
trade and tariffs, and he's saying that New Zealand has
twenty five billion dollars worth of two way trade and
goods and services obviously between New Zealand and the US
are twenty five percent tariff. And he's just thrown that

(03:01):
number out there. On exported goods to America of over
eight billion dollars, could see a two billion dollar bill.
But here's the question for you, who pays the two billion?
Is it ultimately the American consumers?

Speaker 2 (03:16):
Yeah? It is a consumer right. Yeah. So that's the
thing about Paris is that someone pays in the line.
And what happens is it, if you think about a
stock standard, you have consumer, you've got x amount of
dollars to go around, and if more of your disposable
income is cheered up by paying x amount more for

(03:37):
some goods, then you've got less to spend on other goods.
So you're to divert You're what you're spend on one,
you avert and you don't spend on the other. The
bigger issue for New Zealander is look at the consumers.
They're not spending on our goods or in other countries goods,
and there might be some diviews and opportunities here for

(03:58):
New Zealand of other countries. Weacked that we don't get
wecked by the same amount, then where are those opportunities?
And assert.

Speaker 1 (04:07):
Okay, let's just move on from Liberation Day. We'll wait
with baited breath to see what Trump comes up with.
Who knows he might even change his mind between now
and then. Have we got effectively only two more OC
cuts in line before we bottom out?

Speaker 2 (04:22):
No, I'm thinking that the OC in one of mine
is going to go to three to three point five,
so we're getting I think pretty close to the end
of the cutting cycle. Yeah, so we were at three
seventy five at the moment. If you look at the
forward curve, the forward curve is anticipating another two or
so cuts. What does that mean in practice? It means

(04:45):
that interest rate markets are bus again anticipating. At the moment,
the loads and interest rates are pretty well around the corner. Yeah.
So if you look at a one or two a
three year effects mortgage rate that this is probably not
if far away from the lows that would like to
see in the market and the absence of a big
global economic accident accident. But the market at the moment

(05:09):
is yeah, it's forward looking. It's saying, yeah, we're going
to get another two maybe three that's already baked into
the cake. Yeah. What the reserve band does with the
actual oci over then exit of yeah, three to six
months is somewhat incidental because financial market's already anticipating begin
it deliver two maybe three.

Speaker 1 (05:28):
Okay, And well, in summary, then here's the question, and
you might duck for cover on this one. Is now
as good a time as any to fix a wee
bit longer?

Speaker 2 (05:36):
Yeah? Well, I tell people it depends on your balance
sheet right, or your attitudes to risk versus return. If
you've got a really strong balance sheet and you've got
really strong cash flow, and then you can probably take
a little bit more risk within your portfolio in regard

(05:58):
to interest rates. Yeah, but if your cashflow tight, if
you balance it's a little bit squeeze, then you probably
take want to pack a little bit more certainty in
regard to with that hite so you know where you're
going to be every the next fort of one to
two years.

Speaker 1 (06:11):
Hey, Cameron Bagory, thanks for your time, looking forward to
your company next week in Timaru for the South Islands
Dairy Event. Registrations are still open. Go online and book
especially for that breakfast on Wednesday morning you can hear
the great Cameron Bagory. Thanks for some of your time
looking forward to