Oliver Hartwich: New Zealand Initiative executive director on the impact of the Trump tariffs

Business leaders across New Zealand have voiced concerns that Donald Trump's tariffs could have a more severe global impact than the Covid-19 pandemic and the Global Financial Crisis. 

The months since Trump’s 'Liberation Day' announcement have seen sustained market volatility, tit-for-tat trade wars and fears of a resurgence in inflation.

New Zealand Initiative executive director Oliver Hartwich says experts are right to be concerned - as Trump's tariffs could potentially derail the economy for years to come.

"The GFC and the pandemic were over after three of four years, whereas the destabilisation of globalisation with the tariffs Trump is imposing - that could derail the economy for decades to come. There's so much uncertainty about it."

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Episode Transcript

Speaker 1 (00:00):
Business leaders think that Donald Trump's tariffs could have a
more severe global impact than the pandemic or the GFC.
ASB and Talbot Mills have done a survey of more
than three hundred Kiwi business leaders and two thirds of
them so they're really worried about the tariffs. But Ben
Speedy of ASB told Kerry would in this morning that
far fewer businesses have actually taken any action on it.

Speaker 2 (00:19):
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 is
actually to start thinking through that strategy.

Speaker 1 (00:35):
And Oliver Hart, which is the New Zealand Initiative executive
director and with us.

Speaker 3 (00:39):
Hey, Oliver good evening. He I mean, do you think
that they're.

Speaker 1 (00:43):
Overblowing it or are they on the money that this
is bigger the pandemic or bigger than the GFC.

Speaker 3 (00:48):
I think they're on the money, because I mean the
GFC and the pandemic were all off of three or
four years, whereas the destabilization of globalization, the tariff's, the
Trump is im pausing. They could actually do give rail
the global economy for decades to come, and there is
so much uncertainty about that. I mean, with the pandemic,
we knew it was going to be over after a
few years. With this teriff uncertainty, and of course the

(01:10):
state of the WTO, which really barely exists anymore, the
uncertainty is there for a very long period to come.
In I think that's reflected in the pool.

Speaker 1 (01:20):
Do you think that he is exporting the idea of
the tariffs as in, do you think people are going
to look at this and go, that's a great idea,
we should do it too.

Speaker 3 (01:28):
No, I don't think so at all. I think for
most countries it is pretty clear that their prosperity is
built on trade, and we need free trade to succeed
and to be prosperous again. But as long as America,
as the word's dominant economy, is pursuing this teriff policy,
there will be global repercussions. I think. Actually, when you
look at the pool, it's not so much that we

(01:48):
are concerned about the terriffs that we have to pay ourselves.
It is actually about the secondary effects, where for example,
China is paying massive amounts of terrors now, and that's
slows down the Chinese economy and that has negative impacts
on it. So it's a secondary effect and sometimes a
tertiary effect. So I think that's reflected in the poll.

Speaker 1 (02:05):
There is a proportion of businesses and it's not insignificant
who think that the tariffs are an opportunity. Do you
see that?

Speaker 3 (02:12):
Yeah, of course, I mean there will be some opportunities
because it means that for countries that previously couldn't actually
previously traded with the US can't really trade to the
same degree anymore, and they will redirect some of their goods,
maybe at cheaper prices to US. So maybe there are
some opportunities in there, but overall, of course, the net
effect is deeply negative.

Speaker 1 (02:33):
Now it's a very small proportion ten percent to have
actually done anything to mitigate the effects. What should these
businesses be doing.

Speaker 3 (02:41):
Well, it's a very good question. I'm not surprised it's
only ten percent, because right now you cannot really plan
that far ahead. You don't know how to respond because
these terrffs change, They change sometimes on a daily basis,
depending on the mood of the president, and therefore it
is very hard for businesses to really plan to adapt,
to find different strategies, and I think that's what you see,
but only ten percent say that they've actually made some changes.

Speaker 1 (03:03):
Do you not think, Oliver, that we should just take
the approach it? Take it? I mean, should the default
setting that we have not be Donald Trump is bluffing
and he will unwind this.

Speaker 3 (03:13):
I'm not so sure he's entirely bluffing. Of course. We
have seen a lot of times that he has shown
this tackle behavior where he backs down after some pressure
from others. But some of the tariffs are there to say,
and actually we've seen it again today that he's increased
the steel and aluminium tariffs. So I don't think he's
going completely in reverse now and restore the trade order

(03:34):
we had before. So I think it is justified to
think that the destabilization of the global trade system will
be with us for some time to come.

Speaker 1 (03:42):
Oliver, it's good to talk to you mate. Thank you
very much for that, appreciated Oliver Hart, which New Zealand
Initiative Executive Director.

Speaker 2 (03:49):
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