Steven Joyce: former Finance Minister on the financial 'uncertainty' that comes with Donald Trump's tariffs

A former Finance Minister says New Zealand faces uncharted territory - as the world grapples with Donald Trump's tariffs. 

New Zealand, Australian and Asian markets tumbled yesterday, but regained some ground today.

Current Minister Nicola Willis is warning the tariffs and world events will impact the Government books. 

Steven Joyce says given the daily uncertainty which will slow investment - no one can predict what will happen.  

"I don't think Donald Trump knows, to be blunt - I don't think he knows quite where it lands and he's making it up every day as he goes along. And I think that's one of the problems." 

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Episode Transcript

Speaker 1 (00:00):
We've had the Prime Minister on Instagram today, Nichola Willis
doing a press conference this about Trump and his tariffs,
the message they will hurt us largely and directly. Couple
of things they pointed out Our trading partner's growth will
be lower and global inflation will be higher than was
forecast in December.

Speaker 2 (00:18):
All of these factors create risk for the New Zealand economy.
And this happens just as we have been gathering positive
momentum and recovering from a period of high inflation and
high interest rates. Confidence has been setting higher, job growth
has been occurring, and dwelling consents have been gradually picking up.

Speaker 3 (00:38):
Put.

Speaker 2 (00:38):
Simply, the past week's global developments make our recovery harder.
These factors will also impact the government books, with potential
impacts for revenue, debt, inflation, and interest rates.

Speaker 1 (00:54):
Stephen joyces a form of Finance minister with me tonight,
good evening.

Speaker 3 (00:58):
Ending right, how are you? I'm good?

Speaker 1 (00:59):
You can all always hear the disappointment in Nichola Willis's voice,
There can't you?

Speaker 3 (01:04):
Absolutely and lookas has sadly been coming for a few
weeks because it became I think apparent as soon as
Trump came into office that whatever he did, it was
going to be disrupting New Zealand's economic recovery, not by
obviously intention, but by what has actually come to pass,
which is uncertainty around tariffs. Then high tariffs. Then then

(01:29):
you get a second order economic effect which are largely
increased inflation and reduce global growth.

Speaker 1 (01:37):
How bad does it get? I mean, and does the
minister actually know yet? Does anyone actually know yet?

Speaker 3 (01:43):
No? Nobody knows yet. I mean, obviously the boffins of
the Treasury will have to draw pictures on a graph,
so they have to try and their best guess. But
this is uncharted territory everybody. I don't think Donald Trump
knows to be blunt, I don't think he knows quite
where it lands and making it up every day as
he goes along. And I think that's one of the
problems is that there are two issues here. There is

(02:05):
the fact of the tariffs, which is detrimental in their
own right, but there's also the daily uncertainty which is
going to slow down investment around the world. And you
think about it, if you're running a factory anywhere in
the world right now, particularly in the US, China, anywhere
in Asia, and you have been planning to build a

(02:28):
new factory maybe to double output or something where then
you're siddenly going to sit on their hands now for
the next next few weeks to try and work out
what the hell to do next.

Speaker 1 (02:38):
We're all kind of crippled by it, not just Nichola
Willis and the government, but as you say, businesses, but
even then the Reserve Bank, I mean, how do you
make decisions in an environment where you don't you literally
don't know whether inflation is going to go through the roof,
growth is going to go through the floor, or both
of those things are going to happen simultaneously.

Speaker 3 (02:55):
Well, were the dueling the dueling realities? Right? So inflation
is likely to at least initially increase, but then of
course if the world economy slows down, that's likely to
reduce inflation. So you're right, people don't know the answer
that affect them. From the reserve banks point of view,
they're we cautious. I suspect it'll be interesting to see

(03:17):
the weather this week if they still go here with
the cut that obviously planned. They probably will, but I
don't think it's guaranteed And because they'll be sitting there
thinking it through. I think probably most central banks around
the world at the moment will continue cautiously on the
path that they've been on. But then they're going to wait.
But I think probably the biggest thing to watch for,

(03:38):
and I hope this isn't wish for thinking on my part,
but at some point the wider US is going to
wake up and actually curtails to some degree what's going on.
And it's been really interesting to see over the weekend
huge numbers of the Republican parties, big donors and backers
come out and say they're not signed up for this.

(04:00):
And I think at some point, if this volatility continues,
which is likely to it may not continue to drop
the market, say for example, the next Star too. There's
got to be some breather at some point. But if
this continues, then I would expect at some point the
US Senate will start to assert itself only because it
has to at some stage a process, and what I

(04:21):
mean by that is actually starting to put some pressure
on to the administration to curtail some of their wildest excesses.

Speaker 1 (04:29):
Stephen Joyce, appreciate your analysis. Stephen Joyce, the former Finance
minister on the show.

Speaker 3 (04:33):
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Speaker 1 (04:36):
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