Peter Lewis: Business Journalist on the volatile state of the stock markets amid tariff uncertainty

Markets have been losing many of yesterday's historic gains. 

US markets climbed steeply after Donald Trump paused higher tariffs on most countries – locking them at 10%. 

However, they plunged again after the White House confirmed tariffs on Chinese goods are now at 145%. 

Business journalist Peter Lewis told Mike Hosking the up-and-down is likely to continue until investors have certainty about what's happening. 

He says while there is a pause, the tariffs haven’t gone away altogether, and that will lead to a lot of volatility in the market. 

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Episode Transcript

Speaker 1 (00:00):
The will felt awfully edgy this week, didn't it for
most of the week as the market's gyrated in response
to the Trump terror plan, if plan is the right word.
The capitulation came yesterday based on fears around the US
bond market. We got ninety days to achieve lord knows what. Now.
Worst hit was Asia? Really, their markets move more than
anyone else's. China is in a war that's sitting at

(00:20):
one hundred and forty five percent and counting this morning.
So we're to Asia Business Correspondent Peter Lewis with us
PEP Morning to you.

Speaker 2 (00:27):
Good morning, Mike, early.

Speaker 1 (00:28):
Hours of Bangkok, and I do appreciate you getting up
very early in the morning for us, so just give
us the vibe broadly speaking in Asia. But how's it
been handled? How's it been seen? What's the word?

Speaker 2 (00:38):
Well, the markets have obviously reacted very strongly to this.
The big problem is that there is a lot of uncertainty,
and uncertainty leads to volatility in the markets, and we've
seen exactly that, big declines in the stock markets followed
by huge rallies. Also a big decline in the US

(01:00):
bomb markets, which is added to the uncertainty, and that
uncertainty isn't going to end because over the next ninety
days we're now going to see a whole host of
leaders trooping over to Washington to try and negotiate their
own deal on tarifs, and there's no guarantee at all

(01:22):
that that will work. It could well be that there's
no deal at all for several countries because trade negotiations
normally take years, not ninety days. They're very very complex
sets of negotiations. They involve a lot of considerations, not
just trade, but a whole host of political issues as well.

(01:46):
So this is going to be a very difficult ninety days.
There's going to be a lot more uncertainty and there's
going to be a lot more volatility. And in particular,
we have to bear in mind that the tariffs haven't
gone away. There's still one hundred and forty five percent
tariffs on China. There's still the ten percent based tariffs

(02:07):
on every other country in the world. Canada and Mexico's
tariffs are still there. There's the tariffs on steel and aluminium,
tariffs on cars. There are a lot of tariffs left.
And what it means is that the average tariff rate
now on US imports stands at about sixteen percent. That's

(02:30):
the highest in over one hundred years. It was three
percent before Trump's second term started. So we've still got
a lot to deal with and that's going to lead
to a lot of voloacility in the markets.

Speaker 1 (02:43):
The one forty five for China is that a completely
separate thing that will unfold in its own way versus
the rist of Asia. Do you think or because China
is China, we're all in this together.

Speaker 2 (02:55):
I think in some ways we're all in this together
because what happens to the Chinese economy affects the rest
of Asia. About fifteen percent of China's economy depends upon exports.
Around fifteen percent of that goes to the US. So
this could easily shave off a couple of percent off

(03:19):
of China's GDP because when tariff's are at one hundred
and forty five percent, effectively trade between those two countries
has come to a complete halt, and it really doesn't
matter anymore whether tariff's fifty one hundred, one hundred and
fifty two hundred percent. At that sort of level, businesses

(03:39):
cannot export anymore. They simply can't be profitable at that
level of tariffs. So to all intents and purposes, there's
been a hard decoupling in trade between the US and China,
and that affects the rest of Asia and the Asia
Pacific region, including countries like New Zealand Australia. A slowdown

(04:01):
in the Chinese economy of that magnitude is a serious
issue for New Zealand and many other countries in the region.

Speaker 1 (04:08):
I think that the truth. Peter, appreciate your time very much.
We'll catch up, saying Peter Lewis Asia Business. Correspond with
us in Benkok, where it's about two thirty in the morning.

Speaker 2 (04:15):
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Speaker 1 (04:19):
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