Brad Olsen: Infometrics Principal Economist on Donald Trump's proposed tariffs for Mexico, Canada and China

President-elect Donald Trump has threatened to hit Mexico, Canada and China with new tariffs as soon as he takes office.

In a post on social media, Trump promised to charge Mexico and Canada an additional 25 percent tariff on all products they send to the US - and an additional 10 percent tariff will be placed on Chinese goods.

Infometrics Principal Economist Brad Olsen says these trade changes come with ramifications for the rest of the world - New Zealand included.

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Episode Transcript

Speaker 1 (00:00):
Now, Donald Trump, as I told you earlier, has already
promised on social media today that he's going to hit
Mexico and Canada with a twenty five percent tariff on
all all our products coming into the USA. You'll do
that on the first day, and if China doesn't stop
the illegal drug trade, they're going to hit with ten
percent on top of everything else. Informeatric's principal economist, Brad
Olson is with us.

Speaker 2 (00:17):
Hey, Brad, good evening.

Speaker 1 (00:19):
I didn't realize that we would be exposed to this directly,
but I mean by the looks of things, Fisher and
pikel they do manufacturing in Mexico and so they and
then important to the export into the US, so they
could be hit, can't they.

Speaker 2 (00:30):
That's right? And I think you know, it's becoming clearer
and clearer now that any changes or any moves in
the trade space do have ramifications for US, either directly
or indirectly in terms of how trade activity plays out.
I think surprising as well. You'll remember I think he
had probably a conversation that we had a couple of
weeks back, wondering, you know, would this actually be the
sort of policy that Trump would implement quite quickly, because

(00:53):
he'd been talking about you know, retribution and deportations and
some of quite a lot before then. But it looks like,
again the tariff policy is not so much an economic policy.
It's more again part of you know, the retribution going on,
and in this case it's around open borders and sort
of drug access, and Trump saying, well, look, if you
know these are fental and similar still comes over the borders,

(01:14):
then these tariffs will remain so still big, big ramifications.
And the fact that the pre incoming US president wants
to do that on day one does highlight that we're
in for quite a ride when it comes to these
sort of trade flows and trade changes.

Speaker 1 (01:28):
But okay, so immediately immediately there's reaction, right our dollar
drops against the US by something like a third of
a US sense, and that it recovers a little bit,
and there's a drop off in Fisher and Pickel's it is,
are people overreacting to what he says because he might
just be chatting like he does, oh exactly.

Speaker 2 (01:45):
I think, to be honest that the market reaction is
probably pricing in a bit of that jitteriness. So I
suspect that, you know, if there was. If this was
already a signed, sealed, delivered document, they'd probably be a
much stronger market reaction than we've seen. So I think
what you are seeing is people going okay, this is
more of a live conversation than it might have been,
say a week ago, but definitely not locked in. You

(02:07):
saw that in the likes of the share markets, particularly
across parts of Asia as well, going okay, this is
going to be a bit more of a direct sort
of focus coming through, particularly with their additional ten percent
tariff being levied on China apparently, and again we'll sort
of wait and see what happens day one, day two,
But you're right, there is a lot of uncertainly, a
lot of questions out there. I think the thing that

(02:28):
probably we're thinking about a lot in New Zealand is one,
as you've just profiled with Fish and Parka. You know,
where is that exposure for us potentially indirectly, but also
if tariffs do come through and they are widened outside
of Mexico, Canada and China, what sort of potential is
there maybe for New Zealand to get an exemption because
that will be probably that's going to be the hot

(02:49):
ticket or the hot property item when it comes to
trade negotiations, because Trump does look likely to put some
of these bigger tariffs.

Speaker 1 (02:56):
One interesting Brad, Thank you very much. Appreciate it. Brad Awson,
Infimetric Principal Economist. For more from Hither Duplessy Allen Drive,
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