Todd McClay: Trade Minister unpacks what Donald Trump's proposed tariffs could mean for New Zealand

The Trade Minister says he's taking potential disruption to trade very seriously.  

US President Donald Trump has sent stocks tumbling across the world after lumping tariffs on China, Canada and Mexico, who are promising retaliation.

Todd McClay says it'll directly affect New Zealand companies in those countries - such as Fisher and Paykel in Mexico.

He says it could move us even closer to China, especially for products like beef. 

"They will still need the beef that they're bringing from the rest of the world from the US on the restaurant table or the supermarket shelves."

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Episode Transcript

Speaker 1 (00:00):
Good evening seven after five news talks. They'd be Trump's
trade wars on China, Canada, Mexico. They're all retaliating. The
President's been addressed in Congress. He says there's more to come.

Speaker 2 (00:09):
So the tariffs will go on agricultural product coming into
America and our farmer is starting on April second. It
may be a little bit of an adjustment period. We
had that before when I made the deal with China
fifty billion dollars of purchases and I said just bear
with me, and they did.

Speaker 1 (00:28):
You can say that again the can we save a
providers here and warning tough times ahead. As you can imagine,
markets have been hugely volatile. The big question, of course
is how long is this going to last. Tom mcclay's,
the Minister of Trade, is with us. Good evening, Minister.

Speaker 3 (00:41):
Ryan, Hey, how are you good?

Speaker 1 (00:42):
Thank you? How have you got any numbers there or
any any information from officials on modeling on how this
might impact New Zealand.

Speaker 3 (00:50):
Well, from the point of view of the tariffs that
are the US is opposed on Canada, Mexico and China,
and the retality ones which they're talking about haven't released yet.
No we don't get a picture of that. And the
reason for that is although we're not directly affected in
this latest round of terrace, there is going to be
some flow on effect, either because of confidence of those

(01:11):
markets where consumers and businesses don't buy as much though
as we trade with, or secondly as a result of
New Zealand companies that may have a presence there Mexico
as an example with Fisher and pikel who will be
directly affected. So after officials to work that up, but
until we see more detail, it is a little bit
hard to know. It would be a bit of second guessing.

(01:31):
But I can tell you we're taking this very seriously,
and as I said on your show a couple of
weeks ago, we instructed officials and our embassy in Washington
to be engaged proactively with US administration and reminding them
of making the case of how well our trading relationships
and how balanced it is. They continue to do that,

(01:52):
but we're going to see exactly what President Trump is
talking about when it comes to agriculture.

Speaker 1 (01:57):
Yeah, that is the big worry. We heads the Meat
Industry Association. We had Nathan Guy on the show last night.
He said he's really worried about the agricultural tariffs is
talking about, because that's I mean, that's our bread and butter.

Speaker 3 (02:09):
Yeah, it's very important to us, all right. So if
tariff is put on all exports to the US, whilst
we will remain competitive against others, it's just a cost
to the New Zealand exporterer. It's a tax or a
tariff at the border. There's more to this, though than
just the tweet of the announcement the other night from
the President. If you think about beef as an example,

(02:31):
New Zealand beef is an important market for US. Predominantly
it's mixed with the US beef and we have a
lot of beefat that goes up for their hamburgers. We
know that they need to bring that in for the
amount of hamburger they eat. If there is a tariff
or it can't come in from overseas, are either going
to have shortages or those prices go up. And I
think that's why you've seen, you know, the market in
the US and elsewhere in the world take quite a

(02:53):
hit over the last day or two. What we don't
know is whether he's talking about all agricultural products and
everybody or some from some parts of the world exactly what.
But our people are engaging most informations they can.

Speaker 1 (03:06):
And are they listening to what we're saying? You know,
the argument about the balanced trade is a good one,
but are they listening to it? About the beef and
the meat paddies is a good one, but are they
listening Well.

Speaker 3 (03:16):
I think at the level of the officials and those
who engage with we have a good hearing and there's
very good and constructive conversations on going. But I think
I think that you look at the you know, the
social media the other night and the President said that
he's focusing on agriculture next and we'll see what that means.
But there's a there's a second part of this. If

(03:37):
we take both Canada and also China as examples, they
are both important beef from the US. The US has
slapped tarras on them that said they're going to reciprocate.
So in the case of China, they will still need
the beef that they are bringing from the rest of
the world from the US. On the you know, the
restaurant tabor of the supermarket shelves. They their consumers are

(03:59):
like you look out where and so there will be
some opportunities for New Zealand, which is hugely.

Speaker 1 (04:05):
Which is hugely ironic, right, because we've been trying to
diversify away from China and we diversified towards America. It's
now our second largest trading partner for goods and now
we've been hit with these potentially been hit with these terriffts.
It's ironic.

Speaker 3 (04:18):
Yeah, that's right. The other case that we have been
making will continue to is actually New Zealand exporters into
the US market predominantly face greater tariff rates, higher tariff
rates than US exporters into New Zealand, and the reason
for that is we have a very low tariff hrasing.
I've asked my officials to go through line by line
and fight everywhere there is a discrepancy where our TWI

(04:41):
rate might be higher than there, so we have a
clear understanding of that. So far, much of that there
are no imports from the US down to New Zealand.
But we're working through that so that we can be
in a better place to know what we need to do.

Speaker 1 (04:54):
All right, Minister, thank you very much for your time.
Tom McLay, the Minister Trade in the midst of a
trade war. Twelve minutes after.

Speaker 3 (05:00):
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Speaker 1 (05:03):
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