Gareth Kiernan: Infometrics Chief Forecaster on the economic impact of Donald Trump's tariffs

One expert has delivered a grim outlook for share markets around the world. 

Stocks have tumbled after US President Donald Trump slapped tariffs on Canada, China and Mexico. 

Infometrics Chief Forecaster Gareth Kiernan says markets surged after the election with thoughts that Trump might promote growth. 

He says there might not be a quick fix for the issue. 

"I suspect it's going to be something that could last a lot longer, and we could be in a more serious downward trend that lasts for up to 12 months."

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Episode Transcript

Speaker 1 (00:00):
The trade war tariffs against Mexico, Canada, China. Trump has
put them in place. Now they are starting to have
an impact on the market. The ends of It's fifty
finished half of percent down today. The S and P
five hundred has erased most of its gain since Trump's
election win in November, and all eyes will be on
markets overnight of course, to see there's going to be
further reaction. Gareth Kenan is infa Metric's chief forecaster with

(00:22):
US tonight. Hi, Gareth Evening, right, the New Zealand markets,
is that a big deal?

Speaker 2 (00:30):
Well, it's not much of a shift here today compared
to what we've seen overnight with the initial reaction from
American and indeed some of the European markets as well.
I mean my feeling with some of the sort of
share markets and exchange rate as well, as they do
tend to sometimes take a little bit of time to
digest the news, and so I suspect that we may
not well have seen the end of it yet.

Speaker 1 (00:49):
The reaction from Wall Street is that can we say,
basically that's they thought they didn't think that Trump would
follow through in the way that he has, and he's
made good on his word. I suspect that's right.

Speaker 2 (01:01):
I mean you look at some of the initial market
reaction after the election of Trump back in November, and
the reaction was very much like always going to stimulate
the American economy. There might be a bit more inflation,
but you know, we're here for the growth kind of thing.
And I think people are now starting to realize that
actually there's some serious negative, medium term consequences that could
come out of some of the policies that are now
coming through.

Speaker 1 (01:20):
A big question, of course, is how long do they last?

Speaker 2 (01:24):
Yeah, well, I mean that's right. I mean you look
at previous episodes. I looked back at the GFC today
and the sheer market there eighteen months from peak in
two thousand and seven until it reached its trough out
in two thousand and nine, and then it was up
and down over the next two or three years before
we sort of got out of the other side of that.
You know, who knows with financial market Sometimes you look
and go, is it a one week event? In this case,

(01:45):
I suspect it's going to be something that could last
a lot longer, and we could be in a more
serious sort of down tune down with trend that lasts
for up to twelve months.

Speaker 1 (01:53):
We had you reckon. So even if he pulls them
off in the next month or so, the damage has
already been arnold, will have already been done to things
like investment, to you know, labor hiring, that kind of stuff,
that the effects could linger for a year. Is that
what you're saying?

Speaker 2 (02:09):
Look from a business point of view, I mean uncertainly
as a real killer when you're trying to make business decisions,
especially when it's some of that longer term stuff around investment.
And so if you're not sure how the landscape is
going to be in a week's time, in six months time,
then you are going to hold off on those decisions.
And I think you're right. Even if he does sort
of reverse some of these out and I'm not confident

(02:29):
that he will, that businesses are looking at it and going, well,
I'm just not sure how that landscape looks going forward,
and I'm going to hold off on making those sort
of big commitments and decisions.

Speaker 1 (02:39):
And it's hard. I was listening to an auto industry
executive today who was saying, you know, how do you
exactly what your point? How are you meant to plan?
He wants us to move factories to the United States.
You know, currently they're doing it a lot of production
outside of the US. All that takes time, and I
don't even know if these tariffs are still going to
exist in two months, two years. That is how unpredictable

(03:02):
you are.

Speaker 2 (03:03):
Yeah, and I mean, we have seen some responses from
our businesses over the last six to twelve months to
some of the previous tariffs that had come in for
the likes of China, which Biden or Trump had put
in and Biden had increased. In some cases, we have
seen decisions being made where production is moving out of China,
but it's not, of course, coming all the way back
to the US. Generally, it's impacting on some of those

(03:24):
other Southeast Asian nations where the tariffs aren't in place.
But yeah, when you're talking about penalizing the whole rest
of the world, including some of your your closest neighbors,
it does. It's a whole nother step up above that.

Speaker 1 (03:35):
Really certainly is Gareth, thank you very much for that.
Gareth Kennan, who's the chief forecast Infimetrics and Wellington, eleven
minutes after Sex News talks, he'd be

Speaker 2 (03:43):
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