Liam Dann: NZ Herald business editor at large on what Donald Trump's new tariffs could mean for mortgage rates

There's been plenty of discussion about Donald Trump's new barrage of tariffs - and many Kiwis have been left wondering what it means for them.

The new tariffs come with wide-reaching global implications, and experts have revealed it could play a part on future interest rates later down the line.

NZ Herald business editor at large Liam Dann explains further.

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Episode Transcript

Speaker 1 (00:00):
Liam dan Nzid Herald's Business editor at large with US Now. Liam,
good evening.

Speaker 2 (00:04):
Gooday, Ryan.

Speaker 1 (00:04):
So all this tariff talk, we're going to talk. We're
going to keep it simple for people tonight and I
need that more than anyone. So what does it mean
for our mortgage rates?

Speaker 2 (00:17):
Well? Great question. So look, the tariffs, you know, those
direct tariffs. You've heard people talking about the direct tariffs.
We can probably manage them. But the trouble is what
happens to the US economy affects US. So if they
are inflationary for the US economy, and that does look
you know, that's what the markets are expecting, and you

(00:39):
see the US Federal Reserve is unable to cut rates.
They may even worry about inflation and talk about putting
rates up. That puts up the international cost of borrowing,
so that the US yields really set the market. So
were that would put up with pressure on borrowing costs
for our banks, and so you know, you could, I

(01:01):
mean the Reserve Bank could counter that by cutting the
OCR a bit lower. But ultimately that you know that
the trouble is the US economy is so influential on
everything else that happens in financial markets. So even if
New Zealand, New Zealand's got a lot of work to
do to negotiate this anyway, and we've got our own
risks around, you know, a slowdown because our trading partners

(01:24):
a hit harder and all the rest of it. But
you know, what happens in the US economy will matter too.

Speaker 1 (01:30):
Right, Let's talk the dollar. What happens with the dollar, Well.

Speaker 2 (01:34):
It's been bouncing around all over the place. Today, it
went down and up and down and up and ended up.
It's fifty seven something now, so it's actually kind of up.
So the issue is, on the one hand, you've got
inflationary risk in the US. On the other hand, you've
got people talking about a recession. So you know which
which one's going to sort of which way is it

(01:54):
going to break or are they going to be stuck
with stagflation, which is recession and higher inflation should be
terrible for everyone too. So look, it's not one hundred
percent clear, cup, but if the inflation, if it's inflationary
in the States, you'd expect that to keep interest rates
up to keep the US dollar up, and our dollar
would stay low, which actually, you know, it does help

(02:16):
offset things for the our exporters, you know, the low
dollars really helping bring dollars in the New Zealand dollar
terms and keeping us competitive. It's not so good on
the import side, so that could import a bit of
inflation if our dollar stays low. So we you know,
could be facing a bit of inflation pressure here as well,

(02:36):
which again would squeeze the Reserve Bank because it's looking
at you know, that trade off between keeping inflation under
control and stopping the economy slowing down too.

Speaker 1 (02:45):
Much, and Key we Saver run us through it.

Speaker 2 (02:48):
Well, it's already yeah, Kee We Saver is already looking rough, right,
So you know, we are hugely influenced by Wall Street.
Our funds have a large exposure. I know, I've talked
to some fund managers who are you know, there is
talk about shifting out towards Europe and looking back at
other parts of the world, but really where Wall Street goes,

(03:11):
everyone sort of follows, and so it's been it's been off,
it's going to be you know, the futures are saying,
you're looking at it two to three percent off again tonight.
So yeah, not going to be a great day to
look at your KEII saver tomorrow or in the next
next couple of weeks. I guess it's just we don't know.
It is a giant experiment. What happens from here, you know,

(03:31):
how much of its negotiation, how those negotiations go, whether
it escalates to a bigger trade war. So, yeah, there
was a it's a rough one. Markets have to, you know,
process that this was a more aggressive starting point than
maybe they had expected. They've been in pricing some some
of this sin but they'll have to absorb that and then,

(03:51):
you know, we hope that doesn't doesn't escalate from here,
that if anything, it could be dialed back, but that
remains to be seen.

Speaker 1 (03:59):
Unfortunately, we're holding up breath and hoping that they it
doesn't escalate any further. Detonal, Liam, thank you very much
for that. Liam dwan Insidherald Business editor at Large on
Trump's tariffs announced today. For more from Hither Duplessy Allen Drive,
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