US President Donald Trump has increased New Zealand's tariff from 10% to 15%.
This increase comes as Australia remains on the previous 10%, prompting questions around the New Zealand government's handling of negotiations.
Former trade negotiator Stephen Jacobi told Heather duPlessis-Allan that this increase could have a bigger impact than many people realise.
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Speaker 1 (00:00):
Now, international markets haven't wobbled too much in the wake
of the new tariffs. The AX and a few other
Asian markets dipped, but mostly by less than a percent.
Stephen Jacobe is a former trade negotiator.
Speaker 2 (00:10):
Hey, Stephen, Hi, Heather, good to be with you.
Speaker 1 (00:13):
What's gone wrong for us? Do you think?
Speaker 2 (00:17):
Oh, I think we're at the end on the receiving
end of a very large hammer that's coming down, and
I don't think it's probably anything to do with us.
It's most unfair and unjustified. You know, ten percent wasn't great.
Fifteen percent is a lot worse, actually, and we'll have
to see what we can do to try and get
out of it.
Speaker 1 (00:35):
Why do you say it's a lot worse.
Speaker 2 (00:39):
Well, because it's a much more material tariff imposition. You know,
ten percent was at the lower end of the scale.
You know, a five percent tariff is probably neither here
nor there. It's often taken out by exchange rate movements.
But if you're talking about fifteen percent, you're getting into
quite different territory. It's going to American produced. Americans are
(01:02):
over our you know, American producers over our ones, and
of course to the extent that other people in the
American market are getting better treatment than us, like Australia,
like Chile. That's not good either. We have to compete
with them as well.
Speaker 1 (01:16):
I mean, if you think about it, So the Americans
have a ten dollars steak, Our steak is now what
eleven dollars fifty and an Australian steak is eleven dollars?
Is there enough in that to make a consumer change
their mind and change to a different product.
Speaker 2 (01:28):
Actually, in the case of the meat market, probably the
beef market, probably not, because the Americans eat a lot
of beef and there's a lot of you know, we've
still got lots of opportunity. And of course the South
Americans are all being changed even more, except Chile, but
they're not a big exporter of beef to the United States.
So yeah, a lot of it depends on, you know,
(01:49):
the market segment that you're in. But remember, our this
is for US is now a fifteen percent additional tariff.
So to the extent that there's a tariff existing already
in the United Sis, it's like fifteen percent for butter,
we're now paying thirty percent.
Speaker 1 (02:03):
Ah okay, So this this has the potential to be
quite bad then, doesn't it?
Speaker 2 (02:09):
Oh? I think it does. And you know, without wanting to,
you know, over dramatize. We have to see how it
all works out. We know that a lot of export
has been sharing the tariff burden with the importer. I mean,
if they can pass it onto the consumer, that's fine. Well,
not for the consumers, but better for US. Prices go
up in the United States, it's not so good for Americans.
(02:29):
If we have to share it, well, that's a bit
of pain. But if we have to bear it, that's
quite a lot of pain.
Speaker 1 (02:36):
Do you think, Stephen, that we should have changed the
approach that we took, or perhaps we took the wrong approach.
I mean it seemed to be that we were pretty
relaxed about it, or putting our head below the parapet
maybe a combination of both. Should we have done what
Albanesi did and made concessions or what South Korea did
and offered to buy things?
Speaker 2 (02:51):
Well, of course, so Couth's career did that, and it's
still got a fifteen percent tariff.
Speaker 1 (02:55):
But it's down from twenty five, isn't.
Speaker 2 (02:57):
It down twenty five? Yeah? I suppose so. But look,
I don't think there's much more we could have done.
We just don't have enough to offer the United States.
What are we offering right now? We're offering them already
a market where we charge very very low tariffs. You know.
In the case of Australia, of course, they're a free
trade partner with the United States, they have a free
trade agreement. It's not worth much these days, but the
(03:19):
United States has a you know, a surplus with them.
We have a small deficit. So I mean, you know,
I'm not sure there's a lot that we could have done.
The problem is we're already offering to the United States
very advantage advantageous market access conditions without asking for anything
in return. So I just don't think there was a
lot to be negotiated myself.
Speaker 1 (03:41):
What about Okay, So Tod mcclay's going to go to
them now and he's going to say to them, where
about we will get ourselves into surplus for you because
we're going to buy a bunch of Boeings. Will that
change their mind?
Speaker 2 (03:51):
Well? Who knows when these settings are going to be evaluated,
you know, And we don't even know if this is
the last word on all of this. The difficulty with
going back the United States. Of course, it's going to
take a long time to do it, and a lot
of other people are going to be wanting to do
exactly the same thing. I mean, when you look at
the range of countries that are now going to play
this fifteen percent tariff, you know, New Zealand's not quite
(04:12):
in the same position as a lot of these other ones,
you know, and you know, we take them. A country
like Chile, a very fine country, but it hasn't done
a lot, you know, in terms of defense and security
cooperation hasn't been there at the founding of the United
Nations and all these other things like US. I don't
really know why we should be treated so badly, quite frankly, fair.
Speaker 1 (04:31):
Point, Stephen, Thanks very much, Stephen Jacoby, former Trade negotiated.
Speaker 2 (04:34):
For more from Heather Duplessy Allen Drive. Listen live to
News Talk sai'd Be from four pm weekdays, or follow
the podcast on iHeartRadio.
Now, international markets haven't wobbled too much in the wake
of the new tariffs. The AX and a few other
Asian markets dipped, but mostly by less than a percent.
Stephen Jacobe is a former trade negotiator.
Speaker 2 (00:10):
Hey, Stephen, Hi, Heather, good to be with you.
Speaker 1 (00:13):
What's gone wrong for us? Do you think?
Speaker 2 (00:17):
Oh, I think we're at the end on the receiving
end of a very large hammer that's coming down, and
I don't think it's probably anything to do with us.
It's most unfair and unjustified. You know, ten percent wasn't great.
Fifteen percent is a lot worse, actually, and we'll have
to see what we can do to try and get
out of it.
Speaker 1 (00:35):
Why do you say it's a lot worse.
Speaker 2 (00:39):
Well, because it's a much more material tariff imposition. You know,
ten percent was at the lower end of the scale.
You know, a five percent tariff is probably neither here
nor there. It's often taken out by exchange rate movements.
But if you're talking about fifteen percent, you're getting into
quite different territory. It's going to American produced. Americans are
(01:02):
over our you know, American producers over our ones, and
of course to the extent that other people in the
American market are getting better treatment than us, like Australia,
like Chile. That's not good either. We have to compete
with them as well.
Speaker 1 (01:16):
I mean, if you think about it, So the Americans
have a ten dollars steak, Our steak is now what
eleven dollars fifty and an Australian steak is eleven dollars?
Is there enough in that to make a consumer change
their mind and change to a different product.
Speaker 2 (01:28):
Actually, in the case of the meat market, probably the
beef market, probably not, because the Americans eat a lot
of beef and there's a lot of you know, we've
still got lots of opportunity. And of course the South
Americans are all being changed even more, except Chile, but
they're not a big exporter of beef to the United States.
So yeah, a lot of it depends on, you know,
(01:49):
the market segment that you're in. But remember, our this
is for US is now a fifteen percent additional tariff.
So to the extent that there's a tariff existing already
in the United Sis, it's like fifteen percent for butter,
we're now paying thirty percent.
Speaker 1 (02:03):
Ah okay, So this this has the potential to be
quite bad then, doesn't it?
Speaker 2 (02:09):
Oh? I think it does. And you know, without wanting to,
you know, over dramatize. We have to see how it
all works out. We know that a lot of export
has been sharing the tariff burden with the importer. I mean,
if they can pass it onto the consumer, that's fine. Well,
not for the consumers, but better for US. Prices go
up in the United States, it's not so good for Americans.
(02:29):
If we have to share it, well, that's a bit
of pain. But if we have to bear it, that's
quite a lot of pain.
Speaker 1 (02:36):
Do you think, Stephen, that we should have changed the
approach that we took, or perhaps we took the wrong approach.
I mean it seemed to be that we were pretty
relaxed about it, or putting our head below the parapet
maybe a combination of both. Should we have done what
Albanesi did and made concessions or what South Korea did
and offered to buy things?
Speaker 2 (02:51):
Well, of course, so Couth's career did that, and it's
still got a fifteen percent tariff.
Speaker 1 (02:55):
But it's down from twenty five, isn't.
Speaker 2 (02:57):
It down twenty five? Yeah? I suppose so. But look,
I don't think there's much more we could have done.
We just don't have enough to offer the United States.
What are we offering right now? We're offering them already
a market where we charge very very low tariffs. You know.
In the case of Australia, of course, they're a free
trade partner with the United States, they have a free
trade agreement. It's not worth much these days, but the
(03:19):
United States has a you know, a surplus with them.
We have a small deficit. So I mean, you know,
I'm not sure there's a lot that we could have done.
The problem is we're already offering to the United States
very advantage advantageous market access conditions without asking for anything
in return. So I just don't think there was a
lot to be negotiated myself.
Speaker 1 (03:41):
What about Okay, So Tod mcclay's going to go to
them now and he's going to say to them, where
about we will get ourselves into surplus for you because
we're going to buy a bunch of Boeings. Will that
change their mind?
Speaker 2 (03:51):
Well? Who knows when these settings are going to be evaluated,
you know, And we don't even know if this is
the last word on all of this. The difficulty with
going back the United States. Of course, it's going to
take a long time to do it, and a lot
of other people are going to be wanting to do
exactly the same thing. I mean, when you look at
the range of countries that are now going to play
this fifteen percent tariff, you know, New Zealand's not quite
(04:12):
in the same position as a lot of these other ones,
you know, and you know, we take them. A country
like Chile, a very fine country, but it hasn't done
a lot, you know, in terms of defense and security
cooperation hasn't been there at the founding of the United
Nations and all these other things like US. I don't
really know why we should be treated so badly, quite frankly, fair.
Speaker 1 (04:31):
Point, Stephen, Thanks very much, Stephen Jacoby, former Trade negotiated.
Speaker 2 (04:34):
For more from Heather Duplessy Allen Drive. Listen live to
News Talk sai'd Be from four pm weekdays, or follow
the podcast on iHeartRadio.
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