The Country 25/03/25: Conor English talks to Jamie Mackay

The former CEO of Federated Farmers, former adviser to the Reserve Bank, and younger brother of Bill (Sir William) writes "The US government intends to use tariffs as a way of incentivising other countries to do things that are helpful to the US; things like curtail immigrants or drugs travelling across the border, or to shift manufacturing jobs to America. President Donald Trump has described the word 'tariffs' as 'the most beautiful word in the dictionary,' so it’s clear he likes the idea of using tariffs." So, what will Trump do on April 2?

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Episode Transcript

Speaker 1 (00:00):
Boxer Mike Tyson famously said everyone has a plan until
they get punched in the face. So writes Connor English.
Of course, Connor is the younger brother of Sir William.
He's a former chief executive of Federated Farmer's got his
fingers and many many business pies. Connor, I never had
you down for a Trump tariff fan.

Speaker 2 (00:24):
Well, I'm not a Trump terror plan fan, but I'm
intrigued about what the new president is attempting to do
along with his cabinet, which is effectively a big tax tax,
which from reducing income tax and increasing tariff taxes effectively,
because they've got a big problem over there. They've got

(00:45):
dead of thirty six trillion, the GDP's only twenty nine trillion,
and they're running deficits of two trillion on expenditure of
six and a half trillion and only four point five
trillion revenue. So they're looking to get the revenue up
for the country and they're looking to reduce costs. So

(01:06):
that's why they've got Elon Musk on the dodge trying
to get rid of a trillion dollars of what he
calls waste, fraud and abuse and they've got Howard looking
on external revenue, trying to get revenue up from tariffs
and selling what they called a Trump card, which.

Speaker 1 (01:21):
Is but Connor, English, aren't you arguing against yourself there?
I read a really interesting column you'd written in the Listener,
and you went back nearly one hundred years ago, nearly
a century ago to nineteen thirty. President Hoover introduced tariffs
under this Smoot Hawley Tariff Act of nineteen thirty and
it was a disaster for the US economy.

Speaker 2 (01:43):
It was an absolute disaster. And that just shows you
the risk that the new administration in America is taking
on the Trump on the tariffs. And the issue there
is that when they did increase tariffs on over twenty
thousand items, other countries did punch back. And the big

(02:04):
what happened there was that imports did for you know,
sixty six percent, from four point four billion the nineteen
twenty nine to only one and a half billion in
nineteen thirty three. So you think, okay, well, that's good.
We haven't got imports coming in. There must be more
jobs for Americans. But unfortunately, other countries decided not to
buy the exports from America and so exports dropped from

(02:27):
five point four billion down to two point one So
I dropped another sixty percent, and GMP halved, and so
unemployment went from eight percent to nineteen thirty to twenty
five percent of nineteen thirty three.

Speaker 1 (02:40):
Mind you, Connor, let me hang on, Connor, Let's just
temper this, because we did have a great recession during
that period.

Speaker 2 (02:48):
Well, you had. The Smoothhawley Act was implemented partly in
response to the shoe market crash of nineteen twenty nine.
But after that shear market crash, they still only had
five seen unemployment in nineteen thirty, So it took another
three years of those tariffs. And when you can't sell
your goods to other countries, you don't need factories with workers.

(03:11):
The challenge for Donald Trump and his administration now is
for that not to be repeated.

Speaker 1 (03:18):
Okay, apologies, I said the great recession. I meant the
great depression. But here's a question for you. Let's fast
forward a century to where Trump is at the moment
and how he's affecting the world. Is his cure worse
than the disease?

Speaker 2 (03:33):
Well, he's looking at it from a point of view
of America and he's making an assumption that trade flows well,
I think he's making an assumption that trade flows will
be similar to what they are now, and he's looking
at it as tariff as a revenue owner. And what
people may have forgotten is that tariffs came in in
America in about seventeen eighty nine or something like that,

(03:56):
in New Zealand eighteen forty and it was a very
legitimate way of getting revenue for a government, and then
we brought an income tax fifty years later, and he's
just looking to reverse that so that you get the
advantages of Ireland for a light from a low taxation regime,
as he sees it, and you know, you get the
rest of the world to pay in tariffs to fund

(04:18):
the rest of your government activities in the United States.
So it's a massive punt and a lot of risk,
and we're going to find out how it goes. What
are you.

Speaker 1 (04:28):
Expecting to happen on April the second.

Speaker 2 (04:32):
Well, I think the administration is signal that it's going
to tell a whole lot of countries that they're going
to be paying tariffs, and you know, New Zealand is hoping,
of course, that we get an exemption. And when you
look at our trade with America, the our our second
biggest trading partner now of about twenty five billion New
Zealand dollars in trade, about half and half roughly of

(04:54):
imports and exports, we are running a deficit of about
three and a half billion. A fair goal is about
revenue and raising revenue for America. It is hard to
see how we would get an exemption if that's their strategy.
So I'm expecting they're going to tell a lot of
countries that they're going to start playing tariffs.

Speaker 1 (05:16):
That's bad news for us. We're a free trade nation.

Speaker 2 (05:20):
Yeah, I mean there is a possibility that we could
get an exemption. I mean we have low levels of tariffs,
and President Traumas articulated a lot about reciprocity. You know,
other countries charging higher tariffs on American goods than Americans
charge on their goods and that's unfear Well, that can't
be said about New Zealand. So if he's walking on

(05:41):
the fairness strategy, we could get an exemption. That if
he's working on just getting revenue up, that might not
be the case. So you know, we've got a lot
of primary goods there, you know two two about two
and a half billion of meat and one point two
billion of dairy and billion of wine or something like that.
You know, you throw twenty five percent terrify Matt. That's

(06:04):
well over a billion dollars that is going to come
out of the pockets of New Zealand.

Speaker 1 (06:09):
Well, we will eagerly await what he has to say.
On April the second, Connor, English have been really interested
in what you had to say. As Mike Tyson said,
everyone has a plan until they get punched in the face.

Speaker 2 (06:20):
I love it great to remember that from your from
your rugby days. Of course, Jamie, I.

Speaker 1 (06:25):
Stood out the back well away from that. I fired
the verbals, not the punches. See you later, Connor, Yeah,
see you