April 2, 2025 • 6 mins
Rabobank’s Senior Strategist discusses the latest on the USA tariffs and the upcoming RBNZ decision on the OCR on April 9.
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Speaker 1 (00:00):
It is Liberation Day. Let's get some commentary on Trump's tariffs.
Our expert in the field, or one of them is
being picked and he's a senior strata just effectively. The
chief economist for Rabobank based out of Sydney, Albo, Your
Prime Minister Anthony Albanisi said it was not the act
of a friend, but being picked in that ten percent.
(00:22):
Did Australia and New Zealand get off lightly good?
Speaker 2 (00:26):
Jamie? Yeah, I think it's fair to say that Australia
and New Zealand have come out comparatively well in this
round of reciprocal tariffs. So if we look through the lift,
some of the numbers applied to other countries that are
quite a bit higher than the ten percent that New
Zealand and Australia are facing. For Cambodia at forty nine percent,
(00:46):
Sri Lanka at forty four, Banglades thirty seven, China thirty four,
Indonesia thirty two, So ten percent looks okay in the context.
Speaker 1 (00:56):
Yeah, not to mention Japan at twenty four percent, India
twenty six, the EU at twenty Yet the UK, Ben
Pickton got away with ten percent like us.
Speaker 2 (01:08):
Yeah, that's right. So it's interesting looking not just at
the tariffs that the US is imposing on other countries,
but also at the numbers that the US calculated as
the equivalent tariff rate that the United States faces when
exporting into these other markets. And something that stuck out
to me is that they faced trade barriers of about
(01:30):
ten percent tariff equivalent for Australia, but for New Zealand
they calculate that figure at about twenty percent. So maybe
if there's another shoe to drop in the trade war,
at some point, New Zealand might be a little bit
more exposed than what Australia.
Speaker 1 (01:46):
Stephen Jacobe, a trade expert here in New Zealand, I'm
sure you're well aware of them, he said, unjustified, painful,
but at a lower level of pain than expected. And
as I said, Albanizi, your guys said, not the act
of a friend. We seen nine billion dollars worth of
goods to the US. There is second biggest trading partner
twelve percent of exports by value. Who ultimately bears the
(02:10):
cost of this is it US as the exporter or
the Americans as the end consumer.
Speaker 2 (02:17):
Yeah, so there's going to be a bit of a
mix between the two, but ultimately the end consumer will
pay more of the cost of the tafts than what
the exporting nations will, So what we would expect to
see is slightly lower prices for some of the things
that we're exporting to the United States. And beef really
sticks out as the number one export for both New
Zealand and Australia going to the USA. But the USA
(02:41):
can't supply its own consumption needs with beef produced inside
the USA. So what's going to happen in the short
term at least is higher prices for US consumers, So
most of the cost of these tasks will actually be
born by US citizens.
Speaker 1 (02:58):
Why did Trump call out Australian beef in particular, because
our Australian correspondent, Chris Russell is coming up on the
show shortly texted me earlier this morning and said, maybe
Australia is a bit guilty of using biosecurity as a
bit of a shield and the Americans are none too
happy about it.
Speaker 2 (03:17):
Yeah, So this is something that the USA has been
complaining about for years and years, that Australia imposes non
tariff barriers through our biosecurity measures. So we restrict fresh food,
particularly from coming into the Australian market, so we don't
allow US beef, we don't allow apples and pears, we
(03:40):
don't allow fresh pork products, and we don't allow fresh
poultry products either because of biosecurity reasons. But there are
questions around the validity of some of the biosecurity concerns
that have been raised by the United States Trade representative
over many years. They haven't been happy about it. So
(04:02):
there is a little bit of a sense on the
American side that some of these biosecurity laws are sort
of shadow tariffs that are being imposed by Australia.
Speaker 1 (04:12):
Wall Street obviously not trading at the moment it's evening
or nighttime in the US. The Australian and New Zealand
share markets didn't like it. I think Wall Street futures
trading was down two percent. It looks like the world
economy doesn't like this at all.
Speaker 2 (04:28):
Yeah, well that's the financial economy. So Donald Trump has
been pretty clear that he's putting these in place for
US manufacturers and farmers, not the US bankers and hedge funds.
So that's probably not the constituency that he's trying to
keep happy with these sorts of measures. We've had it
(04:49):
very very good for about forty years through increased trade
liberalization and financialization in the financial markets, and the shoe
might be on the other foot at the moment.
Speaker 1 (05:00):
So being picked in with US senior stratages for Rabobank
out of Sydney ben ocr next Wednesday, what are you picking?
Speaker 2 (05:07):
Yeah, well, we think the IRBNZ is going to cut again,
but the cut won't be as big as what we've
had recently. So we're expecting point two five percentage points
next week and we think we'll get one more of
those in May as well.
Speaker 1 (05:24):
What about Trump with the tariffs and the inflation that's
going to cause around the world, Will that upset the
apple cart?
Speaker 2 (05:31):
Yeah, well, it's definitely going to have an effect. So
we think that the tariffs are inflationary in the United
States because they're increasing the prices of all the imported goods,
but probably disinflationary to some extent for other countries around
the world because they won't be able to sell that
product into the United States or not as easily as
(05:53):
they previously could, and therefore they're probably going to discount
goods and dump them into other markets might mean that
we get some cheap product being dumped into the New
Zealand market. In the short term, that's probably short term disinflationary,
so there's different effects in different countries. Over the long run.
(06:14):
Kind of what's happening is we're emphasizing production inside national
borders rather than emphasizing international efficiency comparative advantage. Globalization is
maybe seeing the tide go out a little bit, and
over the longer run that's probably bad news for the
supply side of the economy and points to structurally higher
(06:35):
inflation in the future.
Speaker 1 (06:36):
Bean Pecton from Rabobank. Thanks for your time today on
the Country.
Speaker 2 (06:40):
Cheers, Damie, appreciate it.
It is Liberation Day. Let's get some commentary on Trump's tariffs.
Our expert in the field, or one of them is
being picked and he's a senior strata just effectively. The
chief economist for Rabobank based out of Sydney, Albo, Your
Prime Minister Anthony Albanisi said it was not the act
of a friend, but being picked in that ten percent.
(00:22):
Did Australia and New Zealand get off lightly good?
Speaker 2 (00:26):
Jamie? Yeah, I think it's fair to say that Australia
and New Zealand have come out comparatively well in this
round of reciprocal tariffs. So if we look through the lift,
some of the numbers applied to other countries that are
quite a bit higher than the ten percent that New
Zealand and Australia are facing. For Cambodia at forty nine percent,
(00:46):
Sri Lanka at forty four, Banglades thirty seven, China thirty four,
Indonesia thirty two, So ten percent looks okay in the context.
Speaker 1 (00:56):
Yeah, not to mention Japan at twenty four percent, India
twenty six, the EU at twenty Yet the UK, Ben
Pickton got away with ten percent like us.
Speaker 2 (01:08):
Yeah, that's right. So it's interesting looking not just at
the tariffs that the US is imposing on other countries,
but also at the numbers that the US calculated as
the equivalent tariff rate that the United States faces when
exporting into these other markets. And something that stuck out
to me is that they faced trade barriers of about
(01:30):
ten percent tariff equivalent for Australia, but for New Zealand
they calculate that figure at about twenty percent. So maybe
if there's another shoe to drop in the trade war,
at some point, New Zealand might be a little bit
more exposed than what Australia.
Speaker 1 (01:46):
Stephen Jacobe, a trade expert here in New Zealand, I'm
sure you're well aware of them, he said, unjustified, painful,
but at a lower level of pain than expected. And
as I said, Albanizi, your guys said, not the act
of a friend. We seen nine billion dollars worth of
goods to the US. There is second biggest trading partner
twelve percent of exports by value. Who ultimately bears the
(02:10):
cost of this is it US as the exporter or
the Americans as the end consumer.
Speaker 2 (02:17):
Yeah, so there's going to be a bit of a
mix between the two, but ultimately the end consumer will
pay more of the cost of the tafts than what
the exporting nations will, So what we would expect to
see is slightly lower prices for some of the things
that we're exporting to the United States. And beef really
sticks out as the number one export for both New
Zealand and Australia going to the USA. But the USA
(02:41):
can't supply its own consumption needs with beef produced inside
the USA. So what's going to happen in the short
term at least is higher prices for US consumers, So
most of the cost of these tasks will actually be
born by US citizens.
Speaker 1 (02:58):
Why did Trump call out Australian beef in particular, because
our Australian correspondent, Chris Russell is coming up on the
show shortly texted me earlier this morning and said, maybe
Australia is a bit guilty of using biosecurity as a
bit of a shield and the Americans are none too
happy about it.
Speaker 2 (03:17):
Yeah, So this is something that the USA has been
complaining about for years and years, that Australia imposes non
tariff barriers through our biosecurity measures. So we restrict fresh food,
particularly from coming into the Australian market, so we don't
allow US beef, we don't allow apples and pears, we
(03:40):
don't allow fresh pork products, and we don't allow fresh
poultry products either because of biosecurity reasons. But there are
questions around the validity of some of the biosecurity concerns
that have been raised by the United States Trade representative
over many years. They haven't been happy about it. So
(04:02):
there is a little bit of a sense on the
American side that some of these biosecurity laws are sort
of shadow tariffs that are being imposed by Australia.
Speaker 1 (04:12):
Wall Street obviously not trading at the moment it's evening
or nighttime in the US. The Australian and New Zealand
share markets didn't like it. I think Wall Street futures
trading was down two percent. It looks like the world
economy doesn't like this at all.
Speaker 2 (04:28):
Yeah, well that's the financial economy. So Donald Trump has
been pretty clear that he's putting these in place for
US manufacturers and farmers, not the US bankers and hedge funds.
So that's probably not the constituency that he's trying to
keep happy with these sorts of measures. We've had it
(04:49):
very very good for about forty years through increased trade
liberalization and financialization in the financial markets, and the shoe
might be on the other foot at the moment.
Speaker 1 (05:00):
So being picked in with US senior stratages for Rabobank
out of Sydney ben ocr next Wednesday, what are you picking?
Speaker 2 (05:07):
Yeah, well, we think the IRBNZ is going to cut again,
but the cut won't be as big as what we've
had recently. So we're expecting point two five percentage points
next week and we think we'll get one more of
those in May as well.
Speaker 1 (05:24):
What about Trump with the tariffs and the inflation that's
going to cause around the world, Will that upset the
apple cart?
Speaker 2 (05:31):
Yeah, well, it's definitely going to have an effect. So
we think that the tariffs are inflationary in the United
States because they're increasing the prices of all the imported goods,
but probably disinflationary to some extent for other countries around
the world because they won't be able to sell that
product into the United States or not as easily as
(05:53):
they previously could, and therefore they're probably going to discount
goods and dump them into other markets might mean that
we get some cheap product being dumped into the New
Zealand market. In the short term, that's probably short term disinflationary,
so there's different effects in different countries. Over the long run.
(06:14):
Kind of what's happening is we're emphasizing production inside national
borders rather than emphasizing international efficiency comparative advantage. Globalization is
maybe seeing the tide go out a little bit, and
over the longer run that's probably bad news for the
supply side of the economy and points to structurally higher
(06:35):
inflation in the future.
Speaker 1 (06:36):
Bean Pecton from Rabobank. Thanks for your time today on
the Country.
Speaker 2 (06:40):
Cheers, Damie, appreciate it.
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