1 00:00:05,120 --> 00:00:08,360 Speaker 1: Hilda. I'm Chelsea Daniels and this is the Front Page, 2 00:00:08,760 --> 00:00:16,040 Speaker 1: a daily podcast presented by the New Zealand Herald. Donald 3 00:00:16,079 --> 00:00:19,520 Speaker 1: Trump's Liberation Day has felt more like a blood bath 4 00:00:19,600 --> 00:00:23,000 Speaker 1: for the world economy. The US president last week announced 5 00:00:23,000 --> 00:00:27,840 Speaker 1: what he called reciprocal tariffs on almost every country on Earth, 6 00:00:28,200 --> 00:00:32,159 Speaker 1: as well as some islands uninhabited by human life. New 7 00:00:32,240 --> 00:00:35,479 Speaker 1: Zealand was not as impacted as most, with just a 8 00:00:35,640 --> 00:00:39,200 Speaker 1: ten percent tariff on our goods imported into the US, 9 00:00:39,320 --> 00:00:42,480 Speaker 1: but the European Union has had a twenty percent bump 10 00:00:42,520 --> 00:00:46,360 Speaker 1: on tariffs, while China has received an additional thirty four 11 00:00:46,400 --> 00:00:50,839 Speaker 1: percent tariff. More than fifty countries have reportedly sought talks 12 00:00:50,880 --> 00:00:54,440 Speaker 1: with the US to ease these tariffs. But as trillions 13 00:00:54,480 --> 00:00:57,680 Speaker 1: of dollars are wiped from the US stock market, what 14 00:00:57,760 --> 00:01:00,400 Speaker 1: does this all mean for New Zealand? They on the 15 00:01:00,440 --> 00:01:03,600 Speaker 1: front Page. We're sorting through the numbers with Enzied Herald 16 00:01:03,680 --> 00:01:12,119 Speaker 1: Business Editor at Large Liam Dan. Liam. First off, can 17 00:01:12,160 --> 00:01:15,520 Speaker 1: you explain to those who are unaware what a tariff 18 00:01:15,680 --> 00:01:17,440 Speaker 1: actually is? Sure? 19 00:01:17,520 --> 00:01:19,520 Speaker 2: Yeah, I mean a tariff's just an a tax really 20 00:01:19,600 --> 00:01:22,360 Speaker 2: at the border on goods coming into your country, and 21 00:01:22,400 --> 00:01:24,720 Speaker 2: it's one of the oldest forms of taxation in the 22 00:01:24,760 --> 00:01:28,319 Speaker 2: history of world or human economics. And yeah, it's paid 23 00:01:28,520 --> 00:01:31,600 Speaker 2: by the importer at the border and adds costs to 24 00:01:31,840 --> 00:01:35,000 Speaker 2: imported goods, raises money for the government, and imparts an 25 00:01:35,000 --> 00:01:36,800 Speaker 2: advantage to locally produced goods. 26 00:01:36,920 --> 00:01:39,880 Speaker 1: And what direction does it go in, because that's one 27 00:01:39,880 --> 00:01:42,840 Speaker 1: of the confusing aspects of this, right, Trump is actually 28 00:01:42,880 --> 00:01:45,959 Speaker 1: making goods more expensive to US consumers. 29 00:01:46,319 --> 00:01:51,080 Speaker 2: Yeah, absolutely, he argues that foreign countries will pay. I mean, technically, 30 00:01:51,840 --> 00:01:56,040 Speaker 2: you know, it's absolutely the case that the US importer pays. 31 00:01:55,400 --> 00:01:57,600 Speaker 2: They have to fill out a form and it goes 32 00:01:57,640 --> 00:02:00,720 Speaker 2: to US customs. But what I think Trump means is 33 00:02:00,720 --> 00:02:03,600 Speaker 2: that he believes the foreign countries trying to sell the 34 00:02:03,600 --> 00:02:06,880 Speaker 2: goods will bear the cost, which means that if they 35 00:02:06,880 --> 00:02:08,600 Speaker 2: want to get the goods, and they'll have to lower 36 00:02:08,639 --> 00:02:10,800 Speaker 2: their prices or the prices will be too high and 37 00:02:10,800 --> 00:02:13,880 Speaker 2: no one will buy them. So and that respect, it 38 00:02:13,880 --> 00:02:16,720 Speaker 2: could cost us, and it could cost other countries. If 39 00:02:16,760 --> 00:02:19,400 Speaker 2: we want to sell the same amount of wine into 40 00:02:19,440 --> 00:02:22,359 Speaker 2: the US, maybe our prices will have to come down 41 00:02:22,400 --> 00:02:24,280 Speaker 2: and will have to wear the cost. That's not clear, 42 00:02:24,400 --> 00:02:27,680 Speaker 2: you know, Like New Zealand sells a lot of Hamburger beef. 43 00:02:27,840 --> 00:02:30,800 Speaker 2: All our leftover the poor male dairy cows or the 44 00:02:30,800 --> 00:02:33,760 Speaker 2: ones that you know because they're male, they become hamburger beef. 45 00:02:33,800 --> 00:02:36,520 Speaker 2: They go off to the US to become hamburgers, and 46 00:02:36,560 --> 00:02:38,440 Speaker 2: the US needs that. They have a shortage of that 47 00:02:38,560 --> 00:02:40,760 Speaker 2: kind of beef, and they've been taking a lot of 48 00:02:40,760 --> 00:02:43,960 Speaker 2: New Zealand and Australian beef for basically for hamburgers. And 49 00:02:44,000 --> 00:02:46,560 Speaker 2: if they still need that, you know, they're going to 50 00:02:46,639 --> 00:02:48,520 Speaker 2: have to take it and pay the tariff, and the 51 00:02:48,560 --> 00:02:51,359 Speaker 2: consumers there will pay the cost. Yeah, it could be split, 52 00:02:51,600 --> 00:02:54,360 Speaker 2: but it's hard to know for sure, but yeah, there 53 00:02:54,400 --> 00:02:57,640 Speaker 2: will be there. Expecting costs to go up for US consumers. 54 00:02:57,840 --> 00:03:01,320 Speaker 1: Trillions of dollars have been white of the value of 55 00:03:01,360 --> 00:03:05,360 Speaker 1: the US stock market in response to the tariffs already. 56 00:03:05,600 --> 00:03:08,000 Speaker 1: How rare is this market reaction? 57 00:03:08,320 --> 00:03:10,680 Speaker 2: Well, this is pretty bad. I don't know how it's 58 00:03:10,680 --> 00:03:12,520 Speaker 2: going to go in the next few days, whether you know, 59 00:03:12,760 --> 00:03:14,959 Speaker 2: there's so much relying on what comes out of the 60 00:03:14,960 --> 00:03:18,360 Speaker 2: White House. But this is a serious, serious meltdown. This 61 00:03:18,480 --> 00:03:21,400 Speaker 2: is like, you know, brings back feelings of the GFC. 62 00:03:21,480 --> 00:03:24,720 Speaker 2: There was a big meltdown when COVID hit a really 63 00:03:24,720 --> 00:03:26,680 Speaker 2: massive sell off for a few days. But then, of 64 00:03:26,720 --> 00:03:30,040 Speaker 2: course the government came in with stimulus, and the same 65 00:03:30,080 --> 00:03:32,240 Speaker 2: with the GFC. Eventually the government comes in and the 66 00:03:32,240 --> 00:03:35,320 Speaker 2: Federal Reserve comes in to support things. In this case, 67 00:03:35,320 --> 00:03:37,800 Speaker 2: the government does not coming to the rescue. The US 68 00:03:37,880 --> 00:03:40,720 Speaker 2: government is the reason that this has happened. So yeah, 69 00:03:40,720 --> 00:03:43,720 Speaker 2: but it's historic. This is an historic sell off. This 70 00:03:43,800 --> 00:03:48,000 Speaker 2: is a global market meltdown. The world has changed, you know, 71 00:03:48,080 --> 00:03:49,720 Speaker 2: a little be in the history books. 72 00:03:49,440 --> 00:03:54,520 Speaker 1: And in terms of what this mimics in years gone by. 73 00:03:54,880 --> 00:03:59,400 Speaker 1: I mean, you mentioned the GFC. During the GFC, markets 74 00:03:59,520 --> 00:04:02,960 Speaker 1: essentially crashed by more than what we're seeing at the moment. 75 00:04:03,200 --> 00:04:08,120 Speaker 1: What will indicate GFC levels within the next few days. 76 00:04:08,480 --> 00:04:11,480 Speaker 2: Yeah, it's interesting because the GFC was a huge demand shop. 77 00:04:11,560 --> 00:04:14,480 Speaker 2: It's the fear that takes hold really that causes the problem. 78 00:04:14,640 --> 00:04:18,080 Speaker 2: The tariffs are supposed to create costs for US consumers, 79 00:04:18,080 --> 00:04:20,960 Speaker 2: which means that there's inflationary issues, which means interest rates 80 00:04:21,200 --> 00:04:23,320 Speaker 2: are likely to stay higher in the US, their dollar 81 00:04:23,360 --> 00:04:25,680 Speaker 2: would go higher. All of that stuff was predicted as 82 00:04:25,760 --> 00:04:29,279 Speaker 2: an inflationary problem, but the fear and shock when it 83 00:04:29,320 --> 00:04:31,880 Speaker 2: happened meant that the opposite has happened. The US dollar 84 00:04:31,920 --> 00:04:35,599 Speaker 2: has fallen in relative terms. US bond yields have fallen, 85 00:04:35,839 --> 00:04:39,520 Speaker 2: and there's a lot of fear about recession in the 86 00:04:39,640 --> 00:04:43,120 Speaker 2: US now and that is overwhelming the other bad stuff. 87 00:04:43,160 --> 00:04:45,920 Speaker 2: So there's two lots of bad stuff here. And the 88 00:04:45,920 --> 00:04:49,680 Speaker 2: demand side bad stuff is what's really we've seen in 89 00:04:49,720 --> 00:04:53,720 Speaker 2: the past few days. Whether that stabilizes or who could say. 90 00:04:53,720 --> 00:04:58,120 Speaker 2: But you know, if we see more retaliation the Chinese 91 00:04:58,160 --> 00:05:01,039 Speaker 2: have responded, if we see Europe respond with more tariffs, 92 00:05:01,040 --> 00:05:02,240 Speaker 2: you know, then you have to go back to the 93 00:05:02,320 --> 00:05:04,960 Speaker 2: nineteen thirties to get a comparison with what's going on. 94 00:05:05,080 --> 00:05:07,560 Speaker 2: I mean, this is sort of you know, the last 95 00:05:07,560 --> 00:05:09,760 Speaker 2: time the US did something like this was something called 96 00:05:09,760 --> 00:05:13,160 Speaker 2: the Smoot Hawley Act in nineteen thirty when they thought, 97 00:05:13,200 --> 00:05:15,520 Speaker 2: as a response to the big stock market crash of 98 00:05:15,560 --> 00:05:18,200 Speaker 2: twenty nine that putting tariffs on everything was going to 99 00:05:18,200 --> 00:05:21,919 Speaker 2: be a solution. And that's famously been talked about and 100 00:05:21,960 --> 00:05:25,919 Speaker 2: almost you know, universally accepted as a failure in economics, 101 00:05:26,000 --> 00:05:28,360 Speaker 2: and you know, kids are taught about it in schools. 102 00:05:28,400 --> 00:05:30,239 Speaker 1: Well, Ferris Bueller, isn't it in that movie? 103 00:05:30,360 --> 00:05:32,360 Speaker 2: Yeah, that's right. There's a famous scene in the first 104 00:05:32,400 --> 00:05:34,440 Speaker 2: Bueller's Day Off for those who are of a certain 105 00:05:34,480 --> 00:05:36,680 Speaker 2: age and love that movie, where the class is sitting 106 00:05:36,680 --> 00:05:39,599 Speaker 2: on their board as all hell and the teacher pretty 107 00:05:39,640 --> 00:05:41,160 Speaker 2: much explains the Smoot Hawley Act. 108 00:05:42,680 --> 00:05:46,919 Speaker 3: In nineteen thirty, the Republican controlled House of Representatives, in 109 00:05:46,960 --> 00:05:51,040 Speaker 3: an effort to alleviate the effects of the anyone, anyone 110 00:05:51,600 --> 00:05:58,920 Speaker 3: Great Depression past the anyone anyone the tariff Bill, the 111 00:05:59,080 --> 00:06:06,160 Speaker 3: Holly Smooth Tariff Act, which anyone raised or lowered, raised 112 00:06:06,520 --> 00:06:09,599 Speaker 3: tariffs in an effort to collect more revenue for the 113 00:06:09,600 --> 00:06:13,880 Speaker 3: federal government. Did it work? Anyone anyone know the effects? 114 00:06:14,960 --> 00:06:17,440 Speaker 3: It did not work, and the United States sank deeper 115 00:06:17,480 --> 00:06:18,839 Speaker 3: into the Great Depression. 116 00:06:22,680 --> 00:06:26,040 Speaker 2: US kids all over, they've all been taught this. Trump 117 00:06:26,120 --> 00:06:27,920 Speaker 2: says that's wrong. He has a different view on that, 118 00:06:28,000 --> 00:06:30,080 Speaker 2: and his advisors have a different view. They think the 119 00:06:30,080 --> 00:06:31,880 Speaker 2: problem was that the tariffs were taken off from the 120 00:06:31,920 --> 00:06:34,279 Speaker 2: first place in nineteen oh nine, I think he said, 121 00:06:34,720 --> 00:06:37,320 Speaker 2: and that the Smooth Hawley Act was too little, too late, 122 00:06:37,360 --> 00:06:39,000 Speaker 2: and they should have kept the tariffs on. So he's 123 00:06:39,040 --> 00:06:41,760 Speaker 2: HARKing back to the great days of the late nineteenth 124 00:06:41,800 --> 00:06:45,360 Speaker 2: century when US had very high tariffs and low income 125 00:06:45,400 --> 00:06:47,680 Speaker 2: tax what they called the Gilded Age when there was 126 00:06:47,720 --> 00:06:50,960 Speaker 2: a it was a great time for billionaires. JP Morgan 127 00:06:51,000 --> 00:06:53,640 Speaker 2: and all that sort of stuff. He's literally saying that's 128 00:06:53,680 --> 00:06:56,479 Speaker 2: what they want to get back to, those great days 129 00:06:56,480 --> 00:06:58,800 Speaker 2: of America. Yeah, there's a little bit of skepticism. That 130 00:06:58,800 --> 00:07:02,000 Speaker 2: would be an understatement. But so there is a lot 131 00:07:02,000 --> 00:07:05,599 Speaker 2: of lot of fear and panic through US markets about 132 00:07:05,640 --> 00:07:07,240 Speaker 2: what is actually happening. 133 00:07:06,920 --> 00:07:10,960 Speaker 1: And what does such a loss mean at a consumer 134 00:07:11,080 --> 00:07:14,040 Speaker 1: level or is this only a concern for investors at 135 00:07:14,080 --> 00:07:14,800 Speaker 1: this stage. 136 00:07:15,240 --> 00:07:18,040 Speaker 2: Yeah, I mean, look, we've been through crashes before. It 137 00:07:18,480 --> 00:07:20,440 Speaker 2: looks horrible when you look at your KEII saver, and 138 00:07:20,480 --> 00:07:22,640 Speaker 2: it might you know, we're going to have some volatility 139 00:07:22,720 --> 00:07:24,840 Speaker 2: and it might might get worse. You know, there's no 140 00:07:25,040 --> 00:07:26,760 Speaker 2: question that there is a risk that things could get 141 00:07:26,760 --> 00:07:30,880 Speaker 2: worse for consumers, like until you know, in New Zealand 142 00:07:30,920 --> 00:07:33,280 Speaker 2: it's we sort of buffered a little bit. Our share 143 00:07:33,320 --> 00:07:36,320 Speaker 2: market is down as well, but it's not our direct 144 00:07:36,360 --> 00:07:39,080 Speaker 2: The direct tariffs on New Zealand were seen as manageable 145 00:07:39,080 --> 00:07:41,800 Speaker 2: by economists. The issue for US is what happens to 146 00:07:41,880 --> 00:07:45,040 Speaker 2: Asia and China and the economies there. And I guess 147 00:07:45,080 --> 00:07:47,280 Speaker 2: to some extent the US, So it's the demand. So 148 00:07:47,480 --> 00:07:49,360 Speaker 2: are people still going to want to buy as much 149 00:07:49,360 --> 00:07:51,480 Speaker 2: of our stuff? Are they going to want to travel here? 150 00:07:51,480 --> 00:07:54,680 Speaker 2: So it's a risk for tourism. Already we've seen in 151 00:07:54,720 --> 00:07:57,320 Speaker 2: New Zealand shares fall a lot. There's a risk that 152 00:07:57,400 --> 00:08:00,520 Speaker 2: it does hit tourism, so that that fragile recovery tourism 153 00:08:00,880 --> 00:08:02,520 Speaker 2: is just starting to sort of add value to the 154 00:08:02,560 --> 00:08:05,240 Speaker 2: New Zealand economy again sort of since COVID and that's 155 00:08:05,240 --> 00:08:08,120 Speaker 2: at risk. We're lucky we sell food. You know, it 156 00:08:08,200 --> 00:08:10,480 Speaker 2: never goes out of fashion, but it's still you know, 157 00:08:10,800 --> 00:08:14,240 Speaker 2: when you saw the tariffs were huge on countries like 158 00:08:14,320 --> 00:08:16,720 Speaker 2: Vietnam and you know, a lot of Thai land, a 159 00:08:16,720 --> 00:08:20,040 Speaker 2: lot of Southeast Asian countries. China's going to take them 160 00:08:20,080 --> 00:08:22,280 Speaker 2: on a trade war. There's all sorts of side effects. 161 00:08:22,280 --> 00:08:26,320 Speaker 2: So it's too soon to say for sure exactly what 162 00:08:26,480 --> 00:08:29,080 Speaker 2: this will mean. There might be some weird upsides for 163 00:08:29,160 --> 00:08:32,360 Speaker 2: New Zealand, but overall, the hit to the global economy 164 00:08:32,520 --> 00:08:34,120 Speaker 2: is going to be felt here. So you know, if 165 00:08:34,160 --> 00:08:37,080 Speaker 2: global demand is down and global growth is down, New 166 00:08:37,160 --> 00:08:38,839 Speaker 2: Zealand's going to feel that, and that's going to make 167 00:08:38,920 --> 00:08:40,800 Speaker 2: our recovery much harder to sustain. 168 00:08:41,000 --> 00:08:43,880 Speaker 1: And it's interesting as well. I mean, there might be 169 00:08:43,920 --> 00:08:45,920 Speaker 1: some people out there saying, look, what happens in the 170 00:08:46,000 --> 00:08:48,600 Speaker 1: US stays in the US, and we're in a good position. 171 00:08:48,679 --> 00:08:51,360 Speaker 1: But if you look back to the eighties, I noticed 172 00:08:51,480 --> 00:08:55,920 Speaker 1: that when Wall Street crashed that iconic twenty percent, I 173 00:08:55,960 --> 00:08:58,560 Speaker 1: think dead in the end, and it was the worst 174 00:08:58,640 --> 00:09:02,720 Speaker 1: crash ever recorded on Wall Street. The New Zealand Stock Exchange, 175 00:09:02,760 --> 00:09:06,400 Speaker 1: didn't it then not only crash twenty percent, but continue 176 00:09:06,440 --> 00:09:09,439 Speaker 1: to crash up to fifty sixty percent in the months 177 00:09:09,440 --> 00:09:10,080 Speaker 1: that followed. 178 00:09:10,440 --> 00:09:13,160 Speaker 2: Yeah, that's true. It was a very different stock market 179 00:09:13,200 --> 00:09:15,160 Speaker 2: in New Zealand at the time. We had we were 180 00:09:15,160 --> 00:09:17,600 Speaker 2: in a stock market bubble ourselves at the time, and 181 00:09:17,679 --> 00:09:20,800 Speaker 2: we had a lot of very speculative investment companies and 182 00:09:20,800 --> 00:09:22,880 Speaker 2: so forth on the market in New Zealand. Now our 183 00:09:22,880 --> 00:09:24,920 Speaker 2: market is much more of a sort of a slightly 184 00:09:24,960 --> 00:09:27,960 Speaker 2: boring reflection of the economy. It's got some big retailers, 185 00:09:28,080 --> 00:09:30,400 Speaker 2: it's got some we've seen, you know, some companies are 186 00:09:30,480 --> 00:09:32,800 Speaker 2: affected by tariffs. Fisher and pikel Healthcare as one of 187 00:09:32,800 --> 00:09:36,440 Speaker 2: our biggest companies, and that's affected by tariff's But that 188 00:09:36,520 --> 00:09:39,160 Speaker 2: gets priced and it hasn't been booming, it's fair to 189 00:09:39,160 --> 00:09:42,040 Speaker 2: say our New Zealand and inziet X anyway. So yeah, 190 00:09:42,080 --> 00:09:44,440 Speaker 2: it's coming off in response. There's a bit of fear 191 00:09:44,480 --> 00:09:47,200 Speaker 2: in markets generally when things crash, but there isn't a 192 00:09:47,200 --> 00:09:50,080 Speaker 2: reason for it to just just absolutely go through the 193 00:09:50,120 --> 00:09:51,800 Speaker 2: floor in the same way as there was in the 194 00:09:51,880 --> 00:09:55,360 Speaker 2: nineteen eighties. A lot of it's more directly tied to 195 00:09:55,360 --> 00:09:59,319 Speaker 2: how our economy is going. So those retailers are struggling 196 00:09:59,400 --> 00:10:01,920 Speaker 2: until humors get out and spend again. So that's not 197 00:10:02,000 --> 00:10:04,559 Speaker 2: great news. If there's just just the amount of uncertainty 198 00:10:04,600 --> 00:10:07,400 Speaker 2: and that the damage it does to confidence. All of 199 00:10:07,400 --> 00:10:09,520 Speaker 2: this is not great news in that sense. 200 00:10:20,640 --> 00:10:24,240 Speaker 1: So why is Trump doing this? What's his argument for 201 00:10:24,320 --> 00:10:24,720 Speaker 1: all of it? 202 00:10:25,120 --> 00:10:28,000 Speaker 2: He seems to genuinely believe that this is a way 203 00:10:28,040 --> 00:10:31,600 Speaker 2: to get back to a world where US manufacturing is dominant. 204 00:10:31,640 --> 00:10:34,280 Speaker 2: So obviously, when you take the tariffs away, it's much 205 00:10:34,360 --> 00:10:36,600 Speaker 2: cheaper to build, you know, the labor is much cheaper 206 00:10:36,600 --> 00:10:39,240 Speaker 2: in Vietnam or China or whoever to build build the 207 00:10:39,280 --> 00:10:42,440 Speaker 2: cars and build the phones, and sew the clothes and 208 00:10:42,480 --> 00:10:45,280 Speaker 2: make the Nike sneakers. So the US has effectively exported 209 00:10:45,320 --> 00:10:48,000 Speaker 2: out a lot of manufacturing jobs. He's talking about bringing 210 00:10:48,000 --> 00:10:51,400 Speaker 2: them back, and I suppose that appeals to his base 211 00:10:51,559 --> 00:10:54,079 Speaker 2: in some of those towns and cities that have been 212 00:10:54,160 --> 00:10:58,360 Speaker 2: really hammered by the globalization process and seeing the factories 213 00:10:58,400 --> 00:11:01,160 Speaker 2: shut down. Yeah, I'm personally at skeptical. You know, a 214 00:11:01,160 --> 00:11:03,120 Speaker 2: lot of his supporters are saying, yeah, we want the 215 00:11:03,120 --> 00:11:05,000 Speaker 2: factories back, and we want this. I'm not sure that 216 00:11:05,040 --> 00:11:07,320 Speaker 2: young Americans want to be back in a factory working 217 00:11:07,400 --> 00:11:09,440 Speaker 2: for the kind of wages. You know, the kind of 218 00:11:09,440 --> 00:11:13,560 Speaker 2: wages that Americans would expect to get paid for factory 219 00:11:13,559 --> 00:11:16,160 Speaker 2: work are not going to mean that it's very hard 220 00:11:16,200 --> 00:11:18,320 Speaker 2: for their goods to be competitive, even with the tariffs, 221 00:11:18,320 --> 00:11:22,400 Speaker 2: because you know, just such a huge difference between America 222 00:11:22,440 --> 00:11:24,400 Speaker 2: and the places where they are making this stuff now 223 00:11:24,440 --> 00:11:27,480 Speaker 2: in America, the previous economic model had been to control 224 00:11:27,520 --> 00:11:30,600 Speaker 2: the IP, the intellectual property on Wall Street. It sort 225 00:11:30,600 --> 00:11:33,120 Speaker 2: of controls the financial markets of the world, you know, 226 00:11:33,840 --> 00:11:38,000 Speaker 2: and Silicon Valley is it's the tech giant of the world, 227 00:11:38,080 --> 00:11:41,319 Speaker 2: and it's kind of through all. You know, they're big companies. 228 00:11:41,520 --> 00:11:43,559 Speaker 2: They own the IP and all the money come the 229 00:11:43,600 --> 00:11:46,319 Speaker 2: dividends all come back but the yeah that the jobs 230 00:11:46,400 --> 00:11:50,120 Speaker 2: haven't been there. That's Trump's theory, I guess, is to rebuild. 231 00:11:50,200 --> 00:11:53,800 Speaker 2: He's talking about rebuilding US manufacturing, bringing car making back 232 00:11:53,840 --> 00:11:56,080 Speaker 2: to Detroit, all that kind of stuff. 233 00:11:56,160 --> 00:11:58,920 Speaker 1: Well, I kind of imagine that the late eighteen hundreds 234 00:11:59,200 --> 00:12:01,480 Speaker 1: and then the boom time that we're talking about would 235 00:12:01,520 --> 00:12:04,160 Speaker 1: have been an amazing time for worker riots. 236 00:12:04,760 --> 00:12:09,079 Speaker 2: Yeah, it wasn't was it was rough right, it was, 237 00:12:09,520 --> 00:12:12,240 Speaker 2: you know, like they didn't have all the labor laws 238 00:12:12,280 --> 00:12:15,920 Speaker 2: that came about through the years of the early twentieth century. 239 00:12:16,000 --> 00:12:18,760 Speaker 2: And that's sort of the kind of world that you're 240 00:12:18,760 --> 00:12:22,040 Speaker 2: in with some of these other probably poorer countries that 241 00:12:22,120 --> 00:12:25,400 Speaker 2: have much cheaper labor. So yeah, it's very hard to 242 00:12:25,400 --> 00:12:27,560 Speaker 2: see the US getting back to that. And as a plan, 243 00:12:27,679 --> 00:12:31,160 Speaker 2: it even even it looks like a fairly long term plan. 244 00:12:31,320 --> 00:12:33,720 Speaker 2: So politically, there's going to be some real issues with 245 00:12:34,400 --> 00:12:36,480 Speaker 2: you know, the idea that they tank the US economy 246 00:12:36,720 --> 00:12:39,480 Speaker 2: in the short term. Even if he's able to keep 247 00:12:39,520 --> 00:12:41,880 Speaker 2: selling or he will keep selling this longer term dream 248 00:12:41,920 --> 00:12:45,319 Speaker 2: of rebuilding manufacturing, it just would take a considerable amount 249 00:12:45,360 --> 00:12:47,800 Speaker 2: of time to do that, and you know, the political 250 00:12:47,840 --> 00:12:50,440 Speaker 2: cycles pretty short these days. It's going to be a 251 00:12:50,520 --> 00:12:53,319 Speaker 2: real test of Trump's popularity. Put it that way, and. 252 00:12:53,280 --> 00:12:55,719 Speaker 1: I mean has put a tariff on the Herd and 253 00:12:55,880 --> 00:13:00,000 Speaker 1: McDonald Islands, which is only inhabited by penguins and seas 254 00:13:00,440 --> 00:13:04,440 Speaker 1: and Norfolk Island has received a twenty nine percent tariff 255 00:13:04,520 --> 00:13:08,439 Speaker 1: despite claiming to have no export relationship with the US. 256 00:13:08,559 --> 00:13:11,520 Speaker 1: These mistakes, if you can call them mistakes, don't really 257 00:13:11,559 --> 00:13:14,400 Speaker 1: instill you with too much confidence to they sure. 258 00:13:14,440 --> 00:13:16,480 Speaker 2: I mean a look, to be fair, I've heard that 259 00:13:17,040 --> 00:13:18,800 Speaker 2: the White House has come back and said, look, they 260 00:13:18,840 --> 00:13:21,360 Speaker 2: did that because they want to make sure that in 261 00:13:21,360 --> 00:13:24,560 Speaker 2: this case Australia, which has the sort of the Australian territories, 262 00:13:24,760 --> 00:13:28,120 Speaker 2: doesn't use them as a loophole because they are separate territory. 263 00:13:28,120 --> 00:13:30,400 Speaker 2: And I don't know, like the idea that Australia would 264 00:13:30,400 --> 00:13:35,000 Speaker 2: funnel all its steal exports through you know, Norfolk Island 265 00:13:35,080 --> 00:13:36,720 Speaker 2: or something. It just seems a bit crazy to me. 266 00:13:36,840 --> 00:13:39,960 Speaker 2: But that's that's what the White House says was the 267 00:13:40,000 --> 00:13:42,000 Speaker 2: reason for that. The way that the tariffs are worked 268 00:13:42,000 --> 00:13:44,400 Speaker 2: out shocked a lot of people, and that's part of 269 00:13:44,480 --> 00:13:47,280 Speaker 2: what's causing some of the sort of uncertainty and chaos. 270 00:13:47,280 --> 00:13:51,040 Speaker 2: So they're called reciprocal tariffs, but they literally aren't reciprocal. 271 00:13:51,160 --> 00:13:54,080 Speaker 2: New Zealand has an average tariff on American goods of 272 00:13:54,080 --> 00:13:57,440 Speaker 2: about one point nine percent or something, and on the 273 00:13:57,559 --> 00:13:59,240 Speaker 2: chart that Trump had it said we had a twenty 274 00:13:59,280 --> 00:14:02,480 Speaker 2: percent tariff. They worked it out just by looking at 275 00:14:02,920 --> 00:14:06,199 Speaker 2: the trade balance with the countries and countries that had 276 00:14:06,200 --> 00:14:09,080 Speaker 2: a trade deficit with the US. So we have what 277 00:14:09,120 --> 00:14:11,600 Speaker 2: the US would call a trade deficit with them. We 278 00:14:11,679 --> 00:14:15,080 Speaker 2: sold more stuff to America than we bought last year, 279 00:14:15,120 --> 00:14:19,640 Speaker 2: so about nine billion dollars worth of goods went to America. Well, 280 00:14:19,640 --> 00:14:22,640 Speaker 2: that was our surplus, and so they just do the 281 00:14:22,680 --> 00:14:23,320 Speaker 2: maths on that. 282 00:14:26,600 --> 00:14:31,680 Speaker 4: Tomorrow, the United States will implement reciprocal tariffs on other nations. 283 00:14:32,160 --> 00:14:35,640 Speaker 4: It's been a long time since we even thought of that. 284 00:14:36,120 --> 00:14:37,960 Speaker 4: We used to think about it a lot. We didn't 285 00:14:38,000 --> 00:14:41,080 Speaker 4: think about it for many decades, and you see what's 286 00:14:41,120 --> 00:14:44,840 Speaker 4: happened for nicians that treat us badly. We will calculate 287 00:14:44,920 --> 00:14:48,680 Speaker 4: the combined read of all their tariffs, non monetary barriers, 288 00:14:48,680 --> 00:14:52,600 Speaker 4: and other forms of shooting. And because we are being 289 00:14:52,760 --> 00:14:57,720 Speaker 4: very kind, we're kind people, very kind. You're not so 290 00:14:57,920 --> 00:15:02,200 Speaker 4: kind when you got ripped off, you my auto worker friends. 291 00:15:06,560 --> 00:15:10,280 Speaker 1: How long could it roughly take for Trump to restart 292 00:15:10,360 --> 00:15:13,040 Speaker 1: some of the industries that he wants to restart in 293 00:15:13,040 --> 00:15:16,400 Speaker 1: the US, like manufacturing. You can't just move an entire 294 00:15:16,480 --> 00:15:18,640 Speaker 1: business to the US overnight, can you. 295 00:15:18,840 --> 00:15:21,000 Speaker 2: Well, this is the issue. It takes time to build 296 00:15:21,040 --> 00:15:25,080 Speaker 2: the factory, even if companies move very quickly to try 297 00:15:25,120 --> 00:15:28,280 Speaker 2: and you know, like if Nike wants to repatriate at 298 00:15:28,280 --> 00:15:30,560 Speaker 2: shoe factories or something like that, that's going to take 299 00:15:31,240 --> 00:15:33,600 Speaker 2: a lot of time and shifting and changing to the 300 00:15:33,600 --> 00:15:36,640 Speaker 2: global supply chains. And it's also kind of you know, 301 00:15:36,960 --> 00:15:39,920 Speaker 2: would you you know, the Trump administration has a habit 302 00:15:39,960 --> 00:15:44,480 Speaker 2: of negotiating changing policy. Things can change overnight. You know, 303 00:15:45,320 --> 00:15:48,200 Speaker 2: at what point does the policy become clear and certain 304 00:15:48,320 --> 00:15:50,840 Speaker 2: enough that these companies can trust that it's worth making 305 00:15:50,880 --> 00:15:53,960 Speaker 2: these big moves. So yeah, look, probably quite a long time, 306 00:15:54,000 --> 00:15:57,960 Speaker 2: and probably a longer time than you know, this current 307 00:15:58,000 --> 00:16:00,720 Speaker 2: political cycle. So for example, you know, use has got 308 00:16:00,760 --> 00:16:03,800 Speaker 2: midterms next year already, there'll be a huge amount of 309 00:16:03,840 --> 00:16:06,560 Speaker 2: intense focus on the economy on Wall Street in the 310 00:16:06,600 --> 00:16:09,200 Speaker 2: coming months, and it would be hard to see how 311 00:16:09,200 --> 00:16:11,520 Speaker 2: you'd get the upside from a policy like this, even 312 00:16:11,560 --> 00:16:13,560 Speaker 2: if it worked for several years. 313 00:16:13,680 --> 00:16:16,680 Speaker 1: What do you think New Zealand will or should do 314 00:16:16,920 --> 00:16:19,240 Speaker 1: in response to all of this. Do we just need 315 00:16:19,320 --> 00:16:23,840 Speaker 1: to stop buying American products or perhaps look at alternative 316 00:16:23,880 --> 00:16:26,240 Speaker 1: trading partners, which I know that they're already doing. 317 00:16:26,520 --> 00:16:28,760 Speaker 2: Yeah, I think we have to stay a little calm. 318 00:16:28,960 --> 00:16:32,040 Speaker 2: We are we actually are sitting in a pretty good 319 00:16:32,080 --> 00:16:35,480 Speaker 2: spot with the tariffs themselves. You know that they're not 320 00:16:35,520 --> 00:16:37,560 Speaker 2: going to kill trade with the US, so you know, 321 00:16:37,600 --> 00:16:39,320 Speaker 2: there is a little bit of keep calm and carry on. 322 00:16:39,640 --> 00:16:43,080 Speaker 2: We certainly aren't going to try and accelerate things and 323 00:16:43,120 --> 00:16:46,400 Speaker 2: have escalate things and put on our own tariffs because 324 00:16:46,480 --> 00:16:50,720 Speaker 2: A that would be a risk of coppying more flat 325 00:16:50,800 --> 00:16:53,120 Speaker 2: back from the US, and B it just doesn't fit 326 00:16:53,200 --> 00:16:55,120 Speaker 2: with the way our economy works. And we sort of 327 00:16:55,200 --> 00:16:58,520 Speaker 2: a bipartisan agreement on the idea that we're a low 328 00:16:58,560 --> 00:17:02,440 Speaker 2: tariff economy, we're an open, free trading economy. And look, 329 00:17:02,440 --> 00:17:05,320 Speaker 2: the government is already very focused on you know, both 330 00:17:05,400 --> 00:17:08,200 Speaker 2: both both labor and national over the years, very focused 331 00:17:08,200 --> 00:17:11,800 Speaker 2: on finding new new trade partners. You know, you've seen 332 00:17:12,359 --> 00:17:14,640 Speaker 2: Christopher lux and talk a lot about India, and boy, 333 00:17:14,680 --> 00:17:17,040 Speaker 2: that's you know, that's that's got huge potential and I 334 00:17:17,080 --> 00:17:19,440 Speaker 2: really hope they can progress that. In fact, this might 335 00:17:19,480 --> 00:17:21,960 Speaker 2: help them progress that because India has got big problems 336 00:17:22,000 --> 00:17:24,639 Speaker 2: with huge tariffs going on into the US, so they 337 00:17:24,720 --> 00:17:27,600 Speaker 2: might be looking around for friends. There may be opportunities 338 00:17:27,640 --> 00:17:32,680 Speaker 2: there to expand trading partnerships like the CP TPP and 339 00:17:32,960 --> 00:17:36,360 Speaker 2: other other you know trading you know, multilateral trading agreements 340 00:17:36,400 --> 00:17:39,000 Speaker 2: we're in. We've got our free trade agreement with China. 341 00:17:39,160 --> 00:17:39,360 Speaker 4: Yeah. 342 00:17:39,400 --> 00:17:41,560 Speaker 2: Look, you know, New Zealand is quite good at this stuff. 343 00:17:41,600 --> 00:17:45,320 Speaker 2: We have really great trade officials and diplomats that do 344 00:17:45,440 --> 00:17:47,640 Speaker 2: this stuff. We've got it being quite flexible. I mean, 345 00:17:47,680 --> 00:17:49,640 Speaker 2: it's it's it's tough. It's going to be a really 346 00:17:49,640 --> 00:17:53,879 Speaker 2: tough time, but I think we are well placed to 347 00:17:54,800 --> 00:17:56,480 Speaker 2: sort of find a pathway through it. 348 00:17:56,760 --> 00:18:01,040 Speaker 1: And looking towards the next few days or even weeks, 349 00:18:01,440 --> 00:18:03,560 Speaker 1: what should we be be looking out for when it 350 00:18:03,600 --> 00:18:07,840 Speaker 1: comes to the next global financial crisis? I mean, what 351 00:18:07,880 --> 00:18:10,480 Speaker 1: are the warning signs, what are the red flags that 352 00:18:10,520 --> 00:18:11,520 Speaker 1: will be popping up? 353 00:18:11,920 --> 00:18:13,880 Speaker 2: Well, it's all going to play out in real time 354 00:18:13,920 --> 00:18:18,000 Speaker 2: on currency markets, equity markets, commodity markets. I would say 355 00:18:18,000 --> 00:18:20,000 Speaker 2: that the big ones for New Zealand will be we'll 356 00:18:20,040 --> 00:18:23,760 Speaker 2: start to see you the dairy auctions, the commodity prices 357 00:18:23,840 --> 00:18:25,600 Speaker 2: are going to be an issue. So if it starts 358 00:18:25,600 --> 00:18:29,800 Speaker 2: to affect global demand for commodities, that could mean less 359 00:18:29,840 --> 00:18:31,959 Speaker 2: money coming into New Zealand. But then again, you know 360 00:18:32,280 --> 00:18:34,600 Speaker 2: it is food, so that's that we've got that going 361 00:18:34,640 --> 00:18:37,040 Speaker 2: for US. I am concerned about what it might do 362 00:18:37,240 --> 00:18:40,399 Speaker 2: to tourism and the short term for consumers. You know, 363 00:18:40,720 --> 00:18:42,600 Speaker 2: when you look at things like oil, oil price is 364 00:18:42,640 --> 00:18:45,639 Speaker 2: absolutely crashed in the last two or three days, so 365 00:18:45,720 --> 00:18:47,640 Speaker 2: you're going to be paying less to fill up the tank. 366 00:18:47,800 --> 00:18:50,800 Speaker 2: The New Zealand dollar is actually up in relative terms 367 00:18:50,880 --> 00:18:54,040 Speaker 2: against the US dollar, and the US barrel price of 368 00:18:54,080 --> 00:18:56,160 Speaker 2: oil has fallen to sort of levels we haven't seen 369 00:18:56,200 --> 00:18:59,000 Speaker 2: since you know, the darkest days of COVID, So that's 370 00:18:59,040 --> 00:19:02,040 Speaker 2: you know, US sixty sixty three dollars a barrel I think, 371 00:19:02,160 --> 00:19:04,600 Speaker 2: or you know, around sixty dollars a barrel. So yeah, 372 00:19:04,600 --> 00:19:07,040 Speaker 2: some of these things are sort of deflationary, weirdly in 373 00:19:07,080 --> 00:19:10,600 Speaker 2: the first instance, or disinflationary, so you know, the economists 374 00:19:10,640 --> 00:19:14,199 Speaker 2: expect it. It should also start to create inflationary pressure 375 00:19:14,200 --> 00:19:17,399 Speaker 2: in other places, you know, as other countries put up Tariff's, 376 00:19:17,440 --> 00:19:20,520 Speaker 2: you know, So you've got basically two forces pushing against 377 00:19:20,520 --> 00:19:23,359 Speaker 2: each other, these deflationary forces, you know, the demand side, 378 00:19:23,400 --> 00:19:26,000 Speaker 2: which is the shock that you know, consumers might stop 379 00:19:26,040 --> 00:19:29,320 Speaker 2: spending because of all the uncertainty, and that's dominating at 380 00:19:29,320 --> 00:19:31,760 Speaker 2: the moment. And then you've got the inflationary side, the 381 00:19:31,800 --> 00:19:35,440 Speaker 2: supply side, which is what we know that Tariff's kind 382 00:19:35,480 --> 00:19:37,920 Speaker 2: of do in the long run, which is pushed costs up. 383 00:19:38,000 --> 00:19:40,680 Speaker 2: So you know, these two competing forces is say, both 384 00:19:41,040 --> 00:19:44,080 Speaker 2: not great things, and at the moment it's it's the 385 00:19:44,200 --> 00:19:47,280 Speaker 2: sort of recessionary demand side stuff that's dominating. 386 00:19:47,440 --> 00:19:50,080 Speaker 1: Thanks for joining us, Liam, great, no, happy to be here. 387 00:19:53,720 --> 00:19:56,840 Speaker 1: That's it for this episode of The Front Page. You 388 00:19:56,880 --> 00:20:00,680 Speaker 1: can read more about today's stories and extensive new coverage 389 00:20:00,720 --> 00:20:04,760 Speaker 1: at enzdherld dot co dot nz. The Front Page is 390 00:20:04,760 --> 00:20:08,520 Speaker 1: produced by Ethan Sills and Richard Martin, who is also 391 00:20:08,680 --> 00:20:13,320 Speaker 1: a sound engineer. I'm Chelsea Daniels. Subscribe to the Front 392 00:20:13,359 --> 00:20:16,959 Speaker 1: Page on iHeartRadio or wherever you get your podcasts, and 393 00:20:17,040 --> 00:20:20,640 Speaker 1: tune in tomorrow for another look behind the headlines.