WEBVTT - Trump’s tariffs send cause economic turmoil: What do they mean for NZ?

0:00:05.120 --> 0:00:08.360
<v Speaker 1>Hilda. I'm Chelsea Daniels and this is the Front Page,

0:00:08.760 --> 0:00:16.040
<v Speaker 1>a daily podcast presented by the New Zealand Herald. Donald

0:00:16.079 --> 0:00:19.520
<v Speaker 1>Trump's Liberation Day has felt more like a blood bath

0:00:19.600 --> 0:00:23.000
<v Speaker 1>for the world economy. The US president last week announced

0:00:23.000 --> 0:00:27.840
<v Speaker 1>what he called reciprocal tariffs on almost every country on Earth,

0:00:28.200 --> 0:00:32.159
<v Speaker 1>as well as some islands uninhabited by human life. New

0:00:32.240 --> 0:00:35.479
<v Speaker 1>Zealand was not as impacted as most, with just a

0:00:35.640 --> 0:00:39.200
<v Speaker 1>ten percent tariff on our goods imported into the US,

0:00:39.320 --> 0:00:42.480
<v Speaker 1>but the European Union has had a twenty percent bump

0:00:42.520 --> 0:00:46.360
<v Speaker 1>on tariffs, while China has received an additional thirty four

0:00:46.400 --> 0:00:50.839
<v Speaker 1>percent tariff. More than fifty countries have reportedly sought talks

0:00:50.880 --> 0:00:54.440
<v Speaker 1>with the US to ease these tariffs. But as trillions

0:00:54.480 --> 0:00:57.680
<v Speaker 1>of dollars are wiped from the US stock market, what

0:00:57.760 --> 0:01:00.400
<v Speaker 1>does this all mean for New Zealand? They on the

0:01:00.440 --> 0:01:03.600
<v Speaker 1>front Page. We're sorting through the numbers with Enzied Herald

0:01:03.680 --> 0:01:12.119
<v Speaker 1>Business Editor at Large Liam Dan. Liam. First off, can

0:01:12.160 --> 0:01:15.520
<v Speaker 1>you explain to those who are unaware what a tariff

0:01:15.680 --> 0:01:17.440
<v Speaker 1>actually is? Sure?

0:01:17.520 --> 0:01:19.520
<v Speaker 2>Yeah, I mean a tariff's just an a tax really

0:01:19.600 --> 0:01:22.360
<v Speaker 2>at the border on goods coming into your country, and

0:01:22.400 --> 0:01:24.720
<v Speaker 2>it's one of the oldest forms of taxation in the

0:01:24.760 --> 0:01:28.319
<v Speaker 2>history of world or human economics. And yeah, it's paid

0:01:28.520 --> 0:01:31.600
<v Speaker 2>by the importer at the border and adds costs to

0:01:31.840 --> 0:01:35.000
<v Speaker 2>imported goods, raises money for the government, and imparts an

0:01:35.000 --> 0:01:36.800
<v Speaker 2>advantage to locally produced goods.

0:01:36.920 --> 0:01:39.880
<v Speaker 1>And what direction does it go in, because that's one

0:01:39.880 --> 0:01:42.840
<v Speaker 1>of the confusing aspects of this, right, Trump is actually

0:01:42.880 --> 0:01:45.959
<v Speaker 1>making goods more expensive to US consumers.

0:01:46.319 --> 0:01:51.080
<v Speaker 2>Yeah, absolutely, he argues that foreign countries will pay. I mean, technically,

0:01:51.840 --> 0:01:56.040
<v Speaker 2>you know, it's absolutely the case that the US importer pays.

0:01:55.400 --> 0:01:57.600
<v Speaker 2>They have to fill out a form and it goes

0:01:57.640 --> 0:02:00.720
<v Speaker 2>to US customs. But what I think Trump means is

0:02:00.720 --> 0:02:03.600
<v Speaker 2>that he believes the foreign countries trying to sell the

0:02:03.600 --> 0:02:06.880
<v Speaker 2>goods will bear the cost, which means that if they

0:02:06.880 --> 0:02:08.600
<v Speaker 2>want to get the goods, and they'll have to lower

0:02:08.639 --> 0:02:10.800
<v Speaker 2>their prices or the prices will be too high and

0:02:10.800 --> 0:02:13.880
<v Speaker 2>no one will buy them. So and that respect, it

0:02:13.880 --> 0:02:16.720
<v Speaker 2>could cost us, and it could cost other countries. If

0:02:16.760 --> 0:02:19.400
<v Speaker 2>we want to sell the same amount of wine into

0:02:19.440 --> 0:02:22.359
<v Speaker 2>the US, maybe our prices will have to come down

0:02:22.400 --> 0:02:24.280
<v Speaker 2>and will have to wear the cost. That's not clear,

0:02:24.400 --> 0:02:27.680
<v Speaker 2>you know, Like New Zealand sells a lot of Hamburger beef.

0:02:27.840 --> 0:02:30.800
<v Speaker 2>All our leftover the poor male dairy cows or the

0:02:30.800 --> 0:02:33.760
<v Speaker 2>ones that you know because they're male, they become hamburger beef.

0:02:33.800 --> 0:02:36.520
<v Speaker 2>They go off to the US to become hamburgers, and

0:02:36.560 --> 0:02:38.440
<v Speaker 2>the US needs that. They have a shortage of that

0:02:38.560 --> 0:02:40.760
<v Speaker 2>kind of beef, and they've been taking a lot of

0:02:40.760 --> 0:02:43.960
<v Speaker 2>New Zealand and Australian beef for basically for hamburgers. And

0:02:44.000 --> 0:02:46.560
<v Speaker 2>if they still need that, you know, they're going to

0:02:46.639 --> 0:02:48.520
<v Speaker 2>have to take it and pay the tariff, and the

0:02:48.560 --> 0:02:51.359
<v Speaker 2>consumers there will pay the cost. Yeah, it could be split,

0:02:51.600 --> 0:02:54.360
<v Speaker 2>but it's hard to know for sure, but yeah, there

0:02:54.400 --> 0:02:57.640
<v Speaker 2>will be there. Expecting costs to go up for US consumers.

0:02:57.840 --> 0:03:01.320
<v Speaker 1>Trillions of dollars have been white of the value of

0:03:01.360 --> 0:03:05.360
<v Speaker 1>the US stock market in response to the tariffs already.

0:03:05.600 --> 0:03:08.000
<v Speaker 1>How rare is this market reaction?

0:03:08.320 --> 0:03:10.680
<v Speaker 2>Well, this is pretty bad. I don't know how it's

0:03:10.680 --> 0:03:12.520
<v Speaker 2>going to go in the next few days, whether you know,

0:03:12.760 --> 0:03:14.959
<v Speaker 2>there's so much relying on what comes out of the

0:03:14.960 --> 0:03:18.360
<v Speaker 2>White House. But this is a serious, serious meltdown. This

0:03:18.480 --> 0:03:21.400
<v Speaker 2>is like, you know, brings back feelings of the GFC.

0:03:21.480 --> 0:03:24.720
<v Speaker 2>There was a big meltdown when COVID hit a really

0:03:24.720 --> 0:03:26.680
<v Speaker 2>massive sell off for a few days. But then, of

0:03:26.720 --> 0:03:30.040
<v Speaker 2>course the government came in with stimulus, and the same

0:03:30.080 --> 0:03:32.240
<v Speaker 2>with the GFC. Eventually the government comes in and the

0:03:32.240 --> 0:03:35.320
<v Speaker 2>Federal Reserve comes in to support things. In this case,

0:03:35.320 --> 0:03:37.800
<v Speaker 2>the government does not coming to the rescue. The US

0:03:37.880 --> 0:03:40.720
<v Speaker 2>government is the reason that this has happened. So yeah,

0:03:40.720 --> 0:03:43.720
<v Speaker 2>but it's historic. This is an historic sell off. This

0:03:43.800 --> 0:03:48.000
<v Speaker 2>is a global market meltdown. The world has changed, you know,

0:03:48.080 --> 0:03:49.720
<v Speaker 2>a little be in the history books.

0:03:49.440 --> 0:03:54.520
<v Speaker 1>And in terms of what this mimics in years gone by.

0:03:54.880 --> 0:03:59.400
<v Speaker 1>I mean, you mentioned the GFC. During the GFC, markets

0:03:59.520 --> 0:04:02.960
<v Speaker 1>essentially crashed by more than what we're seeing at the moment.

0:04:03.200 --> 0:04:08.120
<v Speaker 1>What will indicate GFC levels within the next few days.

0:04:08.480 --> 0:04:11.480
<v Speaker 2>Yeah, it's interesting because the GFC was a huge demand shop.

0:04:11.560 --> 0:04:14.480
<v Speaker 2>It's the fear that takes hold really that causes the problem.

0:04:14.640 --> 0:04:18.080
<v Speaker 2>The tariffs are supposed to create costs for US consumers,

0:04:18.080 --> 0:04:20.960
<v Speaker 2>which means that there's inflationary issues, which means interest rates

0:04:21.200 --> 0:04:23.320
<v Speaker 2>are likely to stay higher in the US, their dollar

0:04:23.360 --> 0:04:25.680
<v Speaker 2>would go higher. All of that stuff was predicted as

0:04:25.760 --> 0:04:29.279
<v Speaker 2>an inflationary problem, but the fear and shock when it

0:04:29.320 --> 0:04:31.880
<v Speaker 2>happened meant that the opposite has happened. The US dollar

0:04:31.920 --> 0:04:35.599
<v Speaker 2>has fallen in relative terms. US bond yields have fallen,

0:04:35.839 --> 0:04:39.520
<v Speaker 2>and there's a lot of fear about recession in the

0:04:39.640 --> 0:04:43.120
<v Speaker 2>US now and that is overwhelming the other bad stuff.

0:04:43.160 --> 0:04:45.920
<v Speaker 2>So there's two lots of bad stuff here. And the

0:04:45.920 --> 0:04:49.680
<v Speaker 2>demand side bad stuff is what's really we've seen in

0:04:49.720 --> 0:04:53.720
<v Speaker 2>the past few days. Whether that stabilizes or who could say.

0:04:53.720 --> 0:04:58.120
<v Speaker 2>But you know, if we see more retaliation the Chinese

0:04:58.160 --> 0:05:01.039
<v Speaker 2>have responded, if we see Europe respond with more tariffs,

0:05:01.040 --> 0:05:02.240
<v Speaker 2>you know, then you have to go back to the

0:05:02.320 --> 0:05:04.960
<v Speaker 2>nineteen thirties to get a comparison with what's going on.

0:05:05.080 --> 0:05:07.560
<v Speaker 2>I mean, this is sort of you know, the last

0:05:07.560 --> 0:05:09.760
<v Speaker 2>time the US did something like this was something called

0:05:09.760 --> 0:05:13.160
<v Speaker 2>the Smoot Hawley Act in nineteen thirty when they thought,

0:05:13.200 --> 0:05:15.520
<v Speaker 2>as a response to the big stock market crash of

0:05:15.560 --> 0:05:18.200
<v Speaker 2>twenty nine that putting tariffs on everything was going to

0:05:18.200 --> 0:05:21.919
<v Speaker 2>be a solution. And that's famously been talked about and

0:05:21.960 --> 0:05:25.919
<v Speaker 2>almost you know, universally accepted as a failure in economics,

0:05:26.000 --> 0:05:28.360
<v Speaker 2>and you know, kids are taught about it in schools.

0:05:28.400 --> 0:05:30.239
<v Speaker 1>Well, Ferris Bueller, isn't it in that movie?

0:05:30.360 --> 0:05:32.360
<v Speaker 2>Yeah, that's right. There's a famous scene in the first

0:05:32.400 --> 0:05:34.440
<v Speaker 2>Bueller's Day Off for those who are of a certain

0:05:34.480 --> 0:05:36.680
<v Speaker 2>age and love that movie, where the class is sitting

0:05:36.680 --> 0:05:39.599
<v Speaker 2>on their board as all hell and the teacher pretty

0:05:39.640 --> 0:05:41.160
<v Speaker 2>much explains the Smoot Hawley Act.

0:05:42.680 --> 0:05:46.919
<v Speaker 3>In nineteen thirty, the Republican controlled House of Representatives, in

0:05:46.960 --> 0:05:51.040
<v Speaker 3>an effort to alleviate the effects of the anyone, anyone

0:05:51.600 --> 0:05:58.920
<v Speaker 3>Great Depression past the anyone anyone the tariff Bill, the

0:05:59.080 --> 0:06:06.160
<v Speaker 3>Holly Smooth Tariff Act, which anyone raised or lowered, raised

0:06:06.520 --> 0:06:09.599
<v Speaker 3>tariffs in an effort to collect more revenue for the

0:06:09.600 --> 0:06:13.880
<v Speaker 3>federal government. Did it work? Anyone anyone know the effects?

0:06:14.960 --> 0:06:17.440
<v Speaker 3>It did not work, and the United States sank deeper

0:06:17.480 --> 0:06:18.839
<v Speaker 3>into the Great Depression.

0:06:22.680 --> 0:06:26.040
<v Speaker 2>US kids all over, they've all been taught this. Trump

0:06:26.120 --> 0:06:27.920
<v Speaker 2>says that's wrong. He has a different view on that,

0:06:28.000 --> 0:06:30.080
<v Speaker 2>and his advisors have a different view. They think the

0:06:30.080 --> 0:06:31.880
<v Speaker 2>problem was that the tariffs were taken off from the

0:06:31.920 --> 0:06:34.279
<v Speaker 2>first place in nineteen oh nine, I think he said,

0:06:34.720 --> 0:06:37.320
<v Speaker 2>and that the Smooth Hawley Act was too little, too late,

0:06:37.360 --> 0:06:39.000
<v Speaker 2>and they should have kept the tariffs on. So he's

0:06:39.040 --> 0:06:41.760
<v Speaker 2>HARKing back to the great days of the late nineteenth

0:06:41.800 --> 0:06:45.360
<v Speaker 2>century when US had very high tariffs and low income

0:06:45.400 --> 0:06:47.680
<v Speaker 2>tax what they called the Gilded Age when there was

0:06:47.720 --> 0:06:50.960
<v Speaker 2>a it was a great time for billionaires. JP Morgan

0:06:51.000 --> 0:06:53.640
<v Speaker 2>and all that sort of stuff. He's literally saying that's

0:06:53.680 --> 0:06:56.479
<v Speaker 2>what they want to get back to, those great days

0:06:56.480 --> 0:06:58.800
<v Speaker 2>of America. Yeah, there's a little bit of skepticism. That

0:06:58.800 --> 0:07:02.000
<v Speaker 2>would be an understatement. But so there is a lot

0:07:02.000 --> 0:07:05.599
<v Speaker 2>of lot of fear and panic through US markets about

0:07:05.640 --> 0:07:07.240
<v Speaker 2>what is actually happening.

0:07:06.920 --> 0:07:10.960
<v Speaker 1>And what does such a loss mean at a consumer

0:07:11.080 --> 0:07:14.040
<v Speaker 1>level or is this only a concern for investors at

0:07:14.080 --> 0:07:14.800
<v Speaker 1>this stage.

0:07:15.240 --> 0:07:18.040
<v Speaker 2>Yeah, I mean, look, we've been through crashes before. It

0:07:18.480 --> 0:07:20.440
<v Speaker 2>looks horrible when you look at your KEII saver, and

0:07:20.480 --> 0:07:22.640
<v Speaker 2>it might you know, we're going to have some volatility

0:07:22.720 --> 0:07:24.840
<v Speaker 2>and it might might get worse. You know, there's no

0:07:25.040 --> 0:07:26.760
<v Speaker 2>question that there is a risk that things could get

0:07:26.760 --> 0:07:30.880
<v Speaker 2>worse for consumers, like until you know, in New Zealand

0:07:30.920 --> 0:07:33.280
<v Speaker 2>it's we sort of buffered a little bit. Our share

0:07:33.320 --> 0:07:36.320
<v Speaker 2>market is down as well, but it's not our direct

0:07:36.360 --> 0:07:39.080
<v Speaker 2>The direct tariffs on New Zealand were seen as manageable

0:07:39.080 --> 0:07:41.800
<v Speaker 2>by economists. The issue for US is what happens to

0:07:41.880 --> 0:07:45.040
<v Speaker 2>Asia and China and the economies there. And I guess

0:07:45.080 --> 0:07:47.280
<v Speaker 2>to some extent the US, So it's the demand. So

0:07:47.480 --> 0:07:49.360
<v Speaker 2>are people still going to want to buy as much

0:07:49.360 --> 0:07:51.480
<v Speaker 2>of our stuff? Are they going to want to travel here?

0:07:51.480 --> 0:07:54.680
<v Speaker 2>So it's a risk for tourism. Already we've seen in

0:07:54.720 --> 0:07:57.320
<v Speaker 2>New Zealand shares fall a lot. There's a risk that

0:07:57.400 --> 0:08:00.520
<v Speaker 2>it does hit tourism, so that that fragile recovery tourism

0:08:00.880 --> 0:08:02.520
<v Speaker 2>is just starting to sort of add value to the

0:08:02.560 --> 0:08:05.240
<v Speaker 2>New Zealand economy again sort of since COVID and that's

0:08:05.240 --> 0:08:08.120
<v Speaker 2>at risk. We're lucky we sell food. You know, it

0:08:08.200 --> 0:08:10.480
<v Speaker 2>never goes out of fashion, but it's still you know,

0:08:10.800 --> 0:08:14.240
<v Speaker 2>when you saw the tariffs were huge on countries like

0:08:14.320 --> 0:08:16.720
<v Speaker 2>Vietnam and you know, a lot of Thai land, a

0:08:16.720 --> 0:08:20.040
<v Speaker 2>lot of Southeast Asian countries. China's going to take them

0:08:20.080 --> 0:08:22.280
<v Speaker 2>on a trade war. There's all sorts of side effects.

0:08:22.280 --> 0:08:26.320
<v Speaker 2>So it's too soon to say for sure exactly what

0:08:26.480 --> 0:08:29.080
<v Speaker 2>this will mean. There might be some weird upsides for

0:08:29.160 --> 0:08:32.360
<v Speaker 2>New Zealand, but overall, the hit to the global economy

0:08:32.520 --> 0:08:34.120
<v Speaker 2>is going to be felt here. So you know, if

0:08:34.160 --> 0:08:37.080
<v Speaker 2>global demand is down and global growth is down, New

0:08:37.160 --> 0:08:38.839
<v Speaker 2>Zealand's going to feel that, and that's going to make

0:08:38.920 --> 0:08:40.800
<v Speaker 2>our recovery much harder to sustain.

0:08:41.000 --> 0:08:43.880
<v Speaker 1>And it's interesting as well. I mean, there might be

0:08:43.920 --> 0:08:45.920
<v Speaker 1>some people out there saying, look, what happens in the

0:08:46.000 --> 0:08:48.600
<v Speaker 1>US stays in the US, and we're in a good position.

0:08:48.679 --> 0:08:51.360
<v Speaker 1>But if you look back to the eighties, I noticed

0:08:51.480 --> 0:08:55.920
<v Speaker 1>that when Wall Street crashed that iconic twenty percent, I

0:08:55.960 --> 0:08:58.560
<v Speaker 1>think dead in the end, and it was the worst

0:08:58.640 --> 0:09:02.720
<v Speaker 1>crash ever recorded on Wall Street. The New Zealand Stock Exchange,

0:09:02.760 --> 0:09:06.400
<v Speaker 1>didn't it then not only crash twenty percent, but continue

0:09:06.440 --> 0:09:09.439
<v Speaker 1>to crash up to fifty sixty percent in the months

0:09:09.440 --> 0:09:10.080
<v Speaker 1>that followed.

0:09:10.440 --> 0:09:13.160
<v Speaker 2>Yeah, that's true. It was a very different stock market

0:09:13.200 --> 0:09:15.160
<v Speaker 2>in New Zealand at the time. We had we were

0:09:15.160 --> 0:09:17.600
<v Speaker 2>in a stock market bubble ourselves at the time, and

0:09:17.679 --> 0:09:20.800
<v Speaker 2>we had a lot of very speculative investment companies and

0:09:20.800 --> 0:09:22.880
<v Speaker 2>so forth on the market in New Zealand. Now our

0:09:22.880 --> 0:09:24.920
<v Speaker 2>market is much more of a sort of a slightly

0:09:24.960 --> 0:09:27.960
<v Speaker 2>boring reflection of the economy. It's got some big retailers,

0:09:28.080 --> 0:09:30.400
<v Speaker 2>it's got some we've seen, you know, some companies are

0:09:30.480 --> 0:09:32.800
<v Speaker 2>affected by tariffs. Fisher and pikel Healthcare as one of

0:09:32.800 --> 0:09:36.440
<v Speaker 2>our biggest companies, and that's affected by tariff's But that

0:09:36.520 --> 0:09:39.160
<v Speaker 2>gets priced and it hasn't been booming, it's fair to

0:09:39.160 --> 0:09:42.040
<v Speaker 2>say our New Zealand and inziet X anyway. So yeah,

0:09:42.080 --> 0:09:44.440
<v Speaker 2>it's coming off in response. There's a bit of fear

0:09:44.480 --> 0:09:47.200
<v Speaker 2>in markets generally when things crash, but there isn't a

0:09:47.200 --> 0:09:50.080
<v Speaker 2>reason for it to just just absolutely go through the

0:09:50.120 --> 0:09:51.800
<v Speaker 2>floor in the same way as there was in the

0:09:51.880 --> 0:09:55.360
<v Speaker 2>nineteen eighties. A lot of it's more directly tied to

0:09:55.360 --> 0:09:59.319
<v Speaker 2>how our economy is going. So those retailers are struggling

0:09:59.400 --> 0:10:01.920
<v Speaker 2>until humors get out and spend again. So that's not

0:10:02.000 --> 0:10:04.559
<v Speaker 2>great news. If there's just just the amount of uncertainty

0:10:04.600 --> 0:10:07.400
<v Speaker 2>and that the damage it does to confidence. All of

0:10:07.400 --> 0:10:09.520
<v Speaker 2>this is not great news in that sense.

0:10:20.640 --> 0:10:24.240
<v Speaker 1>So why is Trump doing this? What's his argument for

0:10:24.320 --> 0:10:24.720
<v Speaker 1>all of it?

0:10:25.120 --> 0:10:28.000
<v Speaker 2>He seems to genuinely believe that this is a way

0:10:28.040 --> 0:10:31.600
<v Speaker 2>to get back to a world where US manufacturing is dominant.

0:10:31.640 --> 0:10:34.280
<v Speaker 2>So obviously, when you take the tariffs away, it's much

0:10:34.360 --> 0:10:36.600
<v Speaker 2>cheaper to build, you know, the labor is much cheaper

0:10:36.600 --> 0:10:39.240
<v Speaker 2>in Vietnam or China or whoever to build build the

0:10:39.280 --> 0:10:42.440
<v Speaker 2>cars and build the phones, and sew the clothes and

0:10:42.480 --> 0:10:45.280
<v Speaker 2>make the Nike sneakers. So the US has effectively exported

0:10:45.320 --> 0:10:48.000
<v Speaker 2>out a lot of manufacturing jobs. He's talking about bringing

0:10:48.000 --> 0:10:51.400
<v Speaker 2>them back, and I suppose that appeals to his base

0:10:51.559 --> 0:10:54.079
<v Speaker 2>in some of those towns and cities that have been

0:10:54.160 --> 0:10:58.360
<v Speaker 2>really hammered by the globalization process and seeing the factories

0:10:58.400 --> 0:11:01.160
<v Speaker 2>shut down. Yeah, I'm personally at skeptical. You know, a

0:11:01.160 --> 0:11:03.120
<v Speaker 2>lot of his supporters are saying, yeah, we want the

0:11:03.120 --> 0:11:05.000
<v Speaker 2>factories back, and we want this. I'm not sure that

0:11:05.040 --> 0:11:07.320
<v Speaker 2>young Americans want to be back in a factory working

0:11:07.400 --> 0:11:09.440
<v Speaker 2>for the kind of wages. You know, the kind of

0:11:09.440 --> 0:11:13.560
<v Speaker 2>wages that Americans would expect to get paid for factory

0:11:13.559 --> 0:11:16.160
<v Speaker 2>work are not going to mean that it's very hard

0:11:16.200 --> 0:11:18.320
<v Speaker 2>for their goods to be competitive, even with the tariffs,

0:11:18.320 --> 0:11:22.400
<v Speaker 2>because you know, just such a huge difference between America

0:11:22.440 --> 0:11:24.400
<v Speaker 2>and the places where they are making this stuff now

0:11:24.440 --> 0:11:27.480
<v Speaker 2>in America, the previous economic model had been to control

0:11:27.520 --> 0:11:30.600
<v Speaker 2>the IP, the intellectual property on Wall Street. It sort

0:11:30.600 --> 0:11:33.120
<v Speaker 2>of controls the financial markets of the world, you know,

0:11:33.840 --> 0:11:38.000
<v Speaker 2>and Silicon Valley is it's the tech giant of the world,

0:11:38.080 --> 0:11:41.319
<v Speaker 2>and it's kind of through all. You know, they're big companies.

0:11:41.520 --> 0:11:43.559
<v Speaker 2>They own the IP and all the money come the

0:11:43.600 --> 0:11:46.319
<v Speaker 2>dividends all come back but the yeah that the jobs

0:11:46.400 --> 0:11:50.120
<v Speaker 2>haven't been there. That's Trump's theory, I guess, is to rebuild.

0:11:50.200 --> 0:11:53.800
<v Speaker 2>He's talking about rebuilding US manufacturing, bringing car making back

0:11:53.840 --> 0:11:56.080
<v Speaker 2>to Detroit, all that kind of stuff.

0:11:56.160 --> 0:11:58.920
<v Speaker 1>Well, I kind of imagine that the late eighteen hundreds

0:11:59.200 --> 0:12:01.480
<v Speaker 1>and then the boom time that we're talking about would

0:12:01.520 --> 0:12:04.160
<v Speaker 1>have been an amazing time for worker riots.

0:12:04.760 --> 0:12:09.079
<v Speaker 2>Yeah, it wasn't was it was rough right, it was,

0:12:09.520 --> 0:12:12.240
<v Speaker 2>you know, like they didn't have all the labor laws

0:12:12.280 --> 0:12:15.920
<v Speaker 2>that came about through the years of the early twentieth century.

0:12:16.000 --> 0:12:18.760
<v Speaker 2>And that's sort of the kind of world that you're

0:12:18.760 --> 0:12:22.040
<v Speaker 2>in with some of these other probably poorer countries that

0:12:22.120 --> 0:12:25.400
<v Speaker 2>have much cheaper labor. So yeah, it's very hard to

0:12:25.400 --> 0:12:27.560
<v Speaker 2>see the US getting back to that. And as a plan,

0:12:27.679 --> 0:12:31.160
<v Speaker 2>it even even it looks like a fairly long term plan.

0:12:31.320 --> 0:12:33.720
<v Speaker 2>So politically, there's going to be some real issues with

0:12:34.400 --> 0:12:36.480
<v Speaker 2>you know, the idea that they tank the US economy

0:12:36.720 --> 0:12:39.480
<v Speaker 2>in the short term. Even if he's able to keep

0:12:39.520 --> 0:12:41.880
<v Speaker 2>selling or he will keep selling this longer term dream

0:12:41.920 --> 0:12:45.319
<v Speaker 2>of rebuilding manufacturing, it just would take a considerable amount

0:12:45.360 --> 0:12:47.800
<v Speaker 2>of time to do that, and you know, the political

0:12:47.840 --> 0:12:50.440
<v Speaker 2>cycles pretty short these days. It's going to be a

0:12:50.520 --> 0:12:53.319
<v Speaker 2>real test of Trump's popularity. Put it that way, and.

0:12:53.280 --> 0:12:55.719
<v Speaker 1>I mean has put a tariff on the Herd and

0:12:55.880 --> 0:13:00.000
<v Speaker 1>McDonald Islands, which is only inhabited by penguins and seas

0:13:00.440 --> 0:13:04.440
<v Speaker 1>and Norfolk Island has received a twenty nine percent tariff

0:13:04.520 --> 0:13:08.439
<v Speaker 1>despite claiming to have no export relationship with the US.

0:13:08.559 --> 0:13:11.520
<v Speaker 1>These mistakes, if you can call them mistakes, don't really

0:13:11.559 --> 0:13:14.400
<v Speaker 1>instill you with too much confidence to they sure.

0:13:14.440 --> 0:13:16.480
<v Speaker 2>I mean a look, to be fair, I've heard that

0:13:17.040 --> 0:13:18.800
<v Speaker 2>the White House has come back and said, look, they

0:13:18.840 --> 0:13:21.360
<v Speaker 2>did that because they want to make sure that in

0:13:21.360 --> 0:13:24.560
<v Speaker 2>this case Australia, which has the sort of the Australian territories,

0:13:24.760 --> 0:13:28.120
<v Speaker 2>doesn't use them as a loophole because they are separate territory.

0:13:28.120 --> 0:13:30.400
<v Speaker 2>And I don't know, like the idea that Australia would

0:13:30.400 --> 0:13:35.000
<v Speaker 2>funnel all its steal exports through you know, Norfolk Island

0:13:35.080 --> 0:13:36.720
<v Speaker 2>or something. It just seems a bit crazy to me.

0:13:36.840 --> 0:13:39.960
<v Speaker 2>But that's that's what the White House says was the

0:13:40.000 --> 0:13:42.000
<v Speaker 2>reason for that. The way that the tariffs are worked

0:13:42.000 --> 0:13:44.400
<v Speaker 2>out shocked a lot of people, and that's part of

0:13:44.480 --> 0:13:47.280
<v Speaker 2>what's causing some of the sort of uncertainty and chaos.

0:13:47.280 --> 0:13:51.040
<v Speaker 2>So they're called reciprocal tariffs, but they literally aren't reciprocal.

0:13:51.160 --> 0:13:54.080
<v Speaker 2>New Zealand has an average tariff on American goods of

0:13:54.080 --> 0:13:57.440
<v Speaker 2>about one point nine percent or something, and on the

0:13:57.559 --> 0:13:59.240
<v Speaker 2>chart that Trump had it said we had a twenty

0:13:59.280 --> 0:14:02.480
<v Speaker 2>percent tariff. They worked it out just by looking at

0:14:02.920 --> 0:14:06.199
<v Speaker 2>the trade balance with the countries and countries that had

0:14:06.200 --> 0:14:09.080
<v Speaker 2>a trade deficit with the US. So we have what

0:14:09.120 --> 0:14:11.600
<v Speaker 2>the US would call a trade deficit with them. We

0:14:11.679 --> 0:14:15.080
<v Speaker 2>sold more stuff to America than we bought last year,

0:14:15.120 --> 0:14:19.640
<v Speaker 2>so about nine billion dollars worth of goods went to America. Well,

0:14:19.640 --> 0:14:22.640
<v Speaker 2>that was our surplus, and so they just do the

0:14:22.680 --> 0:14:23.320
<v Speaker 2>maths on that.

0:14:26.600 --> 0:14:31.680
<v Speaker 4>Tomorrow, the United States will implement reciprocal tariffs on other nations.

0:14:32.160 --> 0:14:35.640
<v Speaker 4>It's been a long time since we even thought of that.

0:14:36.120 --> 0:14:37.960
<v Speaker 4>We used to think about it a lot. We didn't

0:14:38.000 --> 0:14:41.080
<v Speaker 4>think about it for many decades, and you see what's

0:14:41.120 --> 0:14:44.840
<v Speaker 4>happened for nicians that treat us badly. We will calculate

0:14:44.920 --> 0:14:48.680
<v Speaker 4>the combined read of all their tariffs, non monetary barriers,

0:14:48.680 --> 0:14:52.600
<v Speaker 4>and other forms of shooting. And because we are being

0:14:52.760 --> 0:14:57.720
<v Speaker 4>very kind, we're kind people, very kind. You're not so

0:14:57.920 --> 0:15:02.200
<v Speaker 4>kind when you got ripped off, you my auto worker friends.

0:15:06.560 --> 0:15:10.280
<v Speaker 1>How long could it roughly take for Trump to restart

0:15:10.360 --> 0:15:13.040
<v Speaker 1>some of the industries that he wants to restart in

0:15:13.040 --> 0:15:16.400
<v Speaker 1>the US, like manufacturing. You can't just move an entire

0:15:16.480 --> 0:15:18.640
<v Speaker 1>business to the US overnight, can you.

0:15:18.840 --> 0:15:21.000
<v Speaker 2>Well, this is the issue. It takes time to build

0:15:21.040 --> 0:15:25.080
<v Speaker 2>the factory, even if companies move very quickly to try

0:15:25.120 --> 0:15:28.280
<v Speaker 2>and you know, like if Nike wants to repatriate at

0:15:28.280 --> 0:15:30.560
<v Speaker 2>shoe factories or something like that, that's going to take

0:15:31.240 --> 0:15:33.600
<v Speaker 2>a lot of time and shifting and changing to the

0:15:33.600 --> 0:15:36.640
<v Speaker 2>global supply chains. And it's also kind of you know,

0:15:36.960 --> 0:15:39.920
<v Speaker 2>would you you know, the Trump administration has a habit

0:15:39.960 --> 0:15:44.480
<v Speaker 2>of negotiating changing policy. Things can change overnight. You know,

0:15:45.320 --> 0:15:48.200
<v Speaker 2>at what point does the policy become clear and certain

0:15:48.320 --> 0:15:50.840
<v Speaker 2>enough that these companies can trust that it's worth making

0:15:50.880 --> 0:15:53.960
<v Speaker 2>these big moves. So yeah, look, probably quite a long time,

0:15:54.000 --> 0:15:57.960
<v Speaker 2>and probably a longer time than you know, this current

0:15:58.000 --> 0:16:00.720
<v Speaker 2>political cycle. So for example, you know, use has got

0:16:00.760 --> 0:16:03.800
<v Speaker 2>midterms next year already, there'll be a huge amount of

0:16:03.840 --> 0:16:06.560
<v Speaker 2>intense focus on the economy on Wall Street in the

0:16:06.600 --> 0:16:09.200
<v Speaker 2>coming months, and it would be hard to see how

0:16:09.200 --> 0:16:11.520
<v Speaker 2>you'd get the upside from a policy like this, even

0:16:11.560 --> 0:16:13.560
<v Speaker 2>if it worked for several years.

0:16:13.680 --> 0:16:16.680
<v Speaker 1>What do you think New Zealand will or should do

0:16:16.920 --> 0:16:19.240
<v Speaker 1>in response to all of this. Do we just need

0:16:19.320 --> 0:16:23.840
<v Speaker 1>to stop buying American products or perhaps look at alternative

0:16:23.880 --> 0:16:26.240
<v Speaker 1>trading partners, which I know that they're already doing.

0:16:26.520 --> 0:16:28.760
<v Speaker 2>Yeah, I think we have to stay a little calm.

0:16:28.960 --> 0:16:32.040
<v Speaker 2>We are we actually are sitting in a pretty good

0:16:32.080 --> 0:16:35.480
<v Speaker 2>spot with the tariffs themselves. You know that they're not

0:16:35.520 --> 0:16:37.560
<v Speaker 2>going to kill trade with the US, so you know,

0:16:37.600 --> 0:16:39.320
<v Speaker 2>there is a little bit of keep calm and carry on.

0:16:39.640 --> 0:16:43.080
<v Speaker 2>We certainly aren't going to try and accelerate things and

0:16:43.120 --> 0:16:46.400
<v Speaker 2>have escalate things and put on our own tariffs because

0:16:46.480 --> 0:16:50.720
<v Speaker 2>A that would be a risk of coppying more flat

0:16:50.800 --> 0:16:53.120
<v Speaker 2>back from the US, and B it just doesn't fit

0:16:53.200 --> 0:16:55.120
<v Speaker 2>with the way our economy works. And we sort of

0:16:55.200 --> 0:16:58.520
<v Speaker 2>a bipartisan agreement on the idea that we're a low

0:16:58.560 --> 0:17:02.440
<v Speaker 2>tariff economy, we're an open, free trading economy. And look,

0:17:02.440 --> 0:17:05.320
<v Speaker 2>the government is already very focused on you know, both

0:17:05.400 --> 0:17:08.200
<v Speaker 2>both both labor and national over the years, very focused

0:17:08.200 --> 0:17:11.800
<v Speaker 2>on finding new new trade partners. You know, you've seen

0:17:12.359 --> 0:17:14.640
<v Speaker 2>Christopher lux and talk a lot about India, and boy,

0:17:14.680 --> 0:17:17.040
<v Speaker 2>that's you know, that's that's got huge potential and I

0:17:17.080 --> 0:17:19.440
<v Speaker 2>really hope they can progress that. In fact, this might

0:17:19.480 --> 0:17:21.960
<v Speaker 2>help them progress that because India has got big problems

0:17:22.000 --> 0:17:24.639
<v Speaker 2>with huge tariffs going on into the US, so they

0:17:24.720 --> 0:17:27.600
<v Speaker 2>might be looking around for friends. There may be opportunities

0:17:27.640 --> 0:17:32.680
<v Speaker 2>there to expand trading partnerships like the CP TPP and

0:17:32.960 --> 0:17:36.360
<v Speaker 2>other other you know trading you know, multilateral trading agreements

0:17:36.400 --> 0:17:39.000
<v Speaker 2>we're in. We've got our free trade agreement with China.

0:17:39.160 --> 0:17:39.360
<v Speaker 4>Yeah.

0:17:39.400 --> 0:17:41.560
<v Speaker 2>Look, you know, New Zealand is quite good at this stuff.

0:17:41.600 --> 0:17:45.320
<v Speaker 2>We have really great trade officials and diplomats that do

0:17:45.440 --> 0:17:47.640
<v Speaker 2>this stuff. We've got it being quite flexible. I mean,

0:17:47.680 --> 0:17:49.640
<v Speaker 2>it's it's it's tough. It's going to be a really

0:17:49.640 --> 0:17:53.879
<v Speaker 2>tough time, but I think we are well placed to

0:17:54.800 --> 0:17:56.480
<v Speaker 2>sort of find a pathway through it.

0:17:56.760 --> 0:18:01.040
<v Speaker 1>And looking towards the next few days or even weeks,

0:18:01.440 --> 0:18:03.560
<v Speaker 1>what should we be be looking out for when it

0:18:03.600 --> 0:18:07.840
<v Speaker 1>comes to the next global financial crisis? I mean, what

0:18:07.880 --> 0:18:10.480
<v Speaker 1>are the warning signs, what are the red flags that

0:18:10.520 --> 0:18:11.520
<v Speaker 1>will be popping up?

0:18:11.920 --> 0:18:13.880
<v Speaker 2>Well, it's all going to play out in real time

0:18:13.920 --> 0:18:18.000
<v Speaker 2>on currency markets, equity markets, commodity markets. I would say

0:18:18.000 --> 0:18:20.000
<v Speaker 2>that the big ones for New Zealand will be we'll

0:18:20.040 --> 0:18:23.760
<v Speaker 2>start to see you the dairy auctions, the commodity prices

0:18:23.840 --> 0:18:25.600
<v Speaker 2>are going to be an issue. So if it starts

0:18:25.600 --> 0:18:29.800
<v Speaker 2>to affect global demand for commodities, that could mean less

0:18:29.840 --> 0:18:31.959
<v Speaker 2>money coming into New Zealand. But then again, you know

0:18:32.280 --> 0:18:34.600
<v Speaker 2>it is food, so that's that we've got that going

0:18:34.640 --> 0:18:37.040
<v Speaker 2>for US. I am concerned about what it might do

0:18:37.240 --> 0:18:40.399
<v Speaker 2>to tourism and the short term for consumers. You know,

0:18:40.720 --> 0:18:42.600
<v Speaker 2>when you look at things like oil, oil price is

0:18:42.640 --> 0:18:45.639
<v Speaker 2>absolutely crashed in the last two or three days, so

0:18:45.720 --> 0:18:47.640
<v Speaker 2>you're going to be paying less to fill up the tank.

0:18:47.800 --> 0:18:50.800
<v Speaker 2>The New Zealand dollar is actually up in relative terms

0:18:50.880 --> 0:18:54.040
<v Speaker 2>against the US dollar, and the US barrel price of

0:18:54.080 --> 0:18:56.160
<v Speaker 2>oil has fallen to sort of levels we haven't seen

0:18:56.200 --> 0:18:59.000
<v Speaker 2>since you know, the darkest days of COVID, So that's

0:18:59.040 --> 0:19:02.040
<v Speaker 2>you know, US sixty sixty three dollars a barrel I think,

0:19:02.160 --> 0:19:04.600
<v Speaker 2>or you know, around sixty dollars a barrel. So yeah,

0:19:04.600 --> 0:19:07.040
<v Speaker 2>some of these things are sort of deflationary, weirdly in

0:19:07.080 --> 0:19:10.600
<v Speaker 2>the first instance, or disinflationary, so you know, the economists

0:19:10.640 --> 0:19:14.199
<v Speaker 2>expect it. It should also start to create inflationary pressure

0:19:14.200 --> 0:19:17.399
<v Speaker 2>in other places, you know, as other countries put up Tariff's,

0:19:17.440 --> 0:19:20.520
<v Speaker 2>you know, So you've got basically two forces pushing against

0:19:20.520 --> 0:19:23.359
<v Speaker 2>each other, these deflationary forces, you know, the demand side,

0:19:23.400 --> 0:19:26.000
<v Speaker 2>which is the shock that you know, consumers might stop

0:19:26.040 --> 0:19:29.320
<v Speaker 2>spending because of all the uncertainty, and that's dominating at

0:19:29.320 --> 0:19:31.760
<v Speaker 2>the moment. And then you've got the inflationary side, the

0:19:31.800 --> 0:19:35.440
<v Speaker 2>supply side, which is what we know that Tariff's kind

0:19:35.480 --> 0:19:37.920
<v Speaker 2>of do in the long run, which is pushed costs up.

0:19:38.000 --> 0:19:40.680
<v Speaker 2>So you know, these two competing forces is say, both

0:19:41.040 --> 0:19:44.080
<v Speaker 2>not great things, and at the moment it's it's the

0:19:44.200 --> 0:19:47.280
<v Speaker 2>sort of recessionary demand side stuff that's dominating.

0:19:47.440 --> 0:19:50.080
<v Speaker 1>Thanks for joining us, Liam, great, no, happy to be here.

0:19:53.720 --> 0:19:56.840
<v Speaker 1>That's it for this episode of The Front Page. You

0:19:56.880 --> 0:20:00.680
<v Speaker 1>can read more about today's stories and extensive new coverage

0:20:00.720 --> 0:20:04.760
<v Speaker 1>at enzdherld dot co dot nz. The Front Page is

0:20:04.760 --> 0:20:08.520
<v Speaker 1>produced by Ethan Sills and Richard Martin, who is also

0:20:08.680 --> 0:20:13.320
<v Speaker 1>a sound engineer. I'm Chelsea Daniels. Subscribe to the Front

0:20:13.359 --> 0:20:16.959
<v Speaker 1>Page on iHeartRadio or wherever you get your podcasts, and

0:20:17.040 --> 0:20:20.640
<v Speaker 1>tune in tomorrow for another look behind the headlines.