Speaker 1: Kyoda.
Speaker 2: I'm Chelsea Daniels and this is the Front Page, a
Speaker 2: daily podcast presented by the New Zealand Herald. The Trump
Speaker 2: tariffs are inching closer and closer towards becoming a reality.
Speaker 2: While they were meant to kick into gear last week.
Speaker 3: They've been delayed.
Speaker 2: Again, this time to August first. Despite being accused of
Speaker 2: chickening out, Donald Trump has reignited the tariff talk through
Speaker 2: a series of letters and social media posts, announcing new
Speaker 2: duties on dozens of countries if they don't sign trade deals.
Speaker 2: In the months since Liberation Day, only two countries have
Speaker 2: signed agreements with the US. So is it likely that
Speaker 2: dozens more will be signed in the next month or
Speaker 2: are we firmly in the era of a tit for
Speaker 2: tariff war and economic uncertainty. Today on the front page,
Speaker 2: New Zealand Herald, Business Editor at Large Liam Dan joins
Speaker 2: us to discuss the latest in the economic story that
Speaker 2: is dominating twenty twenty five. Liam, all these tariffs were
Speaker 2: meant to be in place last week, right, Why have
Speaker 2: they been delayed again?
Speaker 4: Well, it's part of the game of negotiation. So you know,
Speaker 4: I think what we've learned about the way Donald Trump
Speaker 4: does business is that it's very deal based, very transactional. Well,
Speaker 4: it meant to be in place on whenever it was April.
Speaker 3: Yeah, that's right.
Speaker 4: So they delayed everything and they started negotiations, and they've
Speaker 4: had some negotiations. Like China, they've made some progress, Vietnam
Speaker 4: they made some progress, but you know, I don't think
Speaker 4: they've made as much progress as that they like. So
Speaker 4: the deadline around July nine, that didn't hit that. So
Speaker 4: they've said, oh, here's the new dead diners now August one.
Speaker 4: But then, of course over the weekend, Donald Trump's come
Speaker 4: out and sort of got ahead of that deadline with
Speaker 4: another scary sort of announcement about big thirty percent tariffs
Speaker 4: on Mexico and the EU thirty five percent on Canada.
Speaker 4: And he's also threatened that the base tariff, which would
Speaker 4: affect New Zealand, could go from where he's said all
Speaker 4: countries will get a minimum of ten percent, that could
Speaker 4: go up to fifteen or twenty percent.
Speaker 5: But again, it's.
Speaker 4: Very hard to know how seriously to take that, because
Speaker 4: that's the way Donald Trump negotiates. There's a deadline coming
Speaker 4: up on August one. In theory, he's trying to put
Speaker 4: pressure on those negotiations with a big, scary number, and
Speaker 4: one assumes at this point that you know, there'll still
Speaker 4: be some movement before we get that. And so so
Speaker 4: the numbers he's announced, I'm not one hundred percent very
Speaker 4: unsure that they'll be the reality in the end.
Speaker 2: Right So August first, do we actually think it's going
Speaker 2: to happen?
Speaker 4: Well, who knows it. You know, these negotiations, the trade
Speaker 4: negotiations are normally very complex and take a long long time,
Speaker 4: and that's not the way Donald Trump wants.
Speaker 5: To do things.
Speaker 4: But I think he's finding out that, you know, it's
Speaker 4: not that simple. There's side effects. He knows all that,
Speaker 4: but he's still sort of playing a big game. There
Speaker 4: are things like, you know, a big tariff announced on Brazil.
Speaker 4: You know, immediately people start talking about coffee prices, which
Speaker 4: really affect consumers. So the impact on US inflation and
Speaker 4: then more importantly probably US markets and bond markets is
Speaker 4: a driver. But I think it's a case of his
Speaker 4: negotiating styles to see what he can get away. Was
Speaker 4: push it as far as he can, then it comes
Speaker 4: back a bit, Then he pushes again, and it comes
Speaker 4: back again.
Speaker 3: But we're going to just get tired of that though.
Speaker 4: Yeah, there's the cry wolf thing, right, So yeah, well
Speaker 4: I think that's what we will see that measured in
Speaker 4: market react. So there was a bit of market reaction initially.
Speaker 4: I think it caught the Canada tariff announcement caught the
Speaker 4: tail end of US markets. As we record this, we
Speaker 4: haven't yet seen how Wall Street will react when it
Speaker 4: opens Monday night, New Zealand time, but the Futures Exchanges
Speaker 4: is suggesting a sort of at the moment, nearly two
Speaker 4: hundred points coming off, So that's sort of like a
Speaker 4: percent and three quarters off markets, which is a bit
Speaker 4: of a fall.
Speaker 5: It's not a collapse or and then it who knows.
Speaker 2: It kind of feels like because initially, right we were
Speaker 2: talking about Wall Street and it had its worst day
Speaker 2: in next years or something like that. But with every announcement,
Speaker 2: I'm not hearing that anymore. So are the markets kind
Speaker 2: of cluing up, I suppose to Donald Trump's way of
Speaker 2: doing things.
Speaker 4: Yeah, I think that's definitely happening. They carried on as
Speaker 4: if nothing was happening in the gap between April and July,
Speaker 4: so they actually got back to record highs that does
Speaker 4: mean they're quite highly valued US stocks, so there's a
Speaker 4: risk that something triggers a bit of a panic sell
Speaker 4: off at any time. You know, we are in territory
Speaker 4: where that could happen. But I think you know, you
Speaker 4: see a little bit of reaction and then it's it's
Speaker 4: you know, I'm sure Donald Trump and his negotiating team
Speaker 4: would expect to see around two percent fall on Wall
Speaker 4: Street and would would live with that. It's if it
Speaker 4: gets a bit more out of hand that he pulls back,
Speaker 4: or if those bond markets start to move against him,
Speaker 4: which you know we've talked about before, very powerful influence
Speaker 4: on the US and interest rates, which can really hurt
Speaker 4: the US government, which has a lot of debt. It's
Speaker 4: it's it's the game restarting. I mean, I think that's
Speaker 4: what's happened. You know, He's he's getting back in the
Speaker 4: game on tariffs. What it feels like is that we'll
Speaker 4: get to where we get over a long period. You know, eventually,
Speaker 4: maybe by the end of this year. You know, there's
Speaker 4: going to be some higher tariffs than that we're in place.
Speaker 4: The world is learning to.
Speaker 5: Live with that.
Speaker 4: There will be some real world impacts, you know, inflation
Speaker 4: and all that sort of stuff. But you know, the
Speaker 4: US administration has to balance that and get that right
Speaker 4: politically for them, and then you know, as the world
Speaker 4: deals with it. You know, in the background, Asia, Europe,
Speaker 4: New Zealand, all these other nations are you know, really
Speaker 4: putting the foot down on trade negotiation to move away
Speaker 4: from the US as much as possible. So you're seeing
Speaker 4: a sort of a lot of work going on behind
Speaker 4: the scenes for nations to shore up other places for
Speaker 4: their goods to go if they can't get as much
Speaker 4: into the US, which weirdly, again could have some positive
Speaker 4: effects for New Zealand.
Speaker 5: It's hard to know.
Speaker 4: We don't want more cost on our goods going into
Speaker 4: the US, obviously for our winemakers and our beef and
Speaker 4: so on. But the direct impacts still don't look totally
Speaker 4: devastating other than you know, the general uncertainty. But in
Speaker 4: a weird sort of way, the world's you know, living
Speaker 4: with that this year.
Speaker 1: What happened to.
Speaker 2: Nay truth deals.
Speaker 5: Oh, we've smoken to everybody. We know everything. It's all done.
Speaker 6: I told you, I tell you, we'll make some deals.
Speaker 6: But for the most part, we're going to send a
Speaker 6: letter we're going to say, welcome to the United States
Speaker 6: if you'd like to participate in the greatest, most successful
Speaker 6: country ever. I mean, we're doing better than ever we have,
Speaker 6: I don't think and you're going to see these numbers.
Speaker 6: So we've never had numbers like this, We've never had
Speaker 6: investment like this. We have more than ninety.
Speaker 2: Back in April, the Trump administration, they promised ninety deals
Speaker 2: in ninety days.
Speaker 3: So I believe that that.
Speaker 2: Was around the time when Donald Trump said something in
Speaker 2: along the lines of all world leaders are going to
Speaker 2: kiss my ass or something. They only managed two they've managed.
Speaker 3: True, so UK and Vietnam. Where are the other eighty eight?
Speaker 4: Well, as I say, it's harder than it might seem
Speaker 4: from the outside to do these trade deals. They're very complicated.
Speaker 4: It can take years to do the kind of free
Speaker 4: trade deals.
Speaker 3: Look at New Zealand and India.
Speaker 4: Yeah, it's a long time. I mean that the China deal,
Speaker 4: Europe deal we've got now that they take take years
Speaker 4: and years, and there's all sorts of complicated you know,
Speaker 4: exemptions and things that are in, things that are out,
Speaker 4: and you know, I guess it has been it is
Speaker 4: being accelerated. Donald Trump's you know, accelerating things. Yeah, again,
Speaker 4: it just goes to just what he says at the time.
Speaker 4: You take it with a big grain of salt. It's
Speaker 4: it's part of a transactional way of doing business. So
Speaker 4: he's not necessarily thinking about you know, the big, big
Speaker 4: strategic sort of four dimensional chessies, thinking about winning the
Speaker 4: transaction in front of him and progressing the US interest
Speaker 4: that way, and maybe maybe it'll work. Maybe, you know,
Speaker 4: at some point a year from now, he'll have higher
Speaker 4: tariffs on everything and the US market will have adjusted
Speaker 4: and he could call that a win. But he doesn't
Speaker 4: seem to have any concerns or fears about looking bad
Speaker 4: on saying something that doesn't happen, like he's you know,
Speaker 4: his back downs. He doesn't call him back downs or reversals.
Speaker 4: He just does them, and people just get used to it.
Speaker 4: So I don't think, I don't think he cares that
Speaker 4: much whether what he says eventuates specifically, you know, because
Speaker 4: clearly a lot of stuff hasn't gone the way he said.
Speaker 3: In terms of what it means for New Zealand.
Speaker 2: I mean, I know that these numbers chop and change
Speaker 2: all the time, but what are we looking.
Speaker 3: At at the moment.
Speaker 2: So what tariff are we looking at come August first, Well.
Speaker 4: We're still supposed to be just looking at a ten
Speaker 4: percent based tariff, which I'm sure our businesses are the
Speaker 4: businesses that are most affected. The beef and meat sector,
Speaker 4: the wine sector have been working on dealing with talking
Speaker 4: to the trading partners and customers, and I think largely
Speaker 4: will will be okay, you know, we'll wear it because
Speaker 4: that cost is going to be borne by US consumers
Speaker 4: unless you know, unless it means they say no to
Speaker 4: our goods and we have to drop the price a
Speaker 4: bit to keep the same volumes up, and we don't
Speaker 4: have somewhere else to send the products. But if we've
Speaker 4: got other markets interested in our products, then we're not desperate.
Speaker 4: The US needs a lot of our beef. It just
Speaker 4: doesn't generate enough sort of low grade beef for hamburgers
Speaker 4: and things like that, and so it actually needs New
Speaker 4: Zealand and Brazilian and Argentinian beef to.
Speaker 5: Go into all those and Australian.
Speaker 4: Yeah, yeah, yeah, you know, I think those sectors will
Speaker 4: be a right, There is that risk, he said, he's
Speaker 4: just he has said that, Oh look he might look
Speaker 4: at fifteen to twenty percent as a base rate. That
Speaker 4: sounds like a classic Donald Trump threat. I doubt it.
Speaker 4: It's possible. Anything's possible, but I don't think people of
Speaker 4: sudden sort of panicking and thinking this is happening just
Speaker 4: because Donald Trump said it.
Speaker 2: We've talked before about how tariffs actually affect your own
Speaker 2: citizens and the cost for things at the supermarket and stuff.
Speaker 2: And come August first, will US businesses and consumers be
Speaker 2: the ones who are feeling the heat there.
Speaker 4: On some key products? So like they've already put they
Speaker 4: put a fifty percent tariff on copper and the price
Speaker 4: sword so that has an impact. I've seen you the
Speaker 4: Brazil coffee, orange juice consumers will It takes a while
Speaker 4: for these things to flow through, and there is the
Speaker 4: cost has spread between how much price pressure they can
Speaker 4: put on the people, you know, like our exporters trying
Speaker 4: to put goods into the US. But ultimately it is
Speaker 4: expected to be inflationary in the US, so you see
Speaker 4: a reaction on those bond markets. And that's around what
Speaker 4: the US Fed will have to do with interest rates
Speaker 4: if inflation comes back, So it can't put interest rates
Speaker 4: down as low as it would like if inflation's coming back,
Speaker 4: and that annoys Donald Trump because he thinks they should
Speaker 4: just put the rate down anyway.
Speaker 5: But you know, it's a it's a real world.
Speaker 4: Impact, and that's what will prevent I think Donald Trump
Speaker 4: just just enacting these big numbers that he talks about,
Speaker 4: because when it gets to the crunch and the real
Speaker 4: world impact start to flow through, that's when he dials
Speaker 4: it back a bit. So, as I say, I think
Speaker 4: he's testing how far he can go. He gets a
Speaker 4: certain number out there, brings it back. You know, there's
Speaker 4: going to be tariffs. The world has changed. There's going
Speaker 4: to be US tariffs. But I don't think anyone's going
Speaker 4: to panic about these big numbers just yet.
Speaker 2: Do you reckon it'd be a different story if he
Speaker 2: had to run again.
Speaker 5: For first I don't know. He seems to believe that.
Speaker 4: He keeps talking about the fact that you know that
Speaker 4: this this won't have the real world impacts that the
Speaker 4: economists think it will. Inflation when it hits as one
Speaker 4: of the most damaging things politically. We've seen it in
Speaker 4: New Zealand and around the world.
Speaker 3: That's what I mean.
Speaker 2: Though, It's like, would he be making so many risks
Speaker 2: and making so many I suppose low key enemies worldwide.
Speaker 2: I mean, look at Brazil, They're looking at a fifty
Speaker 2: percent tariff. They're not going to be overly happy about that.
Speaker 4: No, Like, I honestly don't think he cares about whether
Speaker 4: he's popular around the world. He does care about being
Speaker 4: popular at home. Yeah, and you know, it's it's it's
Speaker 4: a There are some ideological things about Donald Trump and
Speaker 4: MAGA and all that sort of stuff, and I'm not
Speaker 4: sure tariffs fit perfectly into that ideological mindset. It's sort
Speaker 4: of almost shocked some some of the Republicans the extent
Speaker 4: to which he's pushed on the tariffs. So yeah, I mean, look,
Speaker 4: just remains to be seen. I think his personal ratings
Speaker 4: are probably swinging more on some of those cultural war
Speaker 4: things and views about immigration crackdowns and that sort of stuff.
Speaker 4: The numbers aren't showing that the tariffs have started to
Speaker 4: really hit the US economy directly yet. I think things
Speaker 4: are still rolling along, and as we mentioned, the US
Speaker 4: markets are back at near record highs, So it's still,
Speaker 4: after all, this time isn't quite real yet, And that's
Speaker 4: the sort of hard thing to for everyone dealing with
Speaker 4: the market pricing and all that sort of stuff to
Speaker 4: deal with.
Speaker 1: France's President a Manu Micron says he's in very strong
Speaker 1: disapproval of President Trump's announcement. If no agreements reached, the
Speaker 1: French leader suggested EU plans speeding up the preparation of
Speaker 1: credible countermeasures. Italy's Prime minister, meanwhile, Georgia Maloney said in
Speaker 1: a statement it would make no sense to trigger a
Speaker 1: trade war between the two sides of the Atlantic, whilst
Speaker 1: the Dutch Prime Minister Dick Scoff posted on social medi
Speaker 1: saying that EU must remain unite and resolute in its
Speaker 1: aim to reach a mutually beneficial deal with the US.
Speaker 2: If we look at some of the revised tariff announcements
Speaker 2: from the past week, so we're looking at twenty five
Speaker 2: percent for Japan, Malaysia and South Korea, thirty percent for
Speaker 2: South Africa, thirty five for Mexico and the EU in Canada,
Speaker 2: fifty percent for Brazil. So what kind of pressure are
Speaker 2: those leaders under, do you think? And and are different
Speaker 2: leaders taking different kind of approaches to how they deal
Speaker 2: with these tariffs?
Speaker 4: Yeah, I mean mostly they're trying to negotiate and get
Speaker 4: a good deal. I mean that there's there's you know,
Speaker 4: in the in the first few weeks after the Liberation Day,
Speaker 4: we saw the EU and China pushback and Canada pushback.
Speaker 3: Those were the reciprocal Yeah.
Speaker 4: Well, and Trump just escalated everything if they tried to
Speaker 4: put something And he's still saying that if you try
Speaker 4: and hit us with you know, reciprocal tariffs, and you know,
Speaker 4: he'll just escalate another twenty or thirty percent.
Speaker 2: That's so bloody hard to calculate whatever's going on at
Speaker 2: the moment.
Speaker 4: I don't you know, mostly it's all going on behind
Speaker 4: the scenes, so we don't know where they're at with
Speaker 4: these deals mostly, so it just feels like he's he's
Speaker 4: playing a big hand to try and put the acid
Speaker 4: on for this the deal making that's ongoing and hasn't
Speaker 4: gone as well as he'd probably like at the stage.
Speaker 4: And then it's like, well, August one, that's you know,
Speaker 4: two weeks, you know, just really put the pressure on,
Speaker 4: see if that'll break some of his you know, that's
Speaker 4: how he does deals. Then if he doesn't look like
Speaker 4: he's going to win, he'll he'll backtrack. Well though he
Speaker 4: won't call it a backtrack, he'll just he'll just compromise
Speaker 4: or something like that, and that probably is most likely.
Speaker 2: Well, we spoke to an Z head of geopolitical risk,
Speaker 2: Cameron Mitchell, the other week. What did he have to
Speaker 2: say about this age of uncertainty?
Speaker 4: Well, his view was that we just have to get
Speaker 4: used to it, right, that the kind of you know,
Speaker 4: certain we had up until I guess pre Trump, you know,
Speaker 4: the first Trump presidency and COVID and things was almost
Speaker 4: in some ways fairly unprecedented.
Speaker 5: We had twenty years.
Speaker 4: Of sort of boring lows from the GFC through you know,
Speaker 4: it was just boring low growth, low inflation. But it
Speaker 4: was all very very predictable for you know, almost twenty years.
Speaker 4: And when you look back at history over the last
Speaker 4: one hundred years or so, you know, markets and economies
Speaker 4: and technology and society have carried on through great depressions
Speaker 4: and wars and all that sort of stuff, you know,
Speaker 4: and so maybe the world's a bit more like that
Speaker 4: at the moment. I guess it's about having confidence that
Speaker 4: things keep going, because it's a change of mindset for
Speaker 4: a lot of us, you know, especially of a certain
Speaker 4: age that grew up with a world order that was
Speaker 4: all in place and everybody was moving to more liberalization
Speaker 4: and more free trade and that going into reverse. You know,
Speaker 4: in some ways it's the first time in my lifetime
Speaker 4: seen that reverse. But that does happen cycles come and go.
Speaker 3: Is that two steps forward, one step back kind of thing.
Speaker 4: Well, hopefully, I mean it's not. Hopefully, it just doesn't
Speaker 4: continue to step back. That the trek is really to
Speaker 4: have some confidence about things carrying on and not start
Speaker 4: to feel like that it's apocalyptic or that the end
Speaker 4: of the world is happening because the big picture stuff
Speaker 4: has changed. I mean, I've just come back from the US.
Speaker 2: I was just about to say, what was the vibe
Speaker 2: over there? Like, well, it was where'd you go in
Speaker 2: New York?
Speaker 4: Spent the whole time in New York, which is it's
Speaker 4: almost like a city state, And I'm not going to
Speaker 4: say it's representative everywhere, but it was almost like a
Speaker 4: politics free zone. I mean, unless I turned on the
Speaker 4: social media or the TV, as I would hear you know,
Speaker 4: you didn't hear people talking about the politics on the
Speaker 4: subway or in the cafes or the Dalley's or whatever.
Speaker 4: People were out enjoying the summer or they're busy, they're hustling.
Speaker 4: It's just life goes on. And it's interesting. You know,
Speaker 4: cities like New York, London, Rome and all those places
Speaker 4: where they've been rolling for you know, hundreds of years,
Speaker 4: thousands of years. It takes a lot to rattle them.
Speaker 4: And I think sometimes in New Zealand, you know, we're
Speaker 4: a new place.
Speaker 3: The costs vert to take.
Speaker 4: Yeah, and because we're on the edge of the world,
Speaker 4: we absorb, you know, we're absorbing everything through social media
Speaker 4: and and through mainstream media. And you know, look, I'm
Speaker 4: not saying that there are big, strange things happening in
Speaker 4: the world, there's no denying that. But it does keep rolling.
Speaker 4: And it's important in New Zealand that we maintain confidence
Speaker 4: and keep doing the things, playing that, playing the sort
Speaker 4: of cards as they're dealt, playing the the ball in
Speaker 4: front of us, in order to to make sure that
Speaker 4: we don't sort of create our own sort of self
Speaker 4: fulfilling negative negative prophecy.
Speaker 3: I guess, right, So what's.
Speaker 2: Your final batley? Will August first go ahead?
Speaker 3: Or what are you.
Speaker 2: Buying me as a result?
Speaker 4: Yeah, I guess my gut feel is that he'll have
Speaker 4: to have something for August first, but it won't be
Speaker 4: won't be what he's announced at the weekend. There'll there'll
Speaker 4: be some deals before then, and probably well, August one
Speaker 4: isn't the end of this. I think this will carry
Speaker 4: on for months to come. For the rest of the year.
Speaker 4: We're still going to see Tariff's ebb and flow and
Speaker 4: market uncertainty, and eventually you'd think he's got to get
Speaker 4: to somewhere solid in this term, but it's going to
Speaker 4: take longer than August one.
Speaker 3: Thanks for joining us, Liam.
Speaker 5: Cheers, good to be here.
Speaker 2: That's it for this episode of The Front Page. You
Speaker 2: can read more about today's stories and extensive news coverage
Speaker 2: at ens at Herald.
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Speaker 2: The Front Page is produced by Ethan Sells and Richard Martin,
Speaker 2: who is also our sound engineer.
Speaker 3: I'm Chelsea Daniels.
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Speaker 2: behind the headlines.