Donald Trump’s tariff move a boost for exporters, but what next? – Editorial
THE FACTS
- Donald Trump has signed an order scrapping tariffs on food products, including beef.
- This move is expected to save New Zealand exporters about $330 million in tariffs.
- New Zealand Trade Minister Todd McClay warns of uncertainty, urging caution despite the positive development.
The chickens may be coming home to roost for United States President Donald Trump.
Though it’s not chickens but cows at the centre of news Trump has moved to scrap large tariffs on food products, including beef.
The President has signed an executive order allowing a range of food products to escape his tariffs in a bid to stem rising food prices in the US.
That’s good news for New Zealand exporters, who have faced increased costs since the extra tariffs were introduced.
New Zealand beef exporters alone have so far paid $300 million or so in extra tariffs since they were introduced on August 1.
The products affected represent about 25% of New Zealand’s exports to the US, worth more than $2 billion a year.
Trump’s executive order is expected to save exporters about $330m in tariffs.
The benefits extend to US consumers as well.
In implementing the tariffs, Trump said they would make groceries and everyday goods easier to afford.
But economists and commentators warned the tariffs would lead to increased costs passed on to US consumers.
And so it came to pass. Economists and commentators were right.
New Zealand Trade Minister Todd McClay says US beef prices are at some of the highest levels they’ve ever been, pointing to a “deficit of beef”.
The US doesn’t produce enough of its own and is having to import it, McClay says. It’s one of the main reasons the US has been buying from New Zealand and other countries and that tariff rate is having an inflationary effect, he says.
Where’s the beef? Meat Industry Association chief executive Sirma Karapeeva says supply is short because a number of big export countries, particularly the US, are going through a herd rebuilding phase.
Global supply is tight and it’s pushing up prices.
Karapeeva says the current tight supply could last for another two years.
These factors have helped push the case to scrap the tariffs and provide relief to our primary producers and exporters.
It is a great result, though there is more to do with other key products still facing high tariffs, including lamb.
We can’t rest on our laurels.
McClay has reacted with cautious optimism, saying it is still a very uncertain time for Kiwi exporters and he’s concerned about the changing nature of decisions from the White House. “We’ll be pushing to make sure and get some certainty that [tariffs] stay down and the President doesn’t reverse it at some point in the near or distant future.”
True, it has been in many ways an unpredictable presidency ... again.
While the tariff cuts are welcome news, caution is prudent. We could continue guessing Trump’s next move until the cows come home.