We escaped Trump’s Liberation Day hurt locker ... for now – Editorial
THREE KEY FACTS
- Donald Trump imposed reciprocal tariffs of 10% on New Zealand goods.
- New Zealand exported$9 billion of goods to the US last year.
- The United States was the second-largest export destination for New Zealand goods in 2024.
New Zealand is a small, open economy.
We make money from selling things to the world and our margins are often pretty slim.
Americans, meanwhile, make money from selling things to other Americans. Generally considered their poorest state, Mississippi has a higher GDP per capita than New Zealand.
So our biggest exporters nervously watched television sets yesterday, with nobody quite sure what to expect from Donald Trump’s “Liberation Day”.
“For decades our country has been looted, pillaged and raped,” said Trump from the White House Rose Garden to an audience that included Cabinet members and autoworkers.
“It’s not going to happen any more.
“We will calculate the combined rate of all their tariffs ... and because we are being very kind ... we will charge them roughly half of what they are charging us.”
When Trump slapped a baseline 10% tariff on goods imported from New Zealand many could be forgiven for expressing a sigh of relief. We had feared worse.
As former Kiwi diplomat Stephen Jacobi described it, “unjustified, painful but at a lower level of pain than expected”.
Our exporters will take a hit, the 10% will make a difference, but it won’t be fatal.
Of greater concern now is the potential for Trump’s tariffs to suppress consumer demand for all exports, not just those to the US.
But New Zealand companies are better positioned than those in countries Trump was less kind to.
China and the European Union were hit with tariffs of 34% and 20%. Japan, 24%, and India, 26%, were also in the firing line.
Fisher & Paykel Healthcare was one of our biggest casualties on Liberation Day, with an initial fall of 6% in its share price at the news. It has substantial manufacturing assets in Mexico, which the US has placed a 25% tariff on.
It will take some time to see the full impacts on our businesses and economy.
Despite the tariffs, exporters will still see opportunity in the US market and Americans will ultimately be the ones picking up the tab if they choose to continue buying overseas products.
We shipped $9 billion of goods to the US last year, a market which was our second-largest export destination last year.
Trade wars are not good for a globalised economy and Australian Prime Minister Anthony Albanese said Trump’s tariffs were “not the act of a friend”.
Though, does the rabble currently occupying 1600 Pennsylvania Avenue care to have any friend right now but themselves?
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