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