With Trump’s on-again, off-again tariffs rattling global markets, the PM is vowing to fight for free trade – and not everyone’s happy about it, writes Catherine McGregor in today’s extract from The Bulletin.
To receive The Bulletin in full each weekday, sign up here.
Tech spared from worst of tariffs – for now
A whiplash week in the world of tariffs ended with one more flip-flop over the weekend. In a move that left tech giants cheering, Donald Trump announced that smartphones, computers and other electronics will be exempt from the United States’ 125% (or is it 145%?) “reciprocal” tariff on China.
Big tech companies like Apple, which had seen US$773 billion shaved off its value in just four days, can “breathe a huge sigh of relief”, US tech analyst Dan Ives said on Saturday – although perhaps not so much now that Howard Lutnick, Trump’s commerce secretary, says the electronics exemptions are not permanent. Lutnick had tried to spin the eye-watering Chinese tariffs as a win for the American tech sector, claiming they would create “an army of millions and millions of people screwing in little, little screws to make iPhones” on US soil. That, of course, was always a fantasy. As Apple CEO Tim Cook has pointed out, the US lacks even a basic pool of tooling engineers: “In China, you could fill multiple football fields.”
Peters the pragmatist
If that last-minute backpedal looked chaotic, Winston Peters would probably agree – and quietly note that he called it. Speaking in Hawai’i, the foreign minister warned against what he called the “hysterical” and “short-sighted” use of military metaphors like “trade war” and “fighting” for free trade. His comments doubled as a veiled rebuke of PM Christopher Luxon, who last week declared that free trade “is worth fighting for – and I’m up for that fight.” More pointedly, reports Adam Pearse in the Herald, Peters added: “My advice to politicians is tone down, wait til you see and know what’s going on.” With Trump’s latest flip-flop, the foreign minister might be feeling vindicated.
A PM-CEO for uncertain times
His deputy might not be overly impressed, but Luxon’s performance last week drew measured praise from commentators including former National and NZ First staffer Georgina Stylianou in The Post (paywalled) and Anna Rawhiti-Connell in The Spinoff. Both argued that the prime minister’s instincts – pro-free trade, pro-institution, pro-diplomacy – make him a good fit for this volatile moment. “You don’t have to feel remotely inspired by Luxon’s words or his love of free trade,” Rawhiti-Connell wrote, “but faced with a disinhibited, angry bear obsessed with deference who is intent on burning institutions down, they are what they need to be.”
NZ economy caught in the crossfire
While we’ll escape the worst of the economic damage, New Zealand is still set to feel the effects of Trump’s economic brinkmanship. The silver lining? Lower interest rates, which economists say are likely to keep falling as a global slowdown affects commodity prices and New Zealand exporters take a hit. While the US has backed off on some of its China tariffs, our two largest trading partners are still going at it “head to head, hammer and tong”, Kiwibank’s Jarrod Kerr tells OneRoof’s Catherine Masters.
The impact of all that turmoil on our export sector may lead to higher unemployment, while the wider climate of uncertainty could encourage businesses to pull back on investment, creating another brake on the economy. In other words: don’t get too excited about that cheaper mortgage just yet.
- The Washington Post’s Asia-Pacific editor Anna Fifield, formerly of The Post, on what Trump’s latest concession means for US-China relations. (Q&A with Jack Tame)
- Liam Dann: Risk of another GFC rises as US-China trade war takes world to the brink (NZ Herald Premium, paywalled)
