By Craig McCulloch of RNZ
New Zealand’s Prime Minister Christopher Luxon has made his strongest condemnation yet of US President Donald Trump’s tariffs, denouncing a shift away from agreed rules and the risk of a global trade war.
Trump’s wide-ranging “Liberation Day” tariffs, announced last week, have shocked world markets. They posted a third day of losses on Monday, as investors worried that steep trade barriers around the world’s largest consumer market could lead to a recession. Trump administration officials say the President is following through on a promise to reverse decades of trade liberalisation he believes has undercut the US economy, Reuters reports.
Luxon delivered the prepared remarks to reporters, before heading into a caucus meeting at Parliament this morning, warning of the potential fallout from a “profound shift in the global economic landscape”.
“We’ve all seen the immediate impact on KiwiSaver balances, but wider than that, it is hurting growth prospects at a time when the global economy needs certainty and confidence, not uncertainty.”
Trump’s tariff plan has sent markets tumbling, with losses comparable to the global financial crisis, the arrival of the Covid-19 pandemic and the 1987 Black Monday crash.
Speaking at the White House on Monday, Trump doubled-down and threatened China with an additional 50% tariff if it did not withdraw a countermeasure.
Luxon told reporters he and his government would be the “biggest advocates for free trade on the world stage”.
“What actually is concerning me is the shift away from agreed rules and the risks of actually backsliding into a global trade war,” Luxon said.
“A trade war is, frankly, in nobody’s interest. It will slow global growth, it will hurt jobs and it will reduce the amount of money we have in our wallets.”
Meanwhile, Finance Minister Nicola Willis held a news conference late this morning to discuss what effect the tariffs would have on the economy, warning global inflation could rise by as much as 0.5% in response.
There were currently no plans to change the May Budget in response to the profound shift in the economic landscape, but Willis has warned of tough times ahead.
She said it was clear we were witnessing an “historically significant global event”.
While New Zealand exporters have been hit modestly by the tariffs, Asian markets had been significantly impacted, she said, and that would inevitably affect demand for New Zealand exports.
Luxon has offered some reassurance to New Zealanders, stressing the country was well positioned with competitive farmers and exporters, as well a network of trade deals.
“We have a strong history of advocating for an open, rules-based trading system, and I will work with like-minded countries to promote free trade as a path to prosperity for New Zealanders and for those that we trade with.
“Yes, we’re entering choppy waters, but we step into that from a very strong base and, with that, I’d say that New Zealand’s best days actually lie ahead of us.”
A similar pre-recorded message was pushed out across his social media channels this morning.
Responding to reporters’ questions, Luxon said his message was intended to reassure New Zealanders that the government’s economic plan would get the country through “another round of very very tough economic circumstances”.
Next month’s Budget would not need rethinking as a result of recent events, Luxon said.
“We’re very comfortable with what we’re doing as we set up for the Budget, but we’re just also acknowledging that there is a higher level of global risk and uncertainty… that will be a choppier and a more dynamic environment.”
Luxon said his personal view was that the US economy was going to go through a “power of pain” with huge costs being heaped on US consumers.
Labour calls on coalition to speak up for NZ
Also addressing reporters this morning, Labour leader Chris Hipkins said the government’s “quiet” response to date had not worked in the country’s interest.
He said the tariffs being imposed on New Zealand were “unjustified and based on a lie”.
“[The coalition] could start by speaking up for New Zealand. It’s not the sort of thing friends do to each other.”
Hipkins said just a few months ago Luxon and Foreign Minister Winston Peters were calling for a “much closer relationship with the United States”.
“Donald Trump’s politics certainly align more closely with Winston Peters’ personal view of the world,” Hipkins said.
“I don’t think that’s an approach that’s going to be in New Zealand’s best economic interests though.”
– additional reporting by Reuters
