Former prime minister Sir John Key says he remains optimistic about Donald Trump’s domestic economic policy despite opposing the tariff strategy that has sent global markets into turmoil in recent months.
The former National leader, who served as prime minister for eight years, was the keynote speaker at an Auckland business summit earlier today.
Shortly after his speech, Sir John told 1News he believed Trump would ultimately take a more moderate approach to tariffs than initially proposed.
“I’m not a fan of tariff policies. I don’t think they really work,” he said.
“I’m still optimistic, as I think the stock market is telling you at the moment, that actually there will be a more sensible landing place for the tariffs that he’s wanting to impose.”
Sir John said he “wasn’t entirely surprised” at Trump’s call to go ahead with the policy.
“They’re just a negotiating point. I think he simply put on widespread and high rates of tariffs on every country to give himself a leverage point and a negotiating point.
“What I think he actually grossly underestimated was the stock market reaction. He saw not just the stock market, but the bond market imploding.
“At that point, he actually had to blink. You can actually make the case that his own strategy hasn’t worked. The reason the markets have recovered is because he’s taken those tariffs off the most part, and now he’s saying, ‘I’m going to negotiate case by case’.”
Sir John suggested Trump’s economic policies could still generally be positive for the US, but the tariffs could be trickier for the global economy.
Asked whether he stood by his October comments that Trump would be good for the economy, he said: “Do I think he’s going to reduce regulatory burden in the United States, have a freer labour markets, lower tax environment? I think the answer still remains yes.
“Is he best for the global economy? It depends on where things shake down in terms of tariffs.”
Film tariffs could be ‘really negative’ on NZ
Sir John acknowledged that for certain industries, including New Zealand’s film sector, Trump’s policies could be “a really negative thing”, particularly if the president’s proposed 100% tariff on the film industry were to be implemented.
“I can’t see how it would be cost-competitive to make a movie in New Zealand with a 100% tariff on it,” he said, noting that films such as The Hobbit would not have been made in New Zealand without government subsidies.
The former prime minister, who now served as a director of US tech company Palo Alto Networks, said he had “always been opposed” to Trump’s tariff policies but believes they won’t be the “dominant part of his economic solutions”.
“I don’t think it’s perfect from New Zealand’s point of view, but I don’t think we should panic either. We’ve still got a strong economy, lots of opportunities, and America will still be a very big market for us to sell things to,” he said.
“There are growing markets around the world, like India. It’s not a great thing from New Zealand’s point of view, but it’s not a reason for us to panic. We’ve got a very sound economy with lots of options in front of us.”
Kiwi Anna Fifield speaks to Q+A’s Jack Tame about the stand-off which is challenging world markets. (Source: Q and A)
Last October, Sir John suggested a belief that the Republican Trump was was better “on balance” for the US economy than Democratic opponent Kamala Harris.
Even then, he expressed concerns about Trump’s tariff approach: “China doesn’t pay those tariffs, middle-income consumers or consumers in America do, because when a tariff goes on a good that you bring into a country, you, the consumer, pay that.”
He added: “I don’t agree with the massive tariffs, and I don’t think you’ll follow through with all of that, and I certainly don’t agree with this view on trade.”
