RNZ Morning Report

What does a Donald Trump victory in the US election mean for New Zealand's economy?

Experts say Trump's protectionist policies could have far-reaching consequences, particularly in heavily trade-dependent nations such as our own.

Trump has proposed tariffs of up to 20 percent on all imported goods, which would include major New Zealand exports like beef - and even larger ones targeted at countries he sees as economic adversaries, such as Mexico and China.

"If it applied to New Zealand exports, it would be quite serious," New Zealand International Business Forum executive director Stephen Jacobi told Morning Report earlier this week. "I mean, it would kill off quite a lot of trade."

Former senior government trade deal negotiator Charles Finny told Morning Report on Thursday he was recently asked what benefits there might be for New Zealand, and he said "not many".

"It's all pretty grim. Obviously we're gonna have to argue that we should be exempted - we're a good friend of the United States, we don't impose tariffs on them…. there are arguments why we should be exempted, but it didn't work for steel and aluminium last time around - and we even saw those maintained throughout the Biden administration.

"So there is a strong possibility that we'll have either a 10 or a 20 percent tariff imposed upon us."

Listen to Morning Report here: What does a Trump victory mean for NZ's economy?

"The other issue, which is a bit unclear, is what is it going to mean for US [free-trade] partners like Australia? If they have the tariff imposed upon them, well, that… is going to be contrary to their agreement.

"But it would be better for New Zealand if they did have the tariff imposed upon them, because if they're exempted, our competitive position vis a vis them, it's going to be even worse than the US market. So it could be quite bad in terms of the US market."

Charles Finny. Photo: Photography By Woolf / Supplied via RNZ

Trump's isolation of the US economy could see China turn more towards New Zealand, Finny said.

"If [Trump] goes ahead and imposes 60 percent tariffs on China, China will retaliate. I'm sure US agricultural products will be top of the list of items for retaliation, and that might create opportunities for us in China.

"Also, we have an increasingly large network of free trade agreements. We've got lots of options, so it's not going to be a total disaster for the New Zealand economy, but it is going to be negative. For those who are exporting to the US, it's gonna mean that margins are compressed, and in some cases it's going to be much more difficult to sell their product because others will have a competitive advantage."

Asked if he saw this as a return to a 1930s style of protectionism during the Great Depression, Finny said "without doubt" - and had a warning.

"Remember what happened at the end of that decade… this is very negative for the rules-based international order, and small countries such as New Zealand really bank those rules working and being respected."

Trump's first term as president saw him leave office with fewer Americans in jobs than when he started and an increased federal budget deficit.

Listen to Morning Report here: Unemployment rises to four year high

Economist Cameron Bagrie told Morning Report Trump's promised protectionism was an "immediate concern".

"New Zealand is a small, open trading economy, and we would like to see freer trade as opposed to moving down the protectionist route. So it'll just be a question of watch this space."

Unemployment here has been rising, up to 4.8 percent in the September quarter. - RNZ