I don’t know that the rest of the world is feeling so upbeat about it all.
Share markets are on edge. There is a risk of some serious financial and economic turmoil after the announcement.
Whatever Trump’s tariff policies will be, we need them put in place; markets can work their magic and start pricing in the new world order.
Central bankers need to know what they are dealing with and set their policy course for it.
So, if there is one small spark of optimism we can kindle from next week’s deadline, it is that we might see some more certainty.
Trump has already flip-flopped on a number of tariff announcements. Some have been softened... unsoftened and softened again.
A Wall Street sell-off last week was headed off by Trump’s comments suggesting the new tariffs might be “more lenient than reciprocal”.
“I know there are some exceptions, and it’s an ongoing discussion, but not too many, not too many exceptions,” he said.
Trump has already put tariffs in place for cars and steel, and on goods from China, Mexico and Canada.
He has also made it clear that if Europe or Canada retaliate, he will escalate the trade war.
“If the European Union works with Canada in order to do economic harm to the USA, large-scale tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!” Trump wrote on his social media platform Truth Social.
So, okay, I’d be a brave man to be betting this week will see the end of the tariff policy turmoil.
But surely there has to be a point at which the bulk of the policy is in place and we can finally assess the fallout.
The uncertainty is starting to have a real impact. US consumer confidence is down and fears of recession are growing.
The US Federal Reserve has paused its interest rate cuts and Wall Street stocks have fallen into correction territory (taking our KiwiSaver accounts with them).
Trump’s comments about leniency suggest he’s starting to recognise the risk of overdoing things.
But, lenient or not, what’s planned for next week is a much more comprehensive tariff policy that may well catch New Zealand directly in its scope.
And even if it doesn’t, the tariffs are widely expected to knock global growth hopes this year.
Most economists see that as the bigger issue for New Zealand, which is struggling to get momentum for a fragile economic recovery.
The world’s big economic think tanks have released a flurry of reports in the past few weeks assessing the impact of tariffs.
S&P Global released a new outlook for the Asia-Pacific region last week.
“US tariffs will weigh on Asia-Pacific economies, not choke them,” it said.
It concluded that Australia, Indonesia, New Zealand and the Philippines should be “less at risk” with generally low import tariffs and relatively low goods surpluses with the US.
We can take some comfort that we abolished most of our tariffs years ago (so our big exports to the US – meat, wine and dairy – shouldn’t be exposed).
There were concerns that the White House might view value-added taxes, such as GST, as a tariff barrier.
That would be odd, given that GST doesn’t target imports. But if the White House makes that call, it will apply to all countries with the taxes, so New Zealand will probably have to wear it.
But it seems not going there is part of the “lenient” approach Trump has alluded to.
“Still, all of Asia-Pacific will feel the indirect impact of tariff turmoil. Slower growth internationally as a result of trade friction and the associated uncertainty will weigh on exports,” S&P Global wrote.
It has knocked a not insignificant 0.7% off its growth forecast for New Zealand in 2025. It now sees GDP growth at 1.5% for the full year.
On the upside for New Zealand, it has held its China growth forecast at 4.1%, citing a stimulus and stronger than expected growth in the first quarter.
Perhaps on that basis, S&P Global might be overly negative about our outlook.
Westpac economists just lifted their 2025 GDP outlook to reflect the strong bounce in the December quarter.
Who knows?
The trouble with all the forecasts at the moment is that they rely on guesswork about where the tariffs land and the extent of the trade war that may ensue.
There’s also a lot of speculation about what the net outcome will be for inflation.
Without anything solid to go on, some economists will look through the risk for now. Others will be more pessimistic.
As a result, more certainty is desperately needed.
To summarise the S&P Global take, more US tariffs aren’t great for New Zealand, but we’ll cope.
When we narrow the focus to the domestic economy, New Zealand has a relatively clear pathway ahead of it.
It’s not a booming recovery. We know there are structural limits on economic growth due to low productivity.
The Government is promising to deal with that in time.
But meanwhile, dairy prices are strong, interest rates are falling etc, etc.
The green shoots of economic recovery are there.
They just need time to get established.
It means some sort of resolution to all this tariff-induced economic anxiety is needed so we can all get on with the business of doing business.
Without it, there is an increasing risk that we see what Elon Musk might call “an unscheduled rapid disassembly” on Wall Street.
Nobody – including Trump and Musk – will want a major global meltdown with crashing sharemarkets sucking what little confidence we currently have out of the economy.
So roll on “liberation day”, whatever that means.
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003. To sign up for his weekly newsletter, click on your user profile at nzherald.co.nz and select “My newsletters”. For a step-by-step guide, click here.
