NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business

Ryan Bourne: Donald Trump may have a point over trade but it doesn't mean he's right

Daily Telegraph UK
15 Jun, 2018 06:36 AM6 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

US President Donald Trump. Photo / AP

US President Donald Trump. Photo / AP

"Well, he's got a point."

One hears that phrase a lot about President Trump. It explains his appeal. Highlighting self-evident truths others gloss over - that some illegal immigrants commit gruesome crimes, for example - he gives voice to fears usually left unsaid.

Those who reactively deny it look stupid. Those who describe it in broader context?

Well, "if you're explaining, you're losing", as President Reagan once said.

Before and after the G7 summit, the President faced righteous criticism from international leaders for deciding not to renew exemptions for the EU, Canada and Mexico from his steel and aluminium tariffs.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

He responded by pointing out how heavily protected Canadian dairy and EU car markets are.

"We have put up with Trade Abuse for many decades - and that is long enough," he tweeted.

His tariffs, and consideration of extending them to cars were, he claimed, really a response to this protectionism.

Advertisement
Advertise with NZME.

Ideally, all countries would eliminate tariff and non-tariff barriers, he mused.

But in the absence of that, he just wants reciprocity and a level playing field.

Who can argue with that?

It all sounds reasonable. And, importantly, he does have a point! Canada's dairy market is heavily insulated, with a "supply management" system incorporating tariff rates of near 300 per cent on dairy imports beyond their quota of 10 per cent market share.

Discover more

Business

Dollar gains against greenback

14 Jun 05:45 AM
Business

What are the chances of winning TAB's $5m pick 64?

15 Jun 03:53 AM
Business

Dollar heading for weekly decline as greenback strengthens

15 Jun 04:39 AM
Business

NZX 50 inches lower as Freightways, Ryman drop

15 Jun 05:43 AM

The European Union does impose 10 per cent tariffs on imports of American cars while the US charges only 2.5 per cent the other way (though truck tariffs are higher in the US than EU).

Trump therefore gives voice to the US car and dairy industries who want more freedom to export.

These facts also allow him to take the moral high ground, creating space for Republican free-traders to justify new US trade barriers as a short-term price to pay for a freer future global trading environment.But should we really believe that is what Trump desires?

There's not much evidence to suggest so. Remember, his steel and aluminium tariffs have been legally justified on "national security" grounds, not tit-for-tat protection.

Why Canada and the EU opening up their dairy and car markets would resolve national security concerns about importing steel and aluminium inputs from allies is anybody's guess.

If Trump were actually concerned with reciprocity, he wouldn't cherry-pick individual sectors, but look at the bigger picture.

Advertisement
Advertise with NZME.

This shows international tariffs have been falling worldwide over the past three decades as a result of painstaking multilateral negotiations and free trade deals.

According to World Bank data, the overall weighted mean applied tariff rate for the US and EU are near identical at 1.6 per cent, and even lower in Canada at 0.8 per cent.

Mexico is higher at 4.4 per cent, but given this has tumbled from 15.5 per cent just 15 years ago, and many goods are traded tariff-free with the US due to Nafta, focusing on these countries seems an odd place to start to free up global markets.

True, the EU's variance in tariffs is higher, meaning it imposes much higher tariffs in certain areas.

But if Trump really had free-trade ambitions, would he not also bring some protected US sectors to the bargaining table to trade-off for liberalisation elsewhere?

Why not the US sugar industry, where interventions, tariffs and quotas raise the American sugar price to almost double the world price, and significantly block imports from the Caribbean?

Advertisement
Advertise with NZME.

Or how about reducing clothes tariffs, currently kept high so the US textiles sector gets leverage in US free trade agreements to insist other countries can export their clothes tariff-free only provided they use US inputs?

No, Trump sees the vested interests in other countries as a problem, but domestically they are just fine.This, I'm afraid, is the Trump trade world-view personified.

His focus on economically-meaningless bilateral trade deficits, and on producers, rather than consumers, represents the "exports good, imports bad" mercantilist mindset.

The President really does not see trade as mutually beneficial exchange, but a game played between nations where some win and others lose, depending on how much you sell and how much you buy as a country.

Perhaps the best insight that deep down his administration does not believe in the free trade ideal was his adviser Peter Navarro's recent defence of the tariffs.

Rather dubiously, he claimed that they had already encouraged a new aluminium mill in Kentucky and restarted steelmaking facilities in Illinois.

Advertisement
Advertise with NZME.

But what was absent from his analysis was the real eye-opener, with no mention at all of the impact raising the steel price will have for the 6.5m workers in steel-consuming industries.

Those looking for evidence the administration saw tariffs as a short-term necessary evil in Navarro's musings would be disappointed.

By and large, of course, the economic case for free trade applies whatever other countries decide to do.

Tariffs harm domestic economies by generating investment-sapping uncertainty, raising prices for consumers, and undermining overall efficiency (by insulating producers from global competition and raising input costs).

As damaging as it is to European steel and aluminium exporters to see new US tariffs then, the EU should not have reacted by jacking up tariffs on US products such as bourbon.

This was a dumb move when Trump's priors suggest he would love any opportunity to ramp up tariffs in other areas.Sadly though, politicians can't resist tit-for-tat retaliation to avoid looking bullied.

Advertisement
Advertise with NZME.

Sure, Trump is the clear aggressor here. But faced with the opportunity to call his bluff and take him up on eliminating more tariffs, EU and Canadian politicians seemingly lose the free trade mantras they eulogise and seek to act to protect their industries, not customers.

Perhaps Trump has a point again that they aren't the free traders they claim to be. But acting on that point now threatens a wholly unnecessary, full-blown trade war.

- Ryan Bourne is the R Evan Scharf Chair for the Public Understanding of Economics at the Centre for Economic Studies, Cato Institute.

This story was first published in the Daily Telegraph and reproduced with their permission.

Save

    Share this article

Latest from Business

Media Insider

TVNZ boss on the future of the 6pm news, Shortland Street - and a move into pay TV

19 Jun 09:37 AM
Premium
Shares

Market close: GDP beats forecasts but NZ sharemarket dips

19 Jun 06:24 AM
Premium
Business

Innovation milestone: NZ approves lab-grown quail for consumption

19 Jun 04:34 AM

Audi offers a sporty spin on city driving with the A3 Sportback and S3 Sportback

sponsored
Advertisement
Advertise with NZME.

Latest from Business

TVNZ boss on the future of the 6pm news, Shortland Street - and a move into pay TV

TVNZ boss on the future of the 6pm news, Shortland Street - and a move into pay TV

19 Jun 09:37 AM

Will this be Simon Dallow's swansong year as the 6pm newsreader?

Premium
Market close: GDP beats forecasts but NZ sharemarket dips

Market close: GDP beats forecasts but NZ sharemarket dips

19 Jun 06:24 AM
Premium
Innovation milestone: NZ approves lab-grown quail for consumption

Innovation milestone: NZ approves lab-grown quail for consumption

19 Jun 04:34 AM
$162k in cash, almost $400k in equipment seized in scam crackdown last year

$162k in cash, almost $400k in equipment seized in scam crackdown last year

19 Jun 04:29 AM
Gold demand soars amid global turmoil
sponsored

Gold demand soars amid global turmoil

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP