The world’s economy is in the hands of powerful ‘morons’ – Editorial

Markets around the world have plunged as the trade war escalates. Photo / Getty Images

Editorial

THREE KEY FACTS

• The US and China are engaging in an escalating a trade war, impacting global markets and causing economic uncertainty.
• Donald Trump imposed tariffs on Chinese goods, leading to retaliatory measures from Beijing.
• Finance Minister Nicola Willis warned the trade tensions will make New Zealand’s economic recovery harder.

Don’t check your KiwiSaver balance or share portfolios.

We are watching the United States and China hurtling towards an all-out trade war, leaving us all diving for foxholes hoping to avoid the shrapnel. This is brinkmanship at its worst.

On Donald Trump’s so-called “Liberation Day”, when the President unveiled US tariffs on the world, he originally unveiled a 34% additional duty on Chinese goods.

But after China retaliated with its own 34% counter-tariff, Trump added another 50% duty – bringing the additional rate on Chinese products to 104%.

China vowed to “fight to the end”.

Markets around the world plunged, fund managers were fidgety, corporate valuations were crunched, and countries called the White House.

Apple, the world’s largest company by market capitalisation, desperately scrambled to shift production of the iPhone from China to India.

Country club conservatives and several business leaders, some of whom were vocal Trump supporters last year, are now speaking out against tariffs.

Billionaire hedge fund manager Bill Ackman, who endorsed Trump’s 2024 presidential run, said on social media this is not what he voted for.

“My bad,” he posted.

The boss of BlackRock, the world’s largest asset manager, Larry Fink, raised the risk of a US recession.

Ken Griffin, the billionaire who runs hedge-fund firm Citadel, called the tariffs a “huge policy mistake”.

Kiwi billionaire and Zuru co-founder Nick Mowbray said penalising trade doesn’t bring jobs back — it just raises prices and slows innovation.

“Sad to see what is happening,” he wrote on LinkedIn.

Money talks.

While New Zealand is not facing comparatively high tariffs, our biggest trading partner is China. The Asia region, including Australia, accounts for about 70% of our trade.

“All of these factors create risk for the New Zealand economy, just as we have been gathering positive momentum and recovering from a period of high inflation and interest rates ... put simply, the past week’s global developments make our recovery harder,” Finance Minister Nicola Willis said.

In the face of this chaos and a historically significant event, the Government’s plan, like long-term investors, is to keep calm and carry on.

However, it will be a bumpy road to recovery as we try to navigate the economic uncertainty.

Yesterday, more trouble brewed in Maga paradise.

Trump’s senior trade adviser Peter Navarro and Elon Musk engaged in a spat over the tariff carnage, with Musk calling Navarro “truly a moron” and “dumber than a sack of bricks”.

“Boys will be boys,” White House press secretary Karoline Leavitt said.

Yes, puerile behaviour, not that she would’ve intended her comment to be read that way.

Unfortunately for us, Musk may be right but also wrong. Navarro is possibly just one in a room full of powerful morons.

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