Prime Minister Justin Trudeau says that the justifications for US President Donald Trump's tariffs – including assertions around fentanyl – are bogus. Video / Video Elephant
About 6% of New Zealand’s total dairy exports head to the US and a third of our total wine exports.
Donald Trump has made his first major threat affecting New Zealand – and our Government’s strategy for dealing with it is the opposite of the Canadians.
I asked Trade Minister Todd McClay two weeks ago what our plan was around steel and aluminium tariffs; the answer was we don’t export much to the US but we might have a chat to them. So rather chill, by comparison.
When I spoke to McClay again this week there was slightly more alarm, but certainly still no sign of panic or public pleading from Wellington to Washington.
On Monday, as soon as Trump said he would impose a tax on agricultural imports into the US from April 2, I immediately rang Nathan Guy, the former National minister-turned-chairman of Meat Industry Aotearoa. He was worried and a bit shocked by what Trump had just posted.
McClay was still offering no Trudeau-style overreactions or Oscar-winning tantrums. Though you’d forgive him a few strong words given how serious this could be for our small trading nation of which agriculture is the backbone.
I’m told a tariff at 10% would have a negligible impact - but at 25% could be a major for the economy.
In a cruel twist of irony, our exporters have been busy diversifying away from China in recent years; spreading their eggs over more baskets to avoid sudden, large-scale demand changes that could leave us vulnerable.
That meant, in part, going big with the Americans; they’re now our second-largest goods export market behind China. They buy 40% of our meat, 6% of our dairy (worth more than $1 billion alone) and a third of our wine. The US is also our second-largest buyer of sheep meat.
Given how crucial this market is – plus how fragile China’s demand could become as their own trade war kicks into gear – we have a lot on the line.
And so do our politicians in the Beehive.
After all, much of the growth strategy these guys are hoping to get re-elected on the back of is predicated on high commodity prices for our exports. If demand weakens in key markets, that’s a problem.
Unlike Trudeau’s Adrien Brody-length “Oh Canada” speech this week, our Government is instead adopting a more calm, measured comms strategy which almost borders on nonchalance. Although to be fair, Canada has a lot more skin in this game, with total exports to the US valued at $410b.
Rosemary Banks is New Zealand's Ambassador to the United States.
Behind the scenes, a very busy team of Kiwi diplomats and professional cocktail party minglers are hunting down Republicans and White House officials, their aides and their associates to glean any and all insider information on whose exports might be affected, by how much, and whether any exemptions are being granted.
That team is led by our top woman in Washington DC, Ambassador Rosemary Banks. She now has one of this country’s most important jobs – billions of dollars are on the line.
Her mission is to quietly whisper into the ears of Washington’s elite the many good reasons we should be exempt from a tariff; New Zealand and America have balanced trade and American hamburgers would become more expensive without our beef and beef fat. We already lay more tariffs on our goods than you pay exporting yours Down Under.
Diplomatic channels have helped secure previous exemptions: it can be done. The Aussies got an exemption on steel and aluminium in 2018 under Trump.
If anyone can do it, Banks is the person you want there: highly capable, excellent contacts in the Republican Party and an ability to connect. Banks was asked to stay on in the role by Foreign Minister Winston Peters last May, in anticipation that Trump might return to power.
She is the same ambassador who was in charge when we nearly secured a free trade agreement during Trump’s first term.
Of course, it’s not all on her. Peters and McClay and Prime Minister Christopher Luxon will play their parts too. But the ground game is on the ambassador.
We like to hate on diplomats – oh, they just go to nice dinners, drink wine and shmooze. Well, it’s time to crack out our best pinot, use the contacts, and make the deals happen. The weight of our export nation is on their shoulders.
The best-case scenario is a small tariff on agriculture affecting all exporters equally. The worst case scenario: 25%-plus, which would significantly affect us and force a major rethink of our trading destinations. How quickly we could pivot also matters.
Here’s hoping we can avoid all of that with a deal we quietly hammer out behind the scenes with an air of nonchalance – even if on the inside we’re a bit panicked.
