A tariffying prospect for Kiwi exporters: Trump plans to tax imports – but a Harris presidency would be not much better
Trade and Agriculture Minister Todd McClay today announced he will lead a large trade delegation to the 7th annual China International Import Expo (CIIE) in Shanghai next week, followed by a visit to Guangzhou. Maybe he should be preparing instead to head for the United States to do his best to counter American threats to this country’s trading interests.
The prospect of a second Trump presidency bodes ill for this country’s exports to the US – but, more ominously, his plans to slap stiff taxes on imports to protect American producers portend the sparking of trade wars around the globe.
There has been much clucking within the Kiwi commentariat about this grim prospect in recent days.
But no-one should be too surprised that protectionism is a key component of Trump’s ideas of good economic policy . Early in July The Post’s Thomas Manch reported:
A second Trump presidency could ‘kill’ NZ trade
A second Trump presidency promises to seriously trouble New Zealand’s $14.6 billion in exports to the world’s largest economy.
Many aspects of Trump’s policy platform for a second term had not been scrutinised at that time, the writer acknowledged, but
… one policy planned by the Trump camp is already troubling for New Zealand: a universal 10% trade tariff on incoming goods.
“There’s no question in my mind that the Biden presidency is good for New Zealand, and a Trump presidency would not be good for New Zealand,” said Stephen Hoadley, a University of Auckland associate professor of politics and international relations.
A PBS News report from Washington late in September reinforced whatever concerns had been generated by Manch’s article. This said Trump had identified what he saw as an all-purpose fix for what ailed America: he would slap huge new tariffs on foreign goods entering the United States.
The former president and current Republican nominee asserts that tariffs — basically import taxes — will create more factory jobs, shrink the federal deficit, lower food prices and allow the government to subsidize childcare.
He even says tariffs can promote world peace.
“Tariffs are the greatest thing ever invented,’’ Trump said this month in Flint, Michigan.
As president, this article recalled, Trump had imposed tariffs with a flourish — targeting imported solar panels, steel, aluminium and pretty much everything from China.
“This time, he’s gone much further: He has proposed a 60% tariff on goods from China — and a tariff of up to 20% on everything else the United States imports.
But the same article noted that the Biden-Harris administration has a taste for tariffs. It retained the taxes Trump imposed on $360 billion in Chinese goods. And it imposed a 100% tariff on Chinese electric vehicles.
Indeed, the United States in recent years has gradually retreated from its post-World War II role of promoting global free trade and lower tariffs. That shift has been a response to the loss of U.S. manufacturing jobs, widely attributed to unfettered tree trade and an increasingly aggressive China.
Our Trade Minister’s plans to visit China are recorded today on the Government’s official website:
But no-one should be too surprised that protectionism is a key component of Trump’s ideas of good economic policy . Early in July The Post’s Thomas Manch reported:
A second Trump presidency could ‘kill’ NZ trade
A second Trump presidency promises to seriously trouble New Zealand’s $14.6 billion in exports to the world’s largest economy.
Many aspects of Trump’s policy platform for a second term had not been scrutinised at that time, the writer acknowledged, but
… one policy planned by the Trump camp is already troubling for New Zealand: a universal 10% trade tariff on incoming goods.
“There’s no question in my mind that the Biden presidency is good for New Zealand, and a Trump presidency would not be good for New Zealand,” said Stephen Hoadley, a University of Auckland associate professor of politics and international relations.
A PBS News report from Washington late in September reinforced whatever concerns had been generated by Manch’s article. This said Trump had identified what he saw as an all-purpose fix for what ailed America: he would slap huge new tariffs on foreign goods entering the United States.
The former president and current Republican nominee asserts that tariffs — basically import taxes — will create more factory jobs, shrink the federal deficit, lower food prices and allow the government to subsidize childcare.
He even says tariffs can promote world peace.
“Tariffs are the greatest thing ever invented,’’ Trump said this month in Flint, Michigan.
As president, this article recalled, Trump had imposed tariffs with a flourish — targeting imported solar panels, steel, aluminium and pretty much everything from China.
“This time, he’s gone much further: He has proposed a 60% tariff on goods from China — and a tariff of up to 20% on everything else the United States imports.
But the same article noted that the Biden-Harris administration has a taste for tariffs. It retained the taxes Trump imposed on $360 billion in Chinese goods. And it imposed a 100% tariff on Chinese electric vehicles.
Indeed, the United States in recent years has gradually retreated from its post-World War II role of promoting global free trade and lower tariffs. That shift has been a response to the loss of U.S. manufacturing jobs, widely attributed to unfettered tree trade and an increasingly aggressive China.
Our Trade Minister’s plans to visit China are recorded today on the Government’s official website:
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In his press statement, Todd McClay said this year, almost 70 New Zealand companies will participate in the China International Import Expo (CIIE), to interact with over 3,400 exhibitors and 410,000 visitors.
“This visit is part of the Government delivering on its promise to lead more trade missions than any previous administration during this term of parliament, Mr McClay says.
“China is our largest export market accounting for $38 billion in two-way trade. This is a significant economic partnership for both countries. It’s important we continue to invest in this relationship and grow the New Zealand economy by assisting our exporters to sell more,
“The CIIE will showcase New Zealand’s safe, high-quality and innovative products and our world-leading service sector to China’s growing middle class of over 500 million consumers.”
While supporting New Zealand exhibitors at the Expo, McClay will also meet with Chinese trade leaders and deliver a keynote address at the Hongqiao International Economic Forum, underscoring New Zealand’s commitment to expanding its trade partnerships and reinforcing the Government’s goal of doubling New Zealand’s exports by value in ten years.
Following CIIE, McClay will visit Guangzhou, a commercial gateway for New Zealand into southern China where he will engage with Kiwi businesses operating in the region.
“A strong export sector is part of our plan to grow the economy, lift incomes for kiwis, and create jobs.”
This will be McClay’s second visit to China this year following political meetings in April.
We await news of his first visit to the USA after the new President has been elected and settled into the White House.
It looks like we should be nervous, no matter who wins.
As a Newsroom headline this week notes, NZ exporters nervously await US election result.
Newsroom noted that both Kamala Harris and Donald Trump had been unusually vague regarding their respective economic policy prescriptions.
A report in The Interpreter elaborates on this, noting that – under Joe Biden – the United States continued most of the Trump-era tariffs on China, and introduced others.
Biden did suspend some tariffs, but most policy movement was in the opposite direction. In 2022, the Inflation Reduction Act (IRA) was passed, providing for US$370 billion in tax concessions and subsidies mostly targeting renewable energy. In the same year, Biden also extended tariffs on solar panels. In May 2024, Biden increased tariffs on Chinese electric vehicles to 100 per cent, and expanded other tariffs on China.
A Harris administration would likely continue to use tariffs (mostly on China) to address what the United States views as unfair competition and to accelerate the energy transition to meet the US emissions reduction goals. Policies based on “techno-nationalism” are also likely to continue, although perhaps less aggressively than under a Trump presidency. This will make it harder for other countries to invest in their energy transition because domestic industries will be crowded out by larger US-subsidised projects.
Industry policy with an environmental focus is also likely to continue under a Harris administration. With emissions trading politically toxic in Washington, the United States is pursuing second-best policies to reduce greenhouse gas emissions. The IRA is all carrots and no sticks, providing subsidies and tax incentives for renewable energy investments. While Trump would struggle to reverse the IRA, under Harris, the program will be assured. Given Harris’ strong sentiments on US jobs and on the environment, she may strengthen the use of industry policies.
Harris has been highly critical of Trump’s policy of a blanket import tariff, which he has said may go as high as 20 per cent. Recognising the impact of tariffs on US families, a Harris administration may be more reluctant to use them as an economic weapon, particularly against allies. However, whether Harris will reduce the current level of tariffs, which has resulted in US households paying an extra US$200–300 annually as tariff costs are passed on in higher prices, remains to be seen.
The headline on this report bleakly sums up: Kamala Harris and trade: Better than the alternative, but not much
Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton
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