US President Donald Trump signs executive orders (file photo). Photo: ANGELA WEISS / AFP
US President Donald Trump has introduced 25 percent tariffs on Mexico and Canada, and a 10 percent tariff on China - claiming they're meant to stop drugs and undocumented immigrants.
Sense Partners economist John Ballingall told Morning Report's Corin Dann the move could spark a potential retaliatory trade war between the nations, spelling bad news for New Zealand exports.
"The larger concern for New Zealand is that Trump's actions here lead to retaliation, which we're already seeing from Canada, Mexico and China, and that that blows up into a full-blown trade war.
"When that happens, you'll see global GDP growth go down, and that means lower demand for all of the things that New Zealand exports."
He acknowledged there are possible upsides in the short term. As dairy products going into Canada become more expensive. This could potentially open up new opportunities for New Zealand.
Photo: RNZ / Cosmo Kentish-Barnes
"I don't want to paint this as something which is great for New Zealand. The medium-term and longer-term consequences are pretty worrying."
Especially, he said, if the scope of Trump's tariff tactics widens to include Europe.
"Europe's already talking about how it might retaliate. We know the EU does this pretty effectively. It's got a list of products that it would counter-punch with.
"So again, it's not hard to see this skill heading relatively quickly into something much more concerning to New Zealand."
But while the actions of the US President have incensed those who believe the measures violate the rules-based system of fair trade, New Zealand is unlikely is join the choir.
"I think, to date, we've been very measured in terms of any political statements around President Trump's actions.
"I think that is probably going to be the way that we continue to go. There isn't a huge amount to be gained by jumping up and down and criticizing the US.
"Now that may sound like we're being a bit weak, but I think we have to be pragmatic. New Zealand making a song and dance isn't going to change President Trump's mind about tariffs, so perhaps we're better off taking the diplomatic route, trying to talk to people in this administration, position New Zealand as a partner."
Trump should be told 'allies are not lackeys'
But, Otago University international relations professor Robert Patman says New Zealand and other liberal democracies should make their opposition to the tariffs loud and clear.
US President Donald Trump speaks to the press after signing an executive order in the Oval Office of the White House in Washington, DC on January 31, 2025. Photo: MANDEL NGAN / AFP
"We always see ourselves as a good international citizen. Well, we actually need to walk the talk," he said.
"And that means to say we need to make it quite clear, along with Australia and other liberal democracies that Mr Trump's attempts to single out traditional allies of the United States for this sort of top-down pressure is unacceptable. Allies are not lackeys," he said.
Patman said Trump's "America First" approach to alliances and international institutions implies that other parties involved in the alliances took second place.
"I do think it is important that the United States is left under no illusions that everyone is going to quake in their boots and fold in front of them under Mr Trump."
Noting that New Zealand did have an ongoing trade dispute with Canada over dairy quotas under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), he said the relationship was strong.
US tariffs won't affect profits says Fisher & Paykel
Although Fisher & Paykel Healthcare said US tariffs will increase the cost of the goods it makes in Mexico that isn't expected to have a material impact on this year's net profit.
The company manufactures about 45 percent of its products in Mexico and 55 percent in New Zealand, said managing director Lewis Gradon.
About 60 percent of its products sold in the US are made in Mexico, with US-based customers generating about 43 percent of its first-half-year revenue.
Gradon said they're taking a long-term view, working with global suppliers and US customers to mitigate the impact of the US tariffs.
'In a wait and see period'
Executive director at ExportNZ, Joshua Tan, said while the change brings possible risks and opportunities, right now exporters are "in a wait and see period given that the Trump administration hasn't actually announced anything on New Zealand."
"There could be an opportunity for New Zealand to replace Canadian, Mexican, and Chinese goods in the US market and for our products to replace US products in those markets.
"The great thing is New Zealand has free trade agreements with all three."
"We're pretty confident our exporters can adjust to global changes... but it's pretty hard to break down at this point."
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