Latest / Best of Business / Gareth Kiernan: Infometrics Chief Forecaster on the economic impact of Donald Trump's tariffs

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Gareth Kiernan: Infometrics Chief Forecaster on the economic impact of Donald Trump's tariffs · Best of Business

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  Speaker 1: You're listening to a podcast from Newstalk zed B. Follow
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  Speaker 2: The trade war tariffs against Mexico, Canada, China. Trump has
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  Speaker 2: put them in place. Now they are starting to have
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  Speaker 2: an impact on the market. The end of its fifty
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  Speaker 2: finished half of percent down today. The S and P
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  Speaker 2: five hundred has erased most of its gain since Trump's
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  Speaker 2: election win in November, and all eyes will be on
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  Speaker 2: markets overnight of course to see there's going to be
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  Speaker 2: further reaction. Gareth Kennan is Infametric's chief forecaster with US tonight, Hi, Gareth, evening, Right,
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  Speaker 2: the New Zealand markets, Is that a big deal?
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  Speaker 3: Oh, it's not much of a shift here today compared
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  Speaker 3: to what we've seen overnight with the initial reaction from
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  Speaker 3: American and indeed some of the European markets as well.
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  Speaker 3: I mean my feeling with some of the sort of
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  Speaker 3: share markets and exchange rate as well, as they do
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  Speaker 3: tend to sometimes take a little bit of time to
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  Speaker 3: digest the news, and so I suspect that we may
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  Speaker 3: not well have seen the end of it yet.
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  Speaker 2: The reaction from Wall Street is that can we say
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  Speaker 2: basically that's they thought. They didn't think that Trump would
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  Speaker 2: follow through in the way that he has, and he's
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  Speaker 2: made good on his word.
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  Speaker 3: Yeah, I suspect that's right. I mean you look at
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  Speaker 3: some of the initial market reaction after the election of
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  Speaker 3: Trump back in November, and the reaction was very much
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  Speaker 3: like alwa's going to stimulate the American economy. There might
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  Speaker 3: be a bit more inflation, but you know, we're here
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  Speaker 3: for the growth kind of thing. And I think people
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  Speaker 3: are now starting to realize that actually there's some serious negative,
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  Speaker 3: medium term consequences that could come out of some of
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  Speaker 3: the policies that are now coming through.
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  Speaker 2: A big question, of course, is how long do they last?
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  Speaker 3: Yeah, well, I mean that's right. I mean you look
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  Speaker 3: at previous episodes. I looked back at the GFC today
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  Speaker 3: and the sheer market there eighteen months from peak in
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  Speaker 3: two thousand and seven, ntil it reached its trough out
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  Speaker 3: in two thousand and nine, and then it was up
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  Speaker 3: and down over the next two or three years before
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  Speaker 3: we sort of got out of the other side of that.
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  Speaker 3: You know, who knows with financial market Sometimes you look
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  Speaker 3: at and go, is it a one week event? In
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  Speaker 3: this case, I suspect it's going to be something that
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  Speaker 3: could last a lot longer, and we could be in
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  Speaker 3: a more serious sort of down tune down with trend
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  Speaker 3: that lasts for up to twelve months.
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  Speaker 2: We had you reckon. So even if he pulls them
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  Speaker 2: off in the next month or so, that damage has
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  Speaker 2: already been done or will have already been done to
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  Speaker 2: things like investment, to you know, labor hiring, that kind
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  Speaker 2: of stuff that the effects could linger for a year.
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  Speaker 2: Is that what you're saying.
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  Speaker 3: Look from a business point of view, I mean, uncertainly
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  Speaker 3: is a real killer when you're trying to make business decisions,
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  Speaker 3: especially when it's some of that longer term stuff around investment.
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  Speaker 3: And so if you're not sure how the landscape is
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  Speaker 3: going to be in a week's time, in six months time,
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  Speaker 3: then you are going to hold off on those decisions.
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  Speaker 3: And I think you're right. Even if he does sort
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  Speaker 3: of reverse some of these out and I'm not confident
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  Speaker 3: that he will, that businesses are looking at it and going, well,
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  Speaker 3: I'm just not sure how that landscape looks going forward,
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  Speaker 3: and I'm going to hold off on making those sort
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  Speaker 3: of big commitments and decisions.
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  Speaker 2: And it's hard. I was listening to an auto industry
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  Speaker 2: executive today who was saying, you know, how do you
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  Speaker 2: exactly what your point how you meant to plan? He
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  Speaker 2: wants us to move factories to the United States. Currently
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  Speaker 2: they're doing it a lot of production outside of the US.
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  Speaker 2: All that takes time, And I don't even know if
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  Speaker 2: these tariffs are still going to exist in two months,
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  Speaker 2: let alone two years. That is how unpredictable you are.
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  Speaker 3: Yeah, and I mean, we have seen some responses from
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  Speaker 3: our businesses over the last six to twelve months to
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  Speaker 3: some of the previous tariffs that had come in for
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  Speaker 3: the likes of China, which Biden or Trump had put
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  Speaker 3: in and Biden had increased. In some cases, we have
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  Speaker 3: seen decisions being made where production is moving out of China,
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  Speaker 3: but it's not, of course, coming all the way back
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  Speaker 3: to the US. Generally, it's impacting on some of those
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  Speaker 3: other Southeast Asian nations where the tariffs aren't in place.
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  Speaker 3: But yeah, when you're talking about penalizing the whole rest
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  Speaker 3: of the world, including some of your your closest neighbors,
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  Speaker 3: it does it's a whole nother step up above that really.
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  Speaker 2: Certainly is Gareth, thank you very much for that Gareth Kennan,
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  Speaker 2: who's the chief forecaster Infimetrics and Wellington eleven minutes after
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