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Cameron Bagrie: Economist on new Trump tariffs' impact for kiwis · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk z'd be
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  Speaker 1: follow this and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: Yesterday, Donald Trump said he would place a ten percent
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  Speaker 2: levy on all goods coming into the US. This is
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  Speaker 2: followed by the decision by the Supreme Court to including
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  Speaker 2: by the ones he had including by the ones he
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  Speaker 2: had appointed, to scrap Trump's previous import taxes he calling
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  Speaker 2: they basically called them monster constitutional. And today Trump up
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  Speaker 2: the global tariff to fifteen percent, causing understandable concern among
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  Speaker 2: Kiwi businesses, as well as generally concerned about the risk
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  Speaker 2: of escalating trade tensions and what it might mean for
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  Speaker 2: global growth. Anyway, to dig into all that, economists Cameron
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  Speaker 2: Bagriy is with me now, Cameron, Good afternoon, Good afternoon.
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  Speaker 2: I was tempted to say, in a fickle sense that
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  Speaker 2: system systems normal for us, because didn't we have a
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  Speaker 2: fifteen percent tariff anyway?
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  Speaker 3: Yeah, Or what we're seeing at the moment is what
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  Speaker 3: we call gendernomics, more flip flops and more featured bondoa.
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  Speaker 3: If you sit back and look at the big picture
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  Speaker 3: in regard to what's going on, New Zealander's a we
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  Speaker 3: all that sort of embraces free trade principles, we don't
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  Speaker 3: tend to like by tarrifs. What we saw was the
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  Speaker 3: US President put on some tarifs. May has been told
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  Speaker 3: to take them off because it's own constitutional and and
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  Speaker 3: he's come back and he said, well and get it
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  Speaker 3: another crack. But I think from memory what he can
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  Speaker 3: put on, I think it's got a lifetime of about
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  Speaker 3: one hundred and fifty days. But yeah, it's uncertain. We're
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  Speaker 3: seeing a lot of flip flops. They've all concerned at
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  Speaker 3: the moment. But the good news at face edue what
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  Speaker 3: we saw with the constitutional decision.
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  Speaker 2: I guess what the decision by the Supreme Court have
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  Speaker 2: caused more shock waves back in the US than it
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  Speaker 2: actually causes for us, because ultimately are we greatly affected.
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  Speaker 2: There's the uncertainty, but the actual tariff levels. Does it
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  Speaker 2: make any difference what he's announced to what the status
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  Speaker 2: quo was a couple of days ago.
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  Speaker 3: Well, we'll see. Yeah, the bigger picture here is it's
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  Speaker 3: really simple. We don't like counts. So what's been put
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  Speaker 3: on board looks like it's unconstitutional. It looks like he's
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  Speaker 3: trying a side avenue a sidebar in regard to put
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  Speaker 3: something in. Whether that's stickable beyond the sort of one
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  Speaker 3: hundred and fifty days, we can debate. But I think
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  Speaker 3: the good news out of that there's a little bit
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  Speaker 3: of realism coming through that the US President just can't
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  Speaker 3: go around in place sort of that big bully boy
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  Speaker 3: card in regard to what's going on. There's some pretty
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  Speaker 3: effective checks and balances within the United States political and
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  Speaker 3: economic system that will call time on you if you're
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  Speaker 3: doing something that's just not right. And that's what we've
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  Speaker 3: seen in the past forty eight airs.
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  Speaker 2: So a lot of talk about uncertainty. Is the uncertainty
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  Speaker 2: any worse today than it was a few days ago
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  Speaker 2: before the Supreme Court decision.
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  Speaker 3: No, because what we're seeing at the moment, And as
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  Speaker 3: soon as you got the Supreme Court decision, he came
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  Speaker 3: out and he said, well, I'm going to put a
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  Speaker 3: ten per see global tariff and never goes up to
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  Speaker 3: sort of fifteen. So once again, it's just that gendernomics
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  Speaker 3: environment that we live in. You know, the biggest certainty
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  Speaker 3: at the moment is uncertainty, particularly what's coming out of
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  Speaker 3: anything related to geo politics and geostrategic. We've been used
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  Speaker 3: to the world where it's been all about the rule
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  Speaker 3: of law. Now it's about your power based economic systems.
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  Speaker 3: The world is behaving very differently compared to what we've
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  Speaker 3: been used to between that sort of the nineteen nineties
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  Speaker 3: to about twenty and ninety eight. It's a little bit
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  Speaker 3: more akin to what we saw in the fifties and
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  Speaker 3: sixties and the seventies that were still a reasonable economics
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  Speaker 3: at a period, but a lot more economic viilability that
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  Speaker 3: firms just need to contend with and be aware off.
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  Speaker 2: So how does his latest announcement affect us? Not so
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  Speaker 2: much our tariffs, but in relation to other nations that
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  Speaker 2: trade with the US. So we worse off than them?
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  Speaker 2: And are there some who have been heavily tariffs who
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  Speaker 2: are going to be like, well, yipee, we're better off.
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  Speaker 3: Well, this is the interesting aspect that because yeah, parifs
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  Speaker 3: are not just an absolute game, they're a relative game.
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  Speaker 3: See usual got splotted a little bit more than Australia,
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  Speaker 3: So we will put at a competitive disadvantage compared to Australia.
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  Speaker 3: But I think we're at a competitive advantage compared to
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  Speaker 3: the locks of Brazil the locks of beef because they
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  Speaker 3: got whacked with the high power of six to twelve
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  Speaker 3: months ago and now it looks like they're playing for you.
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  Speaker 3: It's going to be pretty level across the board. So
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  Speaker 3: the absolute story is not great, but the relative stories
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  Speaker 3: probably we're a little bit better off of the margin
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  Speaker 3: compared to where we wear this Australia. They're probably a
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  Speaker 3: little bit worse off compared to some other South American
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  Speaker 3: trading partners who also pushed product into the United States.
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  Speaker 2: How do the markets cope with all this uncertainty, I
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  Speaker 2: mean here and internationally.
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  Speaker 3: Well, there's a few things that are starting to go
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  Speaker 3: on at the moment. Look at the US dollar is
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  Speaker 3: now starting to be a little bit questioned in regard
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  Speaker 3: to its where it's going to be five ten years
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  Speaker 3: down at track. There the United States economy and the
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  Speaker 3: US dollar, there's currency and economy supreme now that there's
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  Speaker 3: no one even close to it. But when you start
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  Speaker 3: to see political uncertainty, economic uncertainty, inflation uncertainty, gender nomics,
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  Speaker 3: your people start to question the venue of the US
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  Speaker 3: dollar as the world's reserve currency. Now that has not
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  Speaker 3: been seriously challenged at present, but if we see a
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  Speaker 3: continuation of this sort of stuff over the extra of three,
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  Speaker 3: four or five years, you're people going to start to
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  Speaker 3: lock at other investment avenues, other countries, the other stores
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  Speaker 3: are that you are really interesting to see in the past.
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  Speaker 3: You're twelve months what we've seen with the price of gold.
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  Speaker 3: The price of gold has gone from twenty six hundred
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  Speaker 3: years up to an excess of five thousand dollars pronounce.
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  Speaker 3: And that's telling you something about your people are starting
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  Speaker 3: to think of economical alternatives and regard the store of
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  Speaker 3: value uncertainty when you're an uncertain world.
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  Speaker 2: So, actually you've alluded to the effect it might have
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  Speaker 2: on the US dollar? Is that the one thing that
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  Speaker 2: might cause t I mean, we've got the Supreme Court
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  Speaker 2: who have an influence on these things, clearly, But in
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  Speaker 2: terms of just what's happening with economies, markets, and the dollar,
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  Speaker 2: would that be something that might actually cause Trump to
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  Speaker 2: modify his behavior if the dollar started to look a
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  Speaker 2: bit her fee.
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  Speaker 3: Yes, not just the US dollar. We keep a pretty
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  Speaker 3: close sigh on what's called bond markets. US ten year
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  Speaker 3: Treasury is sure how much it costs the United States
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  Speaker 3: government to borrow, you know, I got back to a
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  Speaker 3: number of years ago. In the UK, we had this
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  Speaker 3: woman called loz Trust. She was Prime Minister. She came
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  Speaker 3: alive and decided to come in with tax cuts and
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  Speaker 3: an interesting economic sort of program that she thought was
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  Speaker 3: going to be positive for the UK economy. Bond markets
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  Speaker 3: and the British pound had a completely different version. So
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  Speaker 3: the pound went down and what's called guilts or UK
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  Speaker 3: ten year blinds went up and lie and behold. The
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  Speaker 3: Lewis Trust lasted about them up financial markets and then
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  Speaker 3: but they sent a very severe and swift message that
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  Speaker 3: the econ prescription that was put on the table by
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  Speaker 3: her was just untenable and she was out the door.
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  Speaker 3: So in what we saw in April last year with
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  Speaker 3: Donald Trump when he brought in the first round of tariffs,
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  Speaker 3: well guess what, Bonds went up and the US dollar
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  Speaker 3: went down, and the US equity market didn't have a
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  Speaker 3: great sort of first few weeks to April alarmhole. Things
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  Speaker 3: were tempered after that. So the message here is that
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  Speaker 3: there's no free lunch. Markets decided to have a little
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  Speaker 3: bit of a crackle. They've got question marks about your
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  Speaker 3: economic prescription. You can start to see a little bit
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  Speaker 3: of attention between markets versus the presidency or the US
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  Speaker 3: administration in.
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  Speaker 2: Terms of where people are investing their money. Is it
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  Speaker 2: just a continuation from here on that as you say,
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  Speaker 2: gold's gone through the roof? Comparatively speaking, do you see
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  Speaker 2: any particular changes to that might anything that might influence
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  Speaker 2: the change and where people are sticking their money.
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  Speaker 3: Well, one of the big things we're watching at the
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  Speaker 3: moment is just as politics, gender nomicch saw that sort
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  Speaker 3: of stuff you had attention were seeing, Yeah, politically and
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  Speaker 3: now involves a rhym. I think things are going to
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  Speaker 3: get a little industry over Cuba as well. But one
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  Speaker 3: of the key variables where lock keep an eye on
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  Speaker 3: globally is just inflation and inflation around the globe. Central banks,
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  Speaker 3: by and large, you've got a mandate to have inflation
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  Speaker 3: at two percent. Most central banks seem to the best
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  Speaker 3: that done is get sort of poor inflation back down
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  Speaker 3: towards three. And if I have a locker is on Australia,
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  Speaker 3: the United States. You Uni States had some numbers out
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  Speaker 3: on Friday night the Alar and behold the US inflation
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  Speaker 3: is on the ascent. We're seen the reserve banks facing
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  Speaker 3: agelicate balancing act here the Reserve Bank of Australia has already
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  Speaker 3: had to lift interest rates. Inflation is it siphens money
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  Speaker 3: out of people pockets? We don't like it. Unfortunately, in
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  Speaker 3: order to contain inflation you need to beat up the
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  Speaker 3: economy a little bit and introducts tend to go a
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  Speaker 3: little bit higher. It's a big variable. We keep an
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  Speaker 3: eye at the moment. It's just the outlook for inflation,
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  Speaker 3: and it just looks like inflation has proven to be
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  Speaker 3: a bit sticky compared to what we've been used to
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  Speaker 3: over the past twenty to thirty years. And of course
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  Speaker 3: most deep experience with inflation is the last twenty to
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  Speaker 3: thirty years.
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  Speaker 2: Actually, I wasn't going to ask this, but just as
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  Speaker 2: a little bonus question, were you happy with the first
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  Speaker 2: outing of our new Reserve Bank Governor Arna Bremen.
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  Speaker 3: Oh, I've played with a pretty safe so yeah, pair
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  Speaker 3: of hands, played with a pretty straight back. Obviously, the
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  Speaker 3: economy's a little bit stronger. You've got inflation is a
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  Speaker 3: bit stronger, so yeah. The twenty twenty seven start to
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  Speaker 3: the hiking cycle looks now more like it's going to
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  Speaker 3: be twenty twenty six. My personal view is that the
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  Speaker 3: reserve banks should be going a little bit earlier than
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  Speaker 3: the latter part of the year. But they pulled forward
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  Speaker 3: their view. They responded to economic developments. Let's see what
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  Speaker 3: the economic data tells. The Reserve Bank apen extra three months.
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  Speaker 2: Excellent. Hey Cameron, thanks so much for your time this happening.
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  Speaker 1: Really appreciate it all the best.
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  Speaker 2: Yeah, there we go. I think he could. I don't
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  Speaker 2: know if he's copyrighted the Jendle nomics, but he snuck
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  Speaker 2: that one in a few times. I do like it,
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  Speaker 2: the flip flop economy.
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