Latest / Best of Business / Steven Joyce: former Finance Minister on the financial 'uncertainty' that comes with Donald Trump's tariffs

Transcript

Steven Joyce: former Finance Minister on the financial 'uncertainty' that comes with Donald Trump's tariffs · Best of Business

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  Speaker 1: You're listening to a podcast from Newstalk ZEDB. Follow this
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• 0:16
  Speaker 2: We've had the Prime Minister on Instagram today. Nikola Willis
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  Speaker 2: doing a press conference this about Trump and his tariffs,
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  Speaker 2: the message they will hurt us largely and directly. Couple
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  Speaker 2: of things they pointed out our trading partner's growth will
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  Speaker 2: be lower and global inflation will be higher than was
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  Speaker 2: forecast in December.
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  Speaker 3: All of these factors create risk for the New Zealand economy.
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  Speaker 3: And this happens just as we have been gathering positive
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  Speaker 3: momentum and recovering from a period of high inflation and
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  Speaker 3: high interest rates. Confidence has been setting higher, job growth
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  Speaker 3: has been occurring, and dwelling consents have been gradually picking up.
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  Speaker 4: Put.
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  Speaker 3: Simply, the past week's global developments make our recovery harder.
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  Speaker 3: These factors will also impact the government books, with potential
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  Speaker 3: impacts for revenue, debt, inflation, and interest rates.
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  Speaker 2: Stephen Joyce is a form of Finance minister with me tonight, good.
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  Speaker 4: Evening, ending, Ryan, how are you I'm good?
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  Speaker 2: You can almost hear the disappointment in Nichola Willis's voice.
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  Speaker 4: There can't you absolutely, and Lucas has sadly been coming
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  Speaker 4: for a few weeks because it became I think apparent
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  Speaker 4: as soon as Trump came into office that whatever he did,
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  Speaker 4: it was going to be disrupting New Zealand's economic recovery,
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  Speaker 4: not by obviously intention, but by what has actually come
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  Speaker 4: to pass, which is uncertainty around tariffs. Then hied tariffs,
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  Speaker 4: then you get a second order economic effect which are
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  Speaker 4: largely increased inflation and reduce global growth.
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  Speaker 2: How bad does it get? I mean, and does the
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  Speaker 2: minister actually know yet? Does anyone actually know yet?
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  Speaker 4: No? Nobody knows yet. I mean, obviously the boffins that
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  Speaker 4: the Treasury will have to draw pictures on a graph,
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  Speaker 4: so they have to try and do their best guess.
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  Speaker 4: But this is uncharted territory every But I don't think
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  Speaker 4: Donald Trump knows, to be blunt, I don't think he
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  Speaker 4: knows quite where it lands. And he's making it up
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  Speaker 4: every day as he goes along. And I think that's
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  Speaker 4: one of the problems is that there are two issues here.
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  Speaker 4: There is the fact of the tariffs, which is detrimental
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  Speaker 4: in their own right, but there's also the daily uncertainty
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  Speaker 4: which is going to slow down investment around the world.
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  Speaker 4: And you think about it, if you're running a factory
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  Speaker 4: anywhere in the world right now, particularly in the US, China,
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  Speaker 4: anywhere in Asia, and you had been planning to build
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  Speaker 4: a new factory, maybe to double output or something where
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  Speaker 4: then you're siddenly going to sit on their hands now
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  Speaker 4: for the next next few weeks to try and work
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  Speaker 4: out what the hell to do next.
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  Speaker 2: We're all kind of crippled by it, not just Nichola
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  Speaker 2: Willis and the government, but as you say, businesses. But
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  Speaker 2: even then the Reserve Bank, I mean, how do you
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  Speaker 2: make decisions in an environment where you don't you literally
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  Speaker 2: don't know whether the inflation is going to go through
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  Speaker 2: the roof, growth is going to go through the floor,
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  Speaker 2: or both of those things are going to happen simultaneously.
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  Speaker 4: Well, were the dueling realities right? So inflation is likely
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  Speaker 4: to at least initially increase, but then of course if
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  Speaker 4: the world economy slows down, that's likely to reduce inflation.
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  Speaker 4: So you're right, people don't know the answer that affect them.
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  Speaker 4: From the reserve banks point of view, they're we cautious.
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  Speaker 4: I suspect it'll be interesting to see the weather this
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  Speaker 4: week if they still go here with the cut that
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  Speaker 4: obviously planned. They probably will, but I don't think it's guaranteed.
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  Speaker 4: And because they'll be sitting there thinking it through, I
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  Speaker 4: think probably most central banks around the world at the
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  Speaker 4: moment will continue cautiously on the path that they've been on.
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  Speaker 4: But then they're going to wait. But I think probably
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  Speaker 4: the bigger thing to watch for, and I hope this
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  Speaker 4: isn't wishful thinking on my part, but at some point
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  Speaker 4: the wider US is going to wake up and actually
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  Speaker 4: curtails to some degree what's going on. And it's been
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  Speaker 4: really interesting to see over the weekend huge numbers of
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  Speaker 4: the Republican parties, big donors and backers come out and
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  Speaker 4: say they're not signed up for this. And I think
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  Speaker 4: at some point, if this volatility continues, which is likely
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  Speaker 4: to it may not continue to drop the markets, say
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  Speaker 4: for example, the next Star too. There's got to be
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  Speaker 4: some breather at some point. But if this continues, then
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  Speaker 4: I would expect at some point the US Senate will
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  Speaker 4: start to assert itself only because it has to at
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  Speaker 4: some stage process and what I mean by that is
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  Speaker 4: actually starting to put some pressure on to the administration
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  Speaker 4: to curtail some of their wildest excesses.
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  Speaker 2: Stephen Joyce, appreciate your analysis. Stephen Joyce, the former Finance
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  Speaker 2: Minister on the show.
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