Latest / Best of Business / Ben Speedy: ASB's General Manager of Commercial Banking on businesses' uncertainty regarding the impact of Trump's tariffs

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Ben Speedy: ASB's General Manager of Commercial Banking on businesses' uncertainty regarding the impact of Trump's tariffs · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk ZEDB. Follow
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  Speaker 2: As I mentioned earlier, can we business leaders fear the
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  Speaker 2: impact of Donald Trump's tariffs will be more severe than
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  Speaker 2: the impact of the GFC and the COVID pandemic, which
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  Speaker 2: seems absolutely extraordinary. ASB and Torbert Mills surveyed more than
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  Speaker 2: three hundred business leaders, including CEOs and founders, two thirds
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  Speaker 2: of businesses are concerned about the impacts, including almost eighty
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  Speaker 2: percent of exporters. Asb's general manager of Commercial Banking, Ben
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  Speaker 2: Speedy joins me, now.
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  Speaker 3: Good morning to you, Good morning, Kerry.
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  Speaker 2: That does seem extraordinary. Do you think they are just
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  Speaker 2: punch drunk after going through the GFC and COVID?
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  Speaker 3: What is really highlighting is that businesses are really struggling
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  Speaker 3: with the uncertainty that's playing out of the environment at
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  Speaker 3: the moment, and we only need to look at what's
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  Speaker 3: happening with the tariffs and the changes that happen on
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  Speaker 3: a daily basis, which provide more concern and really cements
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  Speaker 3: the fact that there is a lot of uncertainty in
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  Speaker 3: the world and what's challenging for business is that they
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  Speaker 3: not only need to navigate what's happening with tariffs, but
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  Speaker 3: we've also got a difficult business and environment, difficult business
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  Speaker 3: environment at the moment, which is providing challenges.
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  Speaker 2: But COVID was kind of uncertain, was it. Is it
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  Speaker 2: just that this is day to day uncertainty rather than
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  Speaker 2: month my month uncertainty.
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  Speaker 3: Yeah, it is. It's, you know, a combination of a
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  Speaker 3: couple of things. Really. I mean, I think if we
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  Speaker 3: ran to serve at the same time with COVID, we
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  Speaker 3: would have got very similar responses. But you know that's
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  Speaker 3: been in the past. But you know, the raality is
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  Speaker 3: is that we've got the threat of tariffs. And whilst
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  Speaker 3: he feels like there's some stability coming with the New
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  Speaker 3: Zealand's position at ten percent, you know this is coming
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  Speaker 3: off the back of a couple of years of very
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  Speaker 3: difficult trading environment for New Zealand businesses.
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  Speaker 2: It was interesting too, I see that the exporters are
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  Speaker 2: looking closer to home, so that they're looking at China, Australia,
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  Speaker 2: Southeast Asia. Are doors opening to them saying, look, we
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  Speaker 2: need stuff because we're not getting it from America. Can
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  Speaker 2: you supply us? Or are they going looking and knocking
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  Speaker 2: on doors.
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  Speaker 3: There's probably two things there. I mean, businesses that trade
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  Speaker 3: with us will continue to trade with us, and you
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  Speaker 3: know they'll look to implement strategies that actually you know,
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  Speaker 3: smooth the new relationship farm that they'll need to form there.
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  Speaker 3: We've always had a good trade relationship with both Australia,
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  Speaker 3: Southeast Asia and up into China, so it's actually all
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  Speaker 3: about how can we take advantage of those previous relationships
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  Speaker 3: and strengthen them. But also those countries are experiencing the
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  Speaker 3: same thing with tariffs and so ultimately that will create
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  Speaker 3: both purchasing opportunities for companies but also do markets to
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  Speaker 3: export them to as well.
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  Speaker 2: So if you're in a relatively good position as a business,
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  Speaker 2: you can see this as an opportunity for growth for
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  Speaker 2: new markets.
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  Speaker 3: It definitely will, and there'll be strong support that happens
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  Speaker 3: through government around trying to open more doors. There's also
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  Speaker 3: big opportunities to play out with our larger companies in
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  Speaker 3: New Zealand and actually how they can open more doors
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  Speaker 3: for New Zealand businesses and ultimately, you know, create opportunities
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  Speaker 3: for the broader business segment as opposed to just themselves.
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  Speaker 2: Interesting though that more than according to the survey, more
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  Speaker 2: than three quarters of key we exports expect the cost
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  Speaker 2: of doing business with the US to increase by ten
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  Speaker 2: percent or more in the next year. How is that
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  Speaker 2: going to impact their businesses? Are they going to have
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  Speaker 2: to pass that on through price increases or not grow
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  Speaker 2: or cull start?
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  Speaker 3: Yeah, I mean the primary strategy for most companies at
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  Speaker 3: the moment will be to pass that those costs through
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  Speaker 3: to customers in the US. But ultimately, you know, there
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  Speaker 3: are a couple of strategies that strategies that they'll look
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  Speaker 3: to implement. I mean, part of that will be a
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  Speaker 3: degree of cost reduction that will need to happen here.
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  Speaker 3: There'll be investment around, you know, taking costs out of
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  Speaker 3: supply chain. There will be a mix of where sales
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  Speaker 3: go to in different different countries, so you know, there
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  Speaker 3: is lots to focus on. I think the sort of
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  Speaker 3: the challenging part that we've seen through the research is
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  Speaker 3: that whilst two thirds of companies do understand the challenges
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  Speaker 3: around tariff's, only ten percent of companies have actually made
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  Speaker 3: changes to their business to be able to address this volatility.
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  Speaker 3: And so that's what we really encourage businesses to do
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  Speaker 3: is actually to start thinking through that strategy. And we
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  Speaker 3: know that businesses that perform very well have high conviction
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  Speaker 3: in their strategy and execute accordingly.
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  Speaker 2: How on earth do you do you accommodate the tariff
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  Speaker 2: increases and also the fact that you don't know what
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  Speaker 2: the president is going to do on a day to
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  Speaker 2: day basis, I mean, how do you implement a strategy?
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  Speaker 3: Yeah, I mean it is difficult. I mean we've already
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  Speaker 3: seen this morning, haven't we that still tariffs have been
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  Speaker 3: increased from twenty five to fifty fifty percent, So.
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  Speaker 2: Your strategy that looked good yesterday might not look so
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  Speaker 2: flash today.
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  Speaker 3: Yeah. I mean, what we know New Zealand's very good
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  Speaker 3: at is that we produce is very good products. We
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  Speaker 3: need to continue to focus around having premium products that
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  Speaker 3: are able to absorb and and make these tariffs a
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  Speaker 3: little bit less impactful with regard to the total cost
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  Speaker 3: of the product. But ultimately it's you know, having a
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  Speaker 3: lot of clarity with regard to you know, who is
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  Speaker 3: your market in the US, what opportunities will exist elsewhere,
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  Speaker 3: and how do you start making steps towards doing that?
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  Speaker 3: And you know what we really encourage customers to think
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  Speaker 3: about is you know, come and talk to us at
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  Speaker 3: the bank around what is your strategy. There's lots of
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  Speaker 3: new products that exist now to be able to support
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  Speaker 3: trade into new markets. There's a lot of with regard
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  Speaker 3: to so. Actually the Export Credit Office is a really
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  Speaker 3: good example whereby what they do is they work with
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  Speaker 3: the banks and customers to be able to support financing
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  Speaker 3: of trade into new markets. And so there are wonderful
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  Speaker 3: opportunities that that customers can benefit from by having a
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  Speaker 3: good conversation with your bank. And then fundamentally, you know
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  Speaker 3: what volatility also creates as you know a lot of
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  Speaker 3: exchange rate pressure as well, so you know, having a
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  Speaker 3: hedging strategy around effects is a really important thing to do.
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  Speaker 3: So there are many steps that can be taken.
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  Speaker 2: Isn't hedging relatively expensive? You have to be in quite
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  Speaker 2: a good position as a company before you can afford it.
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  Speaker 3: It's if you value certainty around what you want to do,
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  Speaker 3: then I guess the costs and the eye of the beholder.
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  Speaker 2: Yeah, that's true, that's quite true. Interesting, Thank you very much, Ben,
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  Speaker 2: do appreciate it. Ben Speedy, ASP's general manager of Commercial Banking.
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