Latest / Best of Business / Brad Olsen: Infometrics Principal Economist on China’s commerce ministry vowing to fight US tariffs 'to the end'

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Brad Olsen: Infometrics Principal Economist on China’s commerce ministry vowing to fight US tariffs 'to the end' · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk zed B.
• 0:12
  Speaker 1: Follow this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Coming up, Jamie McKay on the dairy fallout from Donald
• 0:19
  Speaker 2: Trump's tariffs, and we're head to Australia for the first
• 0:23
  Speaker 2: leader's debate. Elbow and Dunton go face to face on
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  Speaker 2: Sky News tonight. Plus we're with Indebrady in the UK
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  Speaker 2: by seven o'clock. Right now, China's Commerce ministry saying it'll
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  Speaker 2: fight till the end over the Trump's tariffs. The Chinese
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  Speaker 2: government spokesperson so, Trump obviously hit them with thirty four percent.
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  Speaker 2: They replied with thirty four percent, and then Trump hits
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  Speaker 2: they replied thirty four percent. Trump now threatens fifty percent
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  Speaker 2: on top of that if they continue with their retaliation.
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  Speaker 2: Chinese government spokesperson has said the US threat to escalate
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  Speaker 2: tariffs against China is a mistake. On top of a mistake,
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  Speaker 2: China will never accept this. Brad Olson is in for
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  Speaker 2: Metrics Principal Economists with US Now. Hi, Brad, good evening.
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  Speaker 2: Not great language, is it?
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  Speaker 3: That's pretty strong fighting talk from both sides. I mean
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  Speaker 3: right that you're thirty four percent to start with. But
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  Speaker 3: let's be clear, there was already i think twenty percent
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  Speaker 3: additional tariffs on China earlier in twenty twenty five. You
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  Speaker 3: take on top of that the tariffs that were levied
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  Speaker 3: both by the original Trump administration back you know, five
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  Speaker 3: six years ago, and also some of those under Biden
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  Speaker 3: that haven't been walked back. You're talking in effective tariff rate.
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  Speaker 3: If this COEs ahead, if there is this escalation of
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  Speaker 3: over one hundred percent, you know, that means that every
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  Speaker 3: Chinese product going into the US would be costing more
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  Speaker 3: than double what it needs to. I mean, this really
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  Speaker 3: is starting to look like a full blown trade war.
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  Speaker 2: Which we haven't seen before, right because we have seen
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  Speaker 2: trade wars before, but we haven't seen any with numbers
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  Speaker 2: this big.
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  Speaker 3: Not this big, and not this wide scale. I mean,
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  Speaker 3: this is not sort of a few little products tit
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  Speaker 3: for tat and similar. This is like everything at the
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  Speaker 3: wholesale level you're hearing from the Chinese. They're looking at
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  Speaker 3: targeting agricultural exports from the US that's a big earner
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  Speaker 3: for the United States. So this is much much wider.
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  Speaker 3: And of course it's not just a one to one
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  Speaker 3: it's not just China and the US. It's also that
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  Speaker 3: EU are looking to retaliate Canada has already done, so
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  Speaker 3: you've got to talk from the Mexicans as well about
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  Speaker 3: wanting to go in. Like the wider broader effect of
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  Speaker 3: this is worrying. You heard from the Finance Minister today
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  Speaker 3: saying that Treasury's expectations are that global growth expectations have
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  Speaker 3: now been slashed by half a percentage point from where
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  Speaker 3: they originally thought things were. That makes it so much
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  Speaker 3: harder if you're a key exporter and you're seeing all
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  Speaker 3: of these countries around the world fighting, putting tariffs on
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  Speaker 3: back and forth. There is just going to be less trade,
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  Speaker 3: less money to buy the stuff that we're sending out.
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  Speaker 3: That's scary.
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  Speaker 2: When the Finance Minister says half a percent of global growth,
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  Speaker 2: what does that mean for our growth number?
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  Speaker 3: It's not clear yet. We haven't heard the Treasury estimates.
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  Speaker 3: I mean, and to be fair, you know, even the
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  Speaker 3: private sector forecast is like us, we're still trying to
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  Speaker 3: run the numbers and I don't think anyone's got a
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  Speaker 3: lot of certainty or confidence now. I mean, you see
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  Speaker 3: that also in the financial markets, because everyone's still seeing
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  Speaker 3: those cutbacks, but realistically, you know that slowdown that's coming through,
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  Speaker 3: you could be talking a percentage point of GDP. That's
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  Speaker 3: sort of just a very highly number, but in terms
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  Speaker 3: of scarlet magnitude, it's big enough to care about, and
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  Speaker 3: I think that's why there's so much interest in this
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  Speaker 3: right You know, people are talking about their key we
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  Speaker 3: saver balances right here right now because the markets are down.
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  Speaker 3: But longer term, over the next six months to a year,
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  Speaker 3: we are going to be talking a lot more about, Hey,
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  Speaker 3: where are New Zealand's exports going? Are we able to
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  Speaker 3: see in quite as much out what's coming through because
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  Speaker 3: we're all just sort of caught in the middle of
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  Speaker 3: this mailstrom because we don't know what's next.
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  Speaker 2: Somebody described it to me as like if you have
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  Speaker 2: a motive like spaghetti junction, a motivate with lots of
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  Speaker 2: roads on it, and you're basically having trying to figure
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  Speaker 2: out a new route and then work out what the
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  Speaker 2: speed will be. You know, it's a really hard thing
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  Speaker 2: to dom and of course we have GPS these days
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  Speaker 2: that's quite easy now, but you know, before we had that,
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  Speaker 2: that's similar kind of thing. You're trying to get down
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  Speaker 2: and squared definitely.
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  Speaker 3: And at the same time, right, it's all the rest
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  Speaker 3: of us who are watching. You know, we've seen a
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  Speaker 3: crash happen, and now we're trying to figure out who
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  Speaker 3: goes first to make sure they can find the new route.
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  Speaker 3: We all don't want to sort of immediately pil on
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  Speaker 3: ourselves because they'll scum up the new escape route. But
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  Speaker 3: we are all watching. Now what's everyone else doing? What
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  Speaker 3: way are they starting to? Here? They taking road A,
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  Speaker 3: road B or road C. And I think that's why
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  Speaker 3: it's interesting. Right, you've seen a number of countries that
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  Speaker 3: have retaliated quite hard. You know, that's escalating the trade war.
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  Speaker 3: You've seen a bunch of other countries, particularly through parts
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  Speaker 3: of Asia, the likes of Japan Vietnam have said, hey,
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  Speaker 3: can we negotiate. We're quite keen to sort of see
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  Speaker 3: if we can lower this down. Then you've got that
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  Speaker 3: sort of middle group like New Zealand, we've gone, look,
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  Speaker 3: it's not our best interest to try and sort of
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  Speaker 3: put ourselves on the radar at the moment we're not
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  Speaker 3: being targeted. Let's just sort of sit back, not watch peacefully,
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  Speaker 3: but just watch and wait and learn. Because there's still
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  Speaker 3: a lot of water to go into this bridge. We
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  Speaker 3: have five days into this and already it's been chaos.
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  Speaker 2: We've got an o CR announcement tomorrow. If you're the
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  Speaker 2: Reserve Bank, what do you do? Do you kind of
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  Speaker 2: because on the one hand, you've potentially got, you know,
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  Speaker 2: inflation increasing, on the other hand, you might have growth falling.
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  Speaker 2: It's like you don't know which way is up and
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  Speaker 2: which ways down? What do you do? Just just go
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  Speaker 2: with what you indicated you might deliver broadly.
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  Speaker 3: I think at the moment, I think that's the best call.
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  Speaker 3: I think anything otherwise would imply the Reserve Bank almost
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  Speaker 3: knows too much, and it doesn't at this point. It's
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  Speaker 3: only had the same amount of time that everyone else has.
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  Speaker 3: If the Treasury hasn't been able to come out with
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  Speaker 3: a fulsome this is what it means for the economy
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  Speaker 3: nor I don't think the Reserve Bank will have either. Also, importantly,
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  Speaker 3: that statement tomorrow that the Reserve Bank's issuing, there's only
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  Speaker 3: a couple of pages of texts. There's no big forecast.
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  Speaker 3: They've only had a little bit of time. I think
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  Speaker 3: asking them to come out with too firm of a
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  Speaker 3: view at the moment risks sort of leading us down
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  Speaker 3: one particular path because we're not sure how to toss
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  Speaker 3: up between the likes of that lower growth and the
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  Speaker 3: potential high inflation. I think more appropriate would be the
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  Speaker 3: reserve banks signaling tomorrow and say, look, yep, clearly a risk.
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  Speaker 3: We're doing a lot of work on it. We're trying
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  Speaker 3: to figure out where this lands. For the moment. The
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  Speaker 3: New Zealand economy still in an all right place in
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  Speaker 3: terms of where their forecasts are going, but requires that
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  Speaker 3: official cash rate to come down a bit more. But
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  Speaker 3: then they've got May when they can come out put
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  Speaker 3: some full on forecasts out say this is what our
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  Speaker 3: expectation is. And of course, look if things did deteriorate,
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  Speaker 3: they can always have an impromptu meeting. They don't need
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  Speaker 3: to in my view, but they've always got that option
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  Speaker 3: up this They've now got a governor in place for
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  Speaker 3: the next six months in Christian hawksby very qualified individual.
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  Speaker 3: I think we're in safe hands for the moment amidst
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  Speaker 3: all of the turmoil that's happening globally.
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  Speaker 2: Yeah, Well, because she just announced today, Nikola Willis did
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  Speaker 2: that he'll get that six month job. He had the
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  Speaker 2: immediate job after Adrian all left the building and a
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  Speaker 2: sort of cloud of dust, and then he's got the
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  Speaker 2: six month job and then they'll find the new But
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  Speaker 2: crucially he is going to oversee the funding envelope for
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  Speaker 2: the next five years for the Reserve banks. So it's
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  Speaker 2: quite a good deal for Nikola Willis, isn't it. She
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  Speaker 2: gets the temporary one in the they signed the funding agreement,
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  Speaker 2: which was obviously a point of contention with Adrian or
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  Speaker 2: and then the new one comes in and has to live.
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  Speaker 3: By presumably basically, but I think as well that's realistic.
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  Speaker 3: The government's been pretty clear that everyone needs to live
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  Speaker 3: within their means a bit more. The Reserve Bank has
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  Speaker 3: been spending a lot of money, some of that completely justified,
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  Speaker 3: some of it. I do think you've got a question
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  Speaker 3: should they be able to spend quite as much as
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  Speaker 3: they have been when everyone else has got to trim
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  Speaker 3: their cloth a little bit more. I think it's appropriate
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  Speaker 3: they find a bit more of a middle ground. And
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  Speaker 3: I'm more than confident that between the likes of the
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  Speaker 3: Reserve Bank Board, the Finance Minister, the Governor, everything will
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  Speaker 3: work out all right. But I do think there's got
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  Speaker 3: to be like we're seeing in a number of parts
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  Speaker 3: of the economy, a recalibration what we were doing a
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  Speaker 3: couple of years ago does not cut it these days.
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  Speaker 3: The world has changed, the economy has changed, and we've
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  Speaker 3: got to adapt to it.
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  Speaker 2: Brad also great to have you on the show.
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