President Trump is not expected to impose the tariffs he threatened on his first day, raising concerns about price increases for consumers and negative effects on U.S. businesses and global trades. Instead of enacting tariffs, Trump plans to instruct federal agencies to review trade policies and recommend future actions.
Initially, Trump had promised a 25% tariff on all imports from Canada and Mexico, which he stated would remain until “Drugs, particularly Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” He also indicated a 10% tariff on Chinese goods that would last until the country ceased its fentanyl exports to the U.S. Throughout his campaign, Trump emphasised tariffs as a strategy to protect American industries and encourage domestic manufacturing.
Economists have warned that imposing tariffs could lead to higher prices and inflation. Analysis from Trump’s first term showed that tariffs resulted in a net loss of manufacturing jobs and reduced investments due to increased import costs. Most tariff revenues were directed towards compensating farmers affected by retaliatory tariffs from China, with limited concessions achieved from the country regarding trade commitments.
In response to Trump’s recent tariff threats, Canada and Mexico have indicated plans to impose their own retaliatory tariffs on U.S. goods, potentially disrupting the U.S. auto industry where parts frequently cross borders during production.
Impact of U.S. Tariffs on New Zealand’s Trade with China
Moreover, Trump’s tariff policies could significantly affect New Zealand’s economic relationship with China. If implemented, high tariffs on Chinese imports could slow China’s economy, diminishing demand for New Zealand exports like dairy and meat. However, this might also allow New Zealand to fill gaps left by reduced U.S. agricultural exports to China.
Trade experts warn that while Trump’s tariffs could initially lower prices of some Chinese products entering New Zealand, long-term repercussions may complicate this scenario. If China adjusts its currency in response to U.S. tariffs, it could make New Zealand’s exports more expensive for Chinese consumers.
The geopolitical scene may also shift as China seeks to strengthen ties with countries like New Zealand in response to U.S. isolationist policies. This could lead to increased trade agreements that benefit New Zealand economically but also raise concerns about overreliance on the Chinese market.
Trump’s tariff plans could create immediate challenges for New Zealand’s exports to China, but they also present opportunities for increased trade and cooperation.