Newly elected US president Donald Trump could hinder New Zealand’s prosperity if he goes through with his policies, BusinessNZ warns.
BusinessNZ chief executive Kirk Hope said New Zealand’s prosperity relied on open and free trading of export products.
If the US, which was New Zealand’s third largest export market, were to take a more closed approach to trade in the future, New Zealand export returns could be affected.
“Trade with the US earns New Zealand over $5 billion a year in products including meat, dairy and wine, and over $2 billion a year in services,” Hope said.
Trump, a celebrity businessman with virtually no political experience, has promised to tear up trade agreements which do not benefit US interests such as the Trans-Pacific Partnership Agreement, as well as imposing punitive tariffs on Mexico and China.
Hope said the tariffs increased the possibility of tariff retaliation and general increases in protectionism by other countries.
In general, this could decrease international trade, which would not be in New Zealand’s interest as a trade-reliant economy.
A note from the New Zealand Institute of Economic Research (NZIER) claimed that a Trump victory would be “horrible” for New Zealand’s economy, with both households and companies suffering.
NZIER deputy chief executive John Ballingall said this would lead to “significant instability” in financial markets as well as an increase in borrowing costs and tighter credit conditions for mortgage-holders.
Longer term, NZIER pointed to one warning that Trump’s plans to impose hefty tariffs on Chinese and Mexican imports cutting 4.8 million jobs.
This would likely hurt New Zealand’s $8.4b of goods and services exports to the US, as well as slowing global growth, which could hurt New Zealand’s exports more generally.
Former New Zealand prime minister Jim Bolger said Kiwis would have to expect a “different world economy” under a Trump presidency.
“New Zealand is so dependent on international trade that anything a Trump presidency did to slow world trade would have an impact on New Zealand.”