Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Long-term damage of US-China trade ructions outweigh boost

Long-term damage of US-China trade ructions outweigh brief boost for NZ exporters

By Rebecca Howard

April 6 (BusinessDesk) - Ongoing trade ructions between China and the US could create some short-term opportunities for New Zealand exporters but will be outweighed by the longer-term damage to global trade, analysts say.

"It is a real concern that this tit-for-tat trade war seems to be escalating and the comments of the (US) President (Donald Trump) on measures to protect USA farmers and agricultural interests will be of concern to our agri-exporters," ExportNZ executive director Catherine Beard told BusinessDesk.

Earlier today Trump reiterated China’s "illicit trade practices - ignored for years by Washington - have destroyed thousands of American factories and millions of American jobs," in a White House statement published by MarketWatch. Rather than "remedy its misconduct, China has chosen to harm our farmers and manufacturers," said Trump. As a result, he instructed the US Trade Representative to consider whether US$100 billion of additional tariffs would be appropriate.

In the same statement, Trump also instructed the Secretary of Agriculture "to use his broad authority to implement a plan to protect our farmers and agricultural interests".

Rabobank analyst Blake Holgate said "short-term there is potentially some initial upside if NZ producers replace some of the US product in China," in particular for products like beef and wine.

China is New Zealand's largest export market according to the latest data from Statistics New Zealand while the United States is third, behind Australia.

Holgate added, however, the benefit will depend to what extent China lets US product flow in through Hong Kong, which is so far exempt from the tariffs. He also said any benefit could be partly offset if US product is redirected into other markets to compete with New Zealand exports and notes there will be other suppliers looking to take advantage of available opportunities.

"Longer term, the damage to an open global trading environment is likely to outweigh any short-term gains," he said.

Regarding exports to the US, Beard warned New Zealand could face additional hurdles as there may be "increased tariffs on agricultural imports from other countries to give local USA growers an advantage on the domestic market."

Moody's Investors Service said in a note the "rising uncertainty and political risk accompanying these tit-for-tat measures will likely have economic and financial impact beyond that which is transmitted through direct trade channels."

Any escalation will weigh on investor sentiment and lead to more financial market volatility. The result could be reduced business investment over the medium term and lower production efficiency, it said.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Land Report: Issues With Soil Degradation

An environmental report released today has found we are damaging and losing our soils and our native plants and animals. More>>


Water Quality Report: Cause For Optimism

National River Water Quality Trends released by Land, Air, Water Aotearoa (LAWA) this week, reveal that for all river water quality parameters monitored over a 10 year period, more sites were improving than deteriorating. More>>


IMF Report On NZ: Positive Economic Outlook

Minister of Finance Grant Robertson has welcomed the IMF’s Concluding Statement, released following its annual visit, which provides an independent assessment of the strength of the New Zealand economy. More>>


Retail Power Price: Review Panel Named

The Energy and Resources Minister Megan Woods has released the details of who will sit on an expert advisory panel which is tasked with leading a review into the price of electricity in New Zealand. More>>


Increasingly Disruptive Threats: Govt Cyber Security Refresh

Broadcasting, Communications and Digital Media Minister Clare Curran today announced a comprehensive refresh of New Zealand’s approach to cyber security. More>>


Regional Growth: Action Plan To Modernise Taranaki’s Economy

The Provincial Growth Fund (PGF) will invest up to $20 million to help future-proof the Taranaki region by diversifying its economy, creating additional jobs and leveraging off the strong base the region has established through its oil, gas and agricultural ... More>>


Winding Down Irrigation: Funding Ends For Crown Irrigation Investment

The Government has begun winding down public funding for large-scale irrigation through Crown Irrigation Investments Limited (CIIL), in line with the Coalition Agreement and the Confidence & Supply Agreement. More>>