“Crouch, touch, dis-engage”
- Agite perspective
- Apr 11
- 2 min read
The acrimonious divorce of the world’s largest economies – the USA and China – is causing huge volatility and uncertainty for citizens and businesses everywhere.
The impact of President Trump’s tariff wars cannot be overstated, with repercussions in every corner of the world, including New Zealand.
New Zealand Prime Minister Christopher Luxon and Finance Minister Nicola Willis are scrambling to finalise a Budget that reflects this new reality, and the Government has moved quickly to manage voter expectations of its self-labelled “year of growth” amid the chaos emanating from America.
To misquote the old rugby phrase, nations are wont to “crouch, touch and dis-engage”.
Nevertheless, the New Zealand Prime Minister and trade officials are working with like-minded countries to try to salvage what they can of the old “rules-based order”.
That could include a new trading block involving Asia and the European Union which would account for up to 40 percent of global GDP. Such an arrangement would include the long-negotiated CPTPP or Comprehensive and Progressive Agreement for Trans-Pacific Partnership involving 12 economies.
New Zealand exporters to the USA are bracing themselves for tariffs to increase 10-fold from $100 million to about $1 billion, based on the minimum, or base, 10 percent increase announced by President Trump on 2 April.
Global supply chains will be under severe pressure as will consumer prices, particularly in the USA.
No one really knows what will happen in the medium-term let alone day-to-day, as reflected in wild swings on Wall Street and every other stock market in the world.
The New Zealand Treasury is struggling with the same challenges as it helps finalise next month’s Budget.
And while decisions have been made to spend $12 billion more on defence to improve "interoperability" with Australia, it doesn’t change Pacific security, which is determined by the same superpowers in the middle of a messy divorce.
New Zealand is doing all it can to avoid being caught in the custody battle.
