April 9, 2025 • 14 mins
A week after announcing his Liberation Day tariffs and causing global market chaos, US President Donald Trump has done a 180.
He has announced on social media that he has paused tariffs against 75 countries for 90 days – but has doubled down on a trade war with China, announcing a 125% tariffs on goods from the country.
US stocks rocketed higher after the declaration – the S&P 500 posted its best day since 2008, and the Nasdaq its best since 2001.
So what's behind the sudden backtrack, and what could all of this mean for New Zealand?
Today on The Front Page for this bonus episode, we’re joined once again by NZ Herald business editor at large Liam Dann.
Follow The Front Page on iHeartRadio, Apple Podcasts, Spotify or wherever you get your podcasts.
You can read more about this and other stories in the New Zealand Herald, online at nzherald.co.nz, or tune in to news bulletins across the NZME network.
Host: Chelsea Daniels
Sound Engineer: Richard Martin
Producer: Ethan Sills
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Yelda. I'm Chelsea Daniels and this is a bonus episode
of The Front Page, a daily podcast presented by The
New Zealand Herald. A week after announcing his Liberation Day
tariffs and causing global market chaos, US President Donald Trump
has done a one eighty. He has announced on social
(00:26):
media that he has paused tariffs against seventy five countries
for ninety days, but has doubled down on a trade
wark with China, announcing a one hundred and twenty five
percent tariff on goods from the country. US stocks rocketed
higher after the declaration. The S and P five hundred
(00:46):
posted its best day since two thousand and eight, the
Nasdaq its best day.
Speaker 2 (00:51):
Since two thousand and one.
Speaker 1 (00:52):
So what's behind the sudden backtrack and what could all
of this mean for New Zealand?
Speaker 2 (00:58):
Today?
Speaker 1 (00:58):
On the Front Page, Where's Your Waned once again by
Nsitt Herald Business Editor at Large, Liam Dan.
Speaker 2 (01:10):
Liam, we only caught.
Speaker 1 (01:12):
Up with you a few days ago on tariffs, and
here we are again. Did you expect there would be
such a backtrack so quickly? And what do you think
motivated this decision?
Speaker 3 (01:21):
Well, I've given up expecting or not expecting things out
of the current scenario then the current US president, so
anything was possible, and it was never clear to what
extent these tariffs were a negotiating tactic. There was a
lot of messaging from the White House that they were
dead serious, but really what's happened is he's had to backtrack,
(01:42):
except for China so far because of the financial market
reaction and not so much just the share market sell off,
which was bad enough, but what we've seen in bond
markets in the last twenty four hours seems to be
the real reason that they've backed down.
Speaker 1 (01:55):
Right, So when we're all looking at share markets and
looking at the SMP and the NASDA and everything, what
was happening with bonds.
Speaker 3 (02:02):
In the wake of the initial announcement. There was so
much fear that we're heading into a recession and things
that the bond yields actually fell that the standard model
was that when we say bond yields, we're talking about
effectively the interest rate on debt. So bonds are a
product that is effectively sold, is that they're the debt market.
The bond market is the debt market for the world.
(02:22):
There's a something crazy like one hundred and thirty trillion
US dollars of debt in the world. The world runs
on debt, and these bond markets are widely considered to
be the most powerful political force in the world. They're
the thing that can stop presidents in their tracks. They
effectively force the resignation of the UK Prime Minister is
(02:42):
Trusts when she sort of unveiled some economic policies which
didn't make sense to bond markets. So if you cop
a serious reaction from bond markets, effectively a self a
sell off of bonds, the price goes down, the yield
goes up, and the cost of borrowing in your country
starts to spy, and that is a big problem. You've
reserved bank or your federal Reserve can come in and
(03:04):
try and push back against that by cutting interest rates,
cutting the official cash rate. But effectively, if markets are
saying that at the pricing a higher cost of borrowing,
it just means everything slows down in your economy because
you know, people can't afford to borrow to do things.
Speaker 1 (03:19):
In a speech at the National Republican Congressional Committee President's dinner,
Trump made some pretty scathing comments about his allies.
Speaker 2 (03:29):
I'm telling you, these countries are calling us up kissing
my ass.
Speaker 1 (03:34):
They are dying to make it your.
Speaker 2 (03:37):
Please, please make it your I'll do anything. I'll do anything, sir,
Do we have to kiss his ass? Slam?
Speaker 3 (03:43):
Well, there's two approaches. Some countries have decided that it's
better to negotiat. I think New Zealand, having copped just
the baseline ten percent tariff, as we're not retaliating, we're
not really in that negotiating framework. I mean, we can
talk about the ten percent, but that's going across all
the countries, so it's not scific to New Zealand. We'll
have our trade officials go and talk to them and say, hey,
(04:03):
this is a bit weird and can we get some clarification.
But I don't think we're trying to negotiate in the
same way say Japan would be trying to negotiate right now.
We just have to wait and see what happens to
the whole thing. But then the other tactic, as we've seen,
is China has absolutely retaliated and we've got this you know,
standoff that's got to a sort of I guess a
mutually assured self destruction, you know, like kind of it's
(04:26):
like a nuclear level standoff. Now between China and the US,
and I suspect that in that case, both sides are
looking for a way to start talking. But both sides
need to look like they're not backing down. So my
hunch is that they're trying to find a way to
get some talks going because it's not a sustainable position.
It's disastrous for the US economy to have tariffs of
(04:46):
whatever it is, one hundred and twenty five percent on
Chinese goods, but it's also going to be a big
problem for China. I would imagine something's going to have
to move in the next few days.
Speaker 1 (04:56):
Trump's top trade official, Jamieson Grea, was testifying before Congress
when the ninety day pause was announced, and it doesn't
seem like he knew about it.
Speaker 2 (05:06):
When asked about it, he said, well, I understood the
decision was made a few minutes ago.
Speaker 1 (05:10):
Now this just confirms to us that these decisions seem
to be made on the fly, doesn't it.
Speaker 2 (05:14):
How dangerous is that?
Speaker 3 (05:16):
It's very dangerous. I mean, Trump's playing a really high
stakes game of poker with really the very notion of
the US economy being that the primary or dominant economy
in the world. So trust in the US economy is
fundamental to their dollar being the primary currency for trading
in the world, and to come back to them again
to the bond market. So when you have a big
(05:38):
sell off of equities around the world, or if something
bad happens COVID, you know whatever, US bonds are seen
as the safe place you go there where you put
your money to stay safe. Now, what's happened in the
past couple of days is that we've seen US bonds
sold off quite significantly, so that the bond yields have
gone up. So it's just important to remember that there's
(05:59):
this inverse relation between the bond price and the bond
yield or the interest rate on the bond. So I
always think it's a bit like trying to back a trailer.
I always have to stop and just get it right
in my head each time, because it's not as straightforward
an equation as it is for equity markets. But around
the world countries have either been selling off bonds or
just stopped buying them. There's a lot of talk about
the fact that this could be done as a deliberate
(06:20):
retaliatory tactic. So China holds about a trillion dollars of
American bonds, and if they were to start selling them rapidly,
that would have a significant impact on the market. Now
it's not clear whether they were, or maybe they are
at some level, but there's probably a wider sell off
going on. And the pace at which the yield was
(06:41):
going up. It wasn't taking yields up to the highest
we've seen them in the past year or two, but
the pace at which the yield was rising was spooking
people in the US. There's a famous quote. It was
Bill Clinton's economic advisor, James Claville. He was the guy
who said it's the economy stupid, and they coined that phrase.
But he once said, after a sort of probably much
(07:03):
more mild crisis, that he used to think if he
was reincarnated, he'd want to come back as a president
or a pope to be powerful, But now he'd just
rather come back as the bond market, because that's the
most powerful thing there is out there. They're not well understood,
they're not a popular topic in the just the general
world of the public, but underpinning everything, it's that debt
and the price of debt that keeps our economy functioning
(07:26):
and flowing and so to sort of blow up the
established world order on that is a very high stakes game.
Speaker 1 (07:32):
Indeed, and you mentioned Liz Trust before as well. Is
it true that so the bond market it can't lie right?
So you look back in twenty twenty one when Liz
(07:53):
Trust's tax cut policy tanked the markets and she had
to backtrack and eventually resign ultimately the markets in the
bond market in particular, does that make or break these policies?
Speaker 3 (08:05):
Yeah, look at will do. I mean, sheer markets possibly could.
But you can sort of wear a shear market crash
because you know, you can say, oh, well it's paper money.
You know, we've we've lost so many trillion, but it
might come back next month. With the bond yields rising
to a certain point, there's a real world effect of
seizing up financial markets like we saw in the GFC.
You know, you just if the overnight borrowing rates go
(08:26):
through the roof, that the whole system can seize up.
Speaker 2 (08:29):
Come it's less forgiving, Yeah.
Speaker 3 (08:31):
Because companies that thought they had an okay amount of
debt to carry on suddenly find out that the amount
of debt they've got is too big. With these new
higher interest rates, and you know, in the GFC that
meant that some banks, big banks started falling over, so
you know, and then you've got a global financial crisis.
So I guess what we're saying is that there's a
risk if this all spirals, that you get another global
(08:52):
financial crisis. And I don't think even Donald Trump has
the stomach for that. And that's probably what's forced this
partial back down and hopefully some sort of resolution in
the near future with the China standof.
Speaker 1 (09:03):
And is that why we should be looking at the
bond markets not the share markets, because there have been
some record days for the share markets and people would
be looking at that thinking that's surely a good sign, right, Yeah.
Speaker 3 (09:14):
I mean it's very reactive the share market, so it
came off a lot. People don't have clear signals, you know,
you can't predict what's going to happen, what's going to
come out of the White House. So the share markets
are very erratic, very volatile. They have bounced a lot
this morning that there's still in correction territory. They've bounced
back from around twenty percent losses this year to sort
(09:34):
of being I don't know, probably still down about ten
or twelve percent a lot of the share markets this year,
so it's still not been a great run. I guess
share market investors are hoping that we're back from the brink.
I mean, addedly, it's just a ninety day pause, so
it doesn't make the uncertainty go away. Perhaps you could
argue that this is all a softening, you know, to
get to where Trump wants to be with a new
(09:55):
world Order of tariffs. You go through this turmoil and
wherever we land is a bit soft and slowly the
will gets used to the idea of what's coming, and
markets priced in, and he lands somewhere that's not quite
so terrifying. But yeah, I think it is the bond
market that's really going to decide it, and that's where
we should be looking.
Speaker 1 (10:12):
China, of course, remains Trump's main target. He said that
the increased tariffs there are because of a lack.
Speaker 2 (10:20):
Of respect Beijing has shown.
Speaker 1 (10:23):
Will the measures against China have a trickle down effect
for New Zealand and others?
Speaker 2 (10:28):
How will that affect us?
Speaker 3 (10:30):
Yeah? So if this really does play out, if these
tariffs stay in place, it's going to be bad news
for the Chinese economy. It's going to cost them as well,
so that will affect growth. Now you get into a
game of who can take the most pain and who's
got the most ability to sort of maybe stimulate their
economy through that, you could have you know, central banks
(10:52):
on both sides sort of unleashing stimulus like they did
during COVID. That's not great long term, but in the
short term. Yeah, the expectation is that it's quite serious
for the global economy and probably quite serious then for
New Zealand's recovery. It's a headwind. It slows that. I
think the Finance Minister's called it a significant event. She's
obviously weary of calling it a crisis at this point.
(11:13):
Yesterday we had the Reserve Bank cutting the official cash
rate by the sort of two twenty five basis points,
which was what was already planned, but the tone was
that they could go further and they'd be ready to
go further if things go bad for the economy. So
that could mean that we see the official cash rate
go lower than expected. Here, I mean's lower mortgage rates
to try and try and offset the downside. And then
(11:36):
you know, the other part of any stimulus or help
that you could get for the New Zealand economy would
be the government part, and that's where the Finance Minister
has so far tried to say, look, no, we're holding
the course. The budget's the same, we're still trying to
get out of deficit, get the books into surplus on
the same pathway, but also saying she's not prepared to
do more cuts. But if the numbers don't add up,
(11:56):
if the New Zealand economy, if the growth is slower,
the tax and you will be lower and the government
could face some hard choices. So it may be that
if this spirals and the budget's sort of almost written now,
but there could be some emergency revisions to the budget,
they may have to relax their fiscal constraints and allow
a bit more government money into the economy. It's not
(12:17):
certain yet, but if things keep turning in a negative fashion,
then that is an option for the government as well.
I mean, they're wary of borrowing more to do that.
But then you'd have to look at it in the
context of a world where probably governments around the world
are having to do this sort of thing.
Speaker 1 (12:32):
And Trump has said China wants to make a deal,
they just don't know how quite to go about it.
What could he mean here? And what deal could China
possibly bargain? Do they need to?
Speaker 3 (12:44):
Well, this is what I mean about. I think there's
a lot of saving face here on both sides. Trump
says it as if it's just China's issue, but I
think America is quite quite keen to make a deal too,
was hoping that they would make a deal. And China's
the second biggest economy in the world. It sees what
these you know, sees this tariff policy as an attack
on itself, and so it's standing up and yeah, look,
(13:08):
it is a bit like a sort of a Cold
war nuclear moment. You take it to the brink, and
then at some point, you know, you just hope that
there is going to be a way there. You know,
both both leaders and both countries will say, oh no,
we've got the other sides back down, But there has
to be a way for them to both save face
with their own public and get to the negotiation table
(13:30):
and dial it back to something that is manageable, because
you know, at the moment, you know, those kind of
tariffs when you consider the complexity of the trading relationships
and the manufacturing relationships on everything from iPhones to cars
and just all the goods that are connected between China
and the US. It would be a disaster and really
(13:50):
inflationary for both economies.
Speaker 2 (13:52):
Thanks for joining us, Liam, Yeah, thank you.
Speaker 1 (13:58):
That's it for this episode of the Front Page. You
can read more about today's stories and extensive news coverage
at enzedherld dot co dot enz.
Speaker 2 (14:08):
The Front Page is produced by Ethan.
Speaker 1 (14:10):
Sills and Richard Martin, who is also a sound engineer.
Speaker 2 (14:14):
I'm Chelsea Daniels.
Speaker 1 (14:17):
Subscribe to the Front Page on iHeartRadio or wherever you
get your podcasts, and tune in tomorrow for another look
behind the headlines.
Yelda. I'm Chelsea Daniels and this is a bonus episode
of The Front Page, a daily podcast presented by The
New Zealand Herald. A week after announcing his Liberation Day
tariffs and causing global market chaos, US President Donald Trump
has done a one eighty. He has announced on social
(00:26):
media that he has paused tariffs against seventy five countries
for ninety days, but has doubled down on a trade
wark with China, announcing a one hundred and twenty five
percent tariff on goods from the country. US stocks rocketed
higher after the declaration. The S and P five hundred
(00:46):
posted its best day since two thousand and eight, the
Nasdaq its best day.
Speaker 2 (00:51):
Since two thousand and one.
Speaker 1 (00:52):
So what's behind the sudden backtrack and what could all
of this mean for New Zealand?
Speaker 2 (00:58):
Today?
Speaker 1 (00:58):
On the Front Page, Where's Your Waned once again by
Nsitt Herald Business Editor at Large, Liam Dan.
Speaker 2 (01:10):
Liam, we only caught.
Speaker 1 (01:12):
Up with you a few days ago on tariffs, and
here we are again. Did you expect there would be
such a backtrack so quickly? And what do you think
motivated this decision?
Speaker 3 (01:21):
Well, I've given up expecting or not expecting things out
of the current scenario then the current US president, so
anything was possible, and it was never clear to what
extent these tariffs were a negotiating tactic. There was a
lot of messaging from the White House that they were
dead serious, but really what's happened is he's had to backtrack,
(01:42):
except for China so far because of the financial market
reaction and not so much just the share market sell off,
which was bad enough, but what we've seen in bond
markets in the last twenty four hours seems to be
the real reason that they've backed down.
Speaker 1 (01:55):
Right, So when we're all looking at share markets and
looking at the SMP and the NASDA and everything, what
was happening with bonds.
Speaker 3 (02:02):
In the wake of the initial announcement. There was so
much fear that we're heading into a recession and things
that the bond yields actually fell that the standard model
was that when we say bond yields, we're talking about
effectively the interest rate on debt. So bonds are a
product that is effectively sold, is that they're the debt market.
The bond market is the debt market for the world.
(02:22):
There's a something crazy like one hundred and thirty trillion
US dollars of debt in the world. The world runs
on debt, and these bond markets are widely considered to
be the most powerful political force in the world. They're
the thing that can stop presidents in their tracks. They
effectively force the resignation of the UK Prime Minister is
(02:42):
Trusts when she sort of unveiled some economic policies which
didn't make sense to bond markets. So if you cop
a serious reaction from bond markets, effectively a self a
sell off of bonds, the price goes down, the yield
goes up, and the cost of borrowing in your country
starts to spy, and that is a big problem. You've
reserved bank or your federal Reserve can come in and
(03:04):
try and push back against that by cutting interest rates,
cutting the official cash rate. But effectively, if markets are
saying that at the pricing a higher cost of borrowing,
it just means everything slows down in your economy because
you know, people can't afford to borrow to do things.
Speaker 1 (03:19):
In a speech at the National Republican Congressional Committee President's dinner,
Trump made some pretty scathing comments about his allies.
Speaker 2 (03:29):
I'm telling you, these countries are calling us up kissing
my ass.
Speaker 1 (03:34):
They are dying to make it your.
Speaker 2 (03:37):
Please, please make it your I'll do anything. I'll do anything, sir,
Do we have to kiss his ass? Slam?
Speaker 3 (03:43):
Well, there's two approaches. Some countries have decided that it's
better to negotiat. I think New Zealand, having copped just
the baseline ten percent tariff, as we're not retaliating, we're
not really in that negotiating framework. I mean, we can
talk about the ten percent, but that's going across all
the countries, so it's not scific to New Zealand. We'll
have our trade officials go and talk to them and say, hey,
(04:03):
this is a bit weird and can we get some clarification.
But I don't think we're trying to negotiate in the
same way say Japan would be trying to negotiate right now.
We just have to wait and see what happens to
the whole thing. But then the other tactic, as we've seen,
is China has absolutely retaliated and we've got this you know,
standoff that's got to a sort of I guess a
mutually assured self destruction, you know, like kind of it's
(04:26):
like a nuclear level standoff. Now between China and the US,
and I suspect that in that case, both sides are
looking for a way to start talking. But both sides
need to look like they're not backing down. So my
hunch is that they're trying to find a way to
get some talks going because it's not a sustainable position.
It's disastrous for the US economy to have tariffs of
(04:46):
whatever it is, one hundred and twenty five percent on
Chinese goods, but it's also going to be a big
problem for China. I would imagine something's going to have
to move in the next few days.
Speaker 1 (04:56):
Trump's top trade official, Jamieson Grea, was testifying before Congress
when the ninety day pause was announced, and it doesn't
seem like he knew about it.
Speaker 2 (05:06):
When asked about it, he said, well, I understood the
decision was made a few minutes ago.
Speaker 1 (05:10):
Now this just confirms to us that these decisions seem
to be made on the fly, doesn't it.
Speaker 2 (05:14):
How dangerous is that?
Speaker 3 (05:16):
It's very dangerous. I mean, Trump's playing a really high
stakes game of poker with really the very notion of
the US economy being that the primary or dominant economy
in the world. So trust in the US economy is
fundamental to their dollar being the primary currency for trading
in the world, and to come back to them again
to the bond market. So when you have a big
(05:38):
sell off of equities around the world, or if something
bad happens COVID, you know whatever, US bonds are seen
as the safe place you go there where you put
your money to stay safe. Now, what's happened in the
past couple of days is that we've seen US bonds
sold off quite significantly, so that the bond yields have
gone up. So it's just important to remember that there's
(05:59):
this inverse relation between the bond price and the bond
yield or the interest rate on the bond. So I
always think it's a bit like trying to back a trailer.
I always have to stop and just get it right
in my head each time, because it's not as straightforward
an equation as it is for equity markets. But around
the world countries have either been selling off bonds or
just stopped buying them. There's a lot of talk about
the fact that this could be done as a deliberate
(06:20):
retaliatory tactic. So China holds about a trillion dollars of
American bonds, and if they were to start selling them rapidly,
that would have a significant impact on the market. Now
it's not clear whether they were, or maybe they are
at some level, but there's probably a wider sell off
going on. And the pace at which the yield was
(06:41):
going up. It wasn't taking yields up to the highest
we've seen them in the past year or two, but
the pace at which the yield was rising was spooking
people in the US. There's a famous quote. It was
Bill Clinton's economic advisor, James Claville. He was the guy
who said it's the economy stupid, and they coined that phrase.
But he once said, after a sort of probably much
(07:03):
more mild crisis, that he used to think if he
was reincarnated, he'd want to come back as a president
or a pope to be powerful, But now he'd just
rather come back as the bond market, because that's the
most powerful thing there is out there. They're not well understood,
they're not a popular topic in the just the general
world of the public, but underpinning everything, it's that debt
and the price of debt that keeps our economy functioning
(07:26):
and flowing and so to sort of blow up the
established world order on that is a very high stakes game.
Speaker 1 (07:32):
Indeed, and you mentioned Liz Trust before as well. Is
it true that so the bond market it can't lie right?
So you look back in twenty twenty one when Liz
(07:53):
Trust's tax cut policy tanked the markets and she had
to backtrack and eventually resign ultimately the markets in the
bond market in particular, does that make or break these policies?
Speaker 3 (08:05):
Yeah, look at will do. I mean, sheer markets possibly could.
But you can sort of wear a shear market crash
because you know, you can say, oh, well it's paper money.
You know, we've we've lost so many trillion, but it
might come back next month. With the bond yields rising
to a certain point, there's a real world effect of
seizing up financial markets like we saw in the GFC.
You know, you just if the overnight borrowing rates go
(08:26):
through the roof, that the whole system can seize up.
Speaker 2 (08:29):
Come it's less forgiving, Yeah.
Speaker 3 (08:31):
Because companies that thought they had an okay amount of
debt to carry on suddenly find out that the amount
of debt they've got is too big. With these new
higher interest rates, and you know, in the GFC that
meant that some banks, big banks started falling over, so
you know, and then you've got a global financial crisis.
So I guess what we're saying is that there's a
risk if this all spirals, that you get another global
(08:52):
financial crisis. And I don't think even Donald Trump has
the stomach for that. And that's probably what's forced this
partial back down and hopefully some sort of resolution in
the near future with the China standof.
Speaker 1 (09:03):
And is that why we should be looking at the
bond markets not the share markets, because there have been
some record days for the share markets and people would
be looking at that thinking that's surely a good sign, right, Yeah.
Speaker 3 (09:14):
I mean it's very reactive the share market, so it
came off a lot. People don't have clear signals, you know,
you can't predict what's going to happen, what's going to
come out of the White House. So the share markets
are very erratic, very volatile. They have bounced a lot
this morning that there's still in correction territory. They've bounced
back from around twenty percent losses this year to sort
(09:34):
of being I don't know, probably still down about ten
or twelve percent a lot of the share markets this year,
so it's still not been a great run. I guess
share market investors are hoping that we're back from the brink.
I mean, addedly, it's just a ninety day pause, so
it doesn't make the uncertainty go away. Perhaps you could
argue that this is all a softening, you know, to
get to where Trump wants to be with a new
(09:55):
world Order of tariffs. You go through this turmoil and
wherever we land is a bit soft and slowly the
will gets used to the idea of what's coming, and
markets priced in, and he lands somewhere that's not quite
so terrifying. But yeah, I think it is the bond
market that's really going to decide it, and that's where
we should be looking.
Speaker 1 (10:12):
China, of course, remains Trump's main target. He said that
the increased tariffs there are because of a lack.
Speaker 2 (10:20):
Of respect Beijing has shown.
Speaker 1 (10:23):
Will the measures against China have a trickle down effect
for New Zealand and others?
Speaker 2 (10:28):
How will that affect us?
Speaker 3 (10:30):
Yeah? So if this really does play out, if these
tariffs stay in place, it's going to be bad news
for the Chinese economy. It's going to cost them as well,
so that will affect growth. Now you get into a
game of who can take the most pain and who's
got the most ability to sort of maybe stimulate their
economy through that, you could have you know, central banks
(10:52):
on both sides sort of unleashing stimulus like they did
during COVID. That's not great long term, but in the
short term. Yeah, the expectation is that it's quite serious
for the global economy and probably quite serious then for
New Zealand's recovery. It's a headwind. It slows that. I
think the Finance Minister's called it a significant event. She's
obviously weary of calling it a crisis at this point.
(11:13):
Yesterday we had the Reserve Bank cutting the official cash
rate by the sort of two twenty five basis points,
which was what was already planned, but the tone was
that they could go further and they'd be ready to
go further if things go bad for the economy. So
that could mean that we see the official cash rate
go lower than expected. Here, I mean's lower mortgage rates
to try and try and offset the downside. And then
(11:36):
you know, the other part of any stimulus or help
that you could get for the New Zealand economy would
be the government part, and that's where the Finance Minister
has so far tried to say, look, no, we're holding
the course. The budget's the same, we're still trying to
get out of deficit, get the books into surplus on
the same pathway, but also saying she's not prepared to
do more cuts. But if the numbers don't add up,
(11:56):
if the New Zealand economy, if the growth is slower,
the tax and you will be lower and the government
could face some hard choices. So it may be that
if this spirals and the budget's sort of almost written now,
but there could be some emergency revisions to the budget,
they may have to relax their fiscal constraints and allow
a bit more government money into the economy. It's not
(12:17):
certain yet, but if things keep turning in a negative fashion,
then that is an option for the government as well.
I mean, they're wary of borrowing more to do that.
But then you'd have to look at it in the
context of a world where probably governments around the world
are having to do this sort of thing.
Speaker 1 (12:32):
And Trump has said China wants to make a deal,
they just don't know how quite to go about it.
What could he mean here? And what deal could China
possibly bargain? Do they need to?
Speaker 3 (12:44):
Well, this is what I mean about. I think there's
a lot of saving face here on both sides. Trump
says it as if it's just China's issue, but I
think America is quite quite keen to make a deal too,
was hoping that they would make a deal. And China's
the second biggest economy in the world. It sees what
these you know, sees this tariff policy as an attack
on itself, and so it's standing up and yeah, look,
(13:08):
it is a bit like a sort of a Cold
war nuclear moment. You take it to the brink, and
then at some point, you know, you just hope that
there is going to be a way there. You know,
both both leaders and both countries will say, oh no,
we've got the other sides back down, But there has
to be a way for them to both save face
with their own public and get to the negotiation table
(13:30):
and dial it back to something that is manageable, because
you know, at the moment, you know, those kind of
tariffs when you consider the complexity of the trading relationships
and the manufacturing relationships on everything from iPhones to cars
and just all the goods that are connected between China
and the US. It would be a disaster and really
(13:50):
inflationary for both economies.
Speaker 2 (13:52):
Thanks for joining us, Liam, Yeah, thank you.
Speaker 1 (13:58):
That's it for this episode of the Front Page. You
can read more about today's stories and extensive news coverage
at enzedherld dot co dot enz.
Speaker 2 (14:08):
The Front Page is produced by Ethan.
Speaker 1 (14:10):
Sills and Richard Martin, who is also a sound engineer.
Speaker 2 (14:14):
I'm Chelsea Daniels.
Speaker 1 (14:17):
Subscribe to the Front Page on iHeartRadio or wherever you
get your podcasts, and tune in tomorrow for another look
behind the headlines.
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