NZ eyes trade links as tariffs rift widens

New Zealand faces risks rather than opportunities from the Trump Administration’s escalating trade war with China, Trade Minister David Parker and his National Party counterpart Todd Mcclay predict.

Parker said New Zealand was dependent on ‘‘rules-based trade agreements’’ and rising protectionism around the world was not in the country’s interests.

United States President Donald Trump has announced tariffs on a further US$200 billion (NZ$304 billion) of Chinese imports from next week.

The new tariffs will start at 10 per cent and rise to 25 per cent from the beginning of next year, and come on top of 25 per cent tariffs on another $50b of imports imposed in August.

China retaliated against the first round of tariffs in kind, hitting American soybeans among other goods.

Victoria University Professor Siah Hwee Ang, an expert in Asian trade, forecast China would retaliate to the latest US tariffs within days.

The tariffs could create opportunities for Kiwi exporters, in both countries, Hwee Ang said.

But they could also be expected to push up the price of some goods in New Zealand. For example, higher prices for raw materials in the US could flow through into higher prices for food packaging, which could affect the price of goods in New Zealand supermarkets, he said.

Parker said the Government did not believe the effect on New Zealand would be large ‘‘and neither do we think there will be any large benefit to New Zealand’’.

‘‘The biggest risk to New Zealand lies in the undermining of international rulesbased agreements,’’ he said.

The tariffs also highlighted the importance of regional trade agreements such as the CPTTP (trans-pacific trade) and New Zealand’s arrangements with Europe ‘‘because they of course give New Zealand protection against this sort of thing happening to us’’, Parker said.

Mcclay said there could be some shortterm opportunities for New Zealand from the tariffs but the risks were greater.

‘‘The concern I have is whilst the tariffs are directed at China at the moment they could well go elsewhere.’’

Countries such as New Zealand that stood up for ‘‘dependable rules-based systems’’ needed to engage with the Trump Administration more, he said.

Increased tariffs on some big exports to the US could be devastating, he said.

Parker said he was planning a trip to Washington and Ottawa next month to put New Zealand’s point of view to ministers from ‘‘like-minded countries’’.

He said the Government was also ‘‘participating at all levels in international negotiations’’ to protect and improve the World Trade Organisation.