Parker: Trade wars stoke global tensions

Trade Minister David Parker is warning a global move to trade barriers could have a destabilising effect well beyond commerce.

On Friday (New Zealand time), US President Donald Trump announced he had decided to impose a 25 per cent tariff for foreign-made steel and 10 per cent for aluminium.

Global stock markets plunged on fears that other major economies would retaliate. Within hours of the news, European Union trade officials warned they would respond ‘‘firmly’’ if the US president went through with the plan.

New Zealand does export aluminium and steel products to the United States which would likely be caught up in the measures, but the direct impact is likely to be limited.

Trade Minister David Parker told Stuff that he had been advised that New Zealand’s exports of steel and aluminium products to the United States were worth ‘‘tens of millions of dollars rather than hundreds of millions’’ a year.

New Zealand’s Ambassador to the United States, Tim Groser, has already contacted US officials

New Zealand would not retaliate by adding trade barriers of its own Trade Minister David Parker

seeking an exemption for New Zealand from the tariffs.

Calculating the impact of the tariffs was ‘‘subjective’’ as it was hard to judge how much of the product would be displaced to other markets, Parker said.

According to the Ministry of Foreign Affairs and Trade, New Zealand’s exports to the United States were worth around $8 billion in 2016.

New Zealand would not retaliate by adding trade barriers of its own, Parker said.

‘‘We will be taking a moderate line’’ by reminding trading partners of the benefits of trade.

Parker will head to Santiago, the capital of Chile, today to sign the CPTPP, a modification of what was known as the TPP trade deal.

Parker said the US move underlined the growing importance of being part of the 11-country trade partnership.

It was a ‘‘valid question to ask’’ whether the latest US move would harm its chances of joining the CPTPP later, Parker said, but he had not seen analysis on the question.

A move to protectionism could stoke tensions between countries which were more likely to co-exist peacefully because of trade.

‘‘If you look through the suite of history, when countries sort of divorce each other in their trading relationships and put up trade barriers, it can also lead to deteriorating international relations beyond trade,’’ Parker said.