NZ risks unfriendly fire in US-China trade war - expert

Donald Trump (Getty)
Donald Trump (Getty)

Donald Trump's ascension to the most powerful position on the planet is a threat to Kiwi companies' bottom lines, a top business leader has warned.

But it's not quite time to panic says Stephen Jacobi, executive director of the NZ International Business Forum.

New Zealand depends heavily on foreign markets, and has taken a leading role in facilitating international trade. It was recently named the easiest country in the world to do business by the World Bank, and kicked off the round of trade talks that eventuated in the Trans-Pacific Partnership (TPP).

But Mr Trump has promised to renegotiate, or flat-out cancel, many of the United States' international trade deals, including NAFTA and the TPP.

He's threatened to put a 35 percent tariff on many goods from Mexico, and a 45 percent tariff on everything from China - New Zealand's second-biggest trading partner.

"If trade disputes and retaliation between the United States and China become the order of the day, New Zealand risks getting caught in the crossfire," Mr Jacobi told Paul Henry this morning.

"That is a worry for us, and we need to be careful about that and finding new ways to put in place the sorts of rules that protect our businesses. That's the tragedy of losing the TPP… this globalisation effort could be unregulated, not subject to the sort of rule-making processes we wanted to put in place."

The TPP was signed in Auckland by all the member nations in February, but only Japan - once one of the most protectionist economies in the world - has passed it into law.

Despite Mr Trump's opposition, Mr Jacobi says the Government shouldn't give up on it just yet.

"My advice to the New Zealand Government would be to do everything you can to get that TPP legislation passed in Parliament next week."

Even if it doesn't result in a more open international economy, Mr Jacobi says it sends a "strong message" to the rest of the world, including nations that weren't a part of the negotiations, that New Zealand is open for business.

As for Mr Trump's other economic policies and how they'll affect New Zealand, much remains to be seen.

"We are going into a very uncertain situation," says Mr Jacobi.

"The President has vast powers in trade policy if he cares to use them, and we don't know how he will use them. It's all about the people he puts in place, the policies he takes and how he behaves himself on the international stage."

Economist Shamubeel Eaqub on Thursday told Paul Henry the death of the TPP will have little impact on our economy, but there could be silver lining in his election.

"We should just have a special policy to bring in lots of firms from Silicon Valley into places like Whanganui and Palmerston North - regional development, immigration policy, economic development all rolled into one."

California, where most of the United States' tech firms are based, voted almost two-to-one in favour of Mr Trump's Democrat rival, Hillary Clinton. In the San Francisco Bay Area - home to Google, Tesla, Yahoo!, Hewlett-Packard, Intel, eBay and Apple - Ms Clinton's support was over 80 percent.