'Clear warning signs': US-China trade war expected to affect New Zealand

It's a not a question of "if" New Zealand will be affected by the escalating trade war between China and the United States, but "when", according to a leading economist. 

Cameron Bagrie says we can already see some consequences of the trade war on New Zealand's economy, but the true effects won't be felt until next year.

His comments come after China reacted to a move by the US to impose fresh tariffs on Beijing.  

China retaliated by introducing tariffs on US crude oil, the first time fuel has been the subject of tariffs in the trade war. 

"If we look at the economic indicators across New Zealand in regards to how the global scene is starting to impact us, we're starting to preliminary signs," Bagrie told The AM Show on Monday morning. 

He noted that export numbers for July were down 6 percent on the previous year.

"We're starting to see the early stages of a weakening global economy starting to flow through into New Zealand," he said.

"It think the real impact is going to be a 2020 story."

The United States has so far imposed tariffs on around US$250bn of Chinese goods, with Washington arguing that such measures are necessary to change unfair trade practices by the Asia economic powerhouse.

China, in turn, has retaliated by putting tariffs on US$110bn of US products.

President Donald Trump insists he is "winning, big time against China" but the ongoing trade war has rattled world markets, with many fearing it could cause a global recession. The trade war has also triggered the biggest decline in US consumer confidence in six years.

Bagrie said warning signs that the New Zealand's economy was slowing were evident earlier in the year, when airlines started lowering inbound prices.

"They came out and they issued a profit warning and they came out and they waved the bat a little bit and cut the guts out of prices. That was a pretty clear warning sign that their forward-order books for the middle year were looking sort of soft .

"By the time we see it in the actual tourism numbers the horse has normally bottled."

Bagrie also pointed to an ANZ business outlook survey, which showed a drop of confidence and warned that businesses in New Zealand were "expecting to cut jobs". 

The survey's findings "were grim," Bagrie said. "And grim is actually putting things optimistically in regards to what those numbers actually looked like."

"They pretty clearly show that the New Zealand economy is slowing," Bagrie said. "And we've yet to really see the global impact of what's going on internationally flow to our shores."