Donald Trump win 'could help efforts to lower inflation in NZ' but still 'create significant headaches' - ASB

An economist is warning a second Donald Trump presidency could send global interest rates soaring - which would deliver a mixed bag to the New Zealand economy. 

ASB has issued a report warning a Trump win could be good news for New Zealand households in terms of potentially lower inflation, but bad news for Kiwi exporters due to a likely weaker US dollar. 

Senior economist Mark Smith said the November 5 US election would likely dominate the global economic and market narrative this year. 

"We only need to think back to 2016 that bought us Brexit and the election of Donald Trump as the 45th US President. Brace for a similar dynamic, although there are signs of buyers' remorse given the lacklustre post-Brexit performance of the UK economy." 

ASB predicts the immediate impact of a second Trump win would be higher interest rates in the US and the world. 

"The preference of the Trump administration for a weaker USD could help efforts to lower inflation in NZ (via a stronger NZD) but it would not be greeted fondly by NZ exporters," Smith said. 

He said the reaction of China, New Zealand's trading partner, would be "pivotal". 

Luxon and Trump.
Prime Minister Christopher Luxon and Donald Trump. Photo credit: Getty Images/Newshub.

"The risk is that global trade frictions escalate as US relations with China and the EU deteriorate." 

"Significant headaches" would arise for New Zealand should volatility in the global trade market increase, he said. 

Trump has raised the idea of slapping a 10 percent tariff on all products imported into the US if elected. 

He also wants the authority to put bigger tariffs on countries that have put taxes on US imports. 

In addition, Trump has floated the idea of doing away with China-imported products and banning Chinese companies from owning US energy and technology infrastructure.