‘Dumb idea’ or not, the reverberations are keenly felt as far away as the South Pacific. 

The white-knuckle opening episode of the second Trump presidency continues: fresh from a bizarre public flagellation of Volodymyr Zelenskyy, Potus has just pressed go on sweeping tariffs on Canada, Mexico and China – the three biggest US trading partners – sparking political outrage and market mayhem.

Wait, weren’t these tariffs suspended last month?

Yes. In February, President Trump agreed to a pause on promised blanket 25% tariffs that were to be imposed on Canada and Mexico, after undertakings were given on border controls relating to illegal immigration and drug trafficking. (A 10% tariff on Chinese imports was introduced, prompting Beijing to level a host of tariffs in response.)

But now, citing a lack of action on those undertakings, Trump has pushed the big tariff button, and doubled duties on imports from China to 20%.

How does Trump justify these moves?

An exercise in “punishment”.

He wants to make it “very costly for people to take advantage of this country”, he explained yesterday. “They can’t come in and steal our money and steal our jobs and take our factories and take our businesses and expect not to be punished. And they’re being punished by tariffs. It’s a very powerful weapon that politicians haven’t used because they were either dishonest, stupid, or paid off in some other form.”

How did the markets respond?

Not well. Amid predictions of a resulting spike in costs for US businesses and consumers, share markets started sweating. The Dow Jones index plunged, finishing the day down by more than 1.55%. 

There is a real risk of flow-on effect, too. According to one analyst, the impact on KiwiSaver accounts could be “pretty ugly”.

How have the countries targeted responded?

Justin Trudeau, who is in his final furlong as prime minister of Canada, said the tariffs amounted to “a very dumb thing to do”. Confirming an array of retaliatory duties, and promising more to come if there was not a backdown, Trudeau let rip. “Today, the United States launched a trade war against Canada,” he said at a press briefing. “At the same time, they’re talking about working positively with Russia, while appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense.”

Trudeau appealed to US residents, saying they would feel the pain of these decisions in cost of living terms: “Your government has chosen to do this to you.” He also suggested that Trump was motivated by a wish to provoke an economic crisis for his northern neighbour and move in to annex the place.

That sounds deranged, conspiratorial.

It would sound that way, were it not for the fact that Trump has repeatedly talked about annexing Canada. 

What about Mexico and China?

China hit back with fresh tariffs of its own almost immediately. “By imposing unilateral tariffs, the US has violated WTO rules and disrupted the security and stability of the global industrial and supply chains,” said a Beijing spokesperson.

Mexican president Claudia Sheinbaum said she would be responding soon.

Is that it, or are there more tariffs on the cards?

That’s not it. Trump has warned there may be more to come, as part of his “America First” trade policy, and that the world should be on notice. Those previewed so far include wide-ranging new tariffs on agricultural products, automobiles and steel and aluminium. 

Surely this wouldn’t take in the friendly South Pacific nation of New Zealand?

Last time around, Trump imposed steel and aluminium tariffs across the board, with a handful of exemptions – New Zealand was not among them. Those tariffs remained in place under Joe Biden. Now there is a prospect of a hike in those duties as soon as next week. There are very real concerns, too, among New Zealand agriculture and food exporters. 

What have New Zealand politicians said about it all?

It’s a tricky one. There is a very real risk in offending the stable genius in the White House – as evidenced by the procession of tech oligarchs and foreign leaders going the other way and genuflecting humiliatingly at his feet to further their interests. 

Asked about the Zelenskyy debacle this week, Christopher Luxon said he trusts Trump and considers the US a reliable partner. He has previously declined invitations to condemn the president’s tariff tear.

Speaking this morning to RNZ, Chris Hipkins, leader of the Labour opposition, would not give a direct answer when asked if he trusted Trump. The main message from the tariff boilover, he said, was the importance of working harder to diversify New Zealand’s export markets. 

And the foreign minister?

Appearing on Newstalk ZB this morning, Winston Peters was asked by Mike Hosking for a thought on the latest Trump headlines. “God,” said the broadcaster, “what a mess!” Peters let loose a laugh, saying, “Well, I think, Mr Hosking, it would be wise for me, in the interests of my country, to keep my mouth shut and wait until the dust settles.” The conversation then turned to Mongolian gift horses.

How about the experts?

Winston Peters is an expert, sunshine.

Sorry, the commentators and so on.

Robert Patman of Otago University counsels against the “stay off the Trump radar” approach. It is “naïve to believe this thoroughly transactional president will not demand major concessions from New Zealand in return for any exemption from US tariffs”, he wrote a couple of weeks ago. “Moreover, it is important that New Zealand, in the words of Christopher Luxon, ‘stands up for its values’ at a time when the Trump administration presents a grave threat to the sovereignty, freedom and prosperity of other liberal democracies.”

He concluded: “It may be tempting for New Zealand to keep its head down and hope for some sort of deal with Trump. That would be a grave strategic error and one Trump hopes our government will make. A better New Zealand strategy would be to reaffirm its friendship with America, but clearly indicate such friendship cannot come at the expense of Wellington’s long-standing commitment to free trade, the rules-based global order and its solidarity with states like Canada, Mexico and Denmark that share these values.”

And for a cheerful American take: speaking to the Wall Street Journal, Andrew Wilson, deputy secretary-general of the International Chamber of Commerce, thought Trump’s tactics could trigger something like, oh, you know, the Great Depression. “Our deep concern,” he said, “is that this could be the start of a downward spiral that puts us in 1930s trade-war territory.”