Trump’s choice as his new trade tsar suggests poker skills will also be a most useful attribute in the new era.
Certainly when it comes to navigating his choice of Howard Lutnick, boss of bond trading firm Cantor Fitzgerald and co-chair of Trump’s transition team, to head up the powerful US Department of Commerce.
This is currently headed by Democratic appointee Gina Raimondo, a former Governor of Rhode Island.
Lutnick is pure Wall Street.
Where the game gets interesting is that Trump has also signalled that Lutnick is likely to get some oversight of the United States Trade Representative’s office (USTR).
This is the outfit that spearheaded US trade agreements such as the Trans-Pacific Partnership (TPP), which Trump pulled out of after he won the presidency in 2016. This was back when America was still doing deals to allow greater access to its valuable consumer market.
Lutnick is not a free trader.
He made plenty of comments during the lengthy US presidential campaign that underlined his stance as a proponent of tariffs.
It’s been well-telegraphed that Trump intends to slap 60% tariffs on Chinese goods – possibly a great deal more when it comes to electric vehicles. Lutnick is reported to have said in a podcast interview last month: “Don’t tax our people. Make money instead. Put tariffs on China and make US$400 billion.”
Elsewhere – such as with New Zealand – talk is of tariffs at 10-20%.
That doesn’t sound a lot. But when applied to New Zealand’s exports to the US it could end up costing our exporters somewhere north of $750 million if applied across the board. It is inflationary.
Lutnick is reported as saying the threat of tariffs works on different levels.
He believes it will force some countries to sit down and negotiate with the US and drop their own trade barriers.
He is also open that “it’s a bargaining chip”.
Already there is talk that industries in some countries may shift some of their manufacturing base to the US as a quid pro quo for retaining access to the US market without being slaughtered by punitive tariffs.
What is certain is there is no certainty yet on how this will play out.
Prime Minister Christopher Luxon and his ministers are still assessing what Trump’s return to the White House means.
Luxon was fairly sanguine on this score at the United States Business Summit in Auckland yesterday.
New Zealand does not have a great deal of chips to play with.
We unilaterally disarmed by wiping tariffs on most goods coming into New Zealand decades ago.
It will require a much more sophisticated approach if New Zealand is to avoid tariffs, assuming that is the approach the incoming Trump Administration will choose.
Luxon has a very “relational” style when it comes to international affairs.
That was obvious when he recounted his conversation with the incoming president.
The Prime Minister has faced a flurry of criticism this week over his political style.
But his style has been talked up favourably on X by close Trump ally Elon Musk.
Both political leaders come from the business world. Both understand a transactional approach.
Luxon recounted that Trump had been well briefed on him.
The PM found him “actually very friendly”. “He knew New Zealand well. He knew of my background with coming from outside of politics and from a world of business. And he also knew about our Government and what we were doing as well.”
Luxon counts himself fortunate that Trump made the effort to take his call – it was “really special”.
He has told the President he is “more than welcome here anytime. And he said likewise – he’s looking forward to catching up.”
When it comes to detail, the pair talked about the role of the US and the Indo-Pacific, the importance of continuing that work and the challenges in their respective economies.
“I just thought it was a very warm conversation. He was aware of New Zealand. He knew about our Government and I just think we’ve got an opportunity also to position New Zealand well and to actually create the opportunities to continue to build the business in the US.”
