Former Prime Minister Sir Robert Muldoon put down United States President Jimmy Carter as a peanut farmer.
Former Acting Prime Minister
Sir Geoffrey Palmer refused the USS Buchanan entry.
New Zealand suffered no economic consequences. US Treasury Secretaries have adhered to international financial rules, which the US largely wrote.
Scott Bessent, the new US Secretary of the Treasury, has upended the US Treasury’s policy.
Bessent supports tariffs and advocates reciprocal tariffs. He called former Canadian Prime Minister Justin Trudeau “a numbskull”.
Bessent wants much harsher economic sanctions.
If fact-checking Trump results in the suspension of intelligence-sharing so “Russia is bombing the hell out of Ukraine”, what is the Trump administration’s response to a High Commissioner questioning whether Trump knows his history?
If Winston Peters had not fired Phil Goff, Peters might as well have cancelled his upcoming trip to America.
We have been able to have an independent foreign policy because until Chinese warships did live fire drills in the Tasman Sea, the Pacific has been the Seventh Fleet’s lake.
We have relied on US Secretaries of the Treasury to promote international trade.
I attended the OECD finance ministers' meeting in Paris where the US Treasury Secretary, Donald Regan, pushed for agriculture to be in the Gatt (General Agreement on Tariffs and Trade) round. Liberalisation of trade in agriculture saved our dairy industry.
We cannot rely on Bessent. Bessent is unlikely to let us make Google pay for content. The G20 agreement on taxing multinationals will be history.
We are going to have to spend more on defence but rushing into Aukus (the three-way security pact between Australia, the United Kingdom and the US) might not be the answer.
The Europeans are so integrated into US defence systems that they cannot make up for the US unilateral suspension of aid to Ukraine.
Our ageing frigates could not have responded to the Chinese warships. Missiles cost so much that the frigate probably had none.
Our defence doctrine is that when we need missiles, we can get some from America. Ukraine demonstrates that might not be correct.
The Ukrainians, without a navy, have sunk most of the Russian Black Sea fleet. Drones are transforming warfare.
We have a space industry that builds rockets. We must be able to build drones.
The Europeans building an independent defence capability may give New Zealand options.
Waiting is the best response. Some say Trump is transactional and it is all a negotiating ploy.
Always assume that politicians mean what they say, especially when it is stupid.
Economics will defeat Trump. Trump’s tariffs are dumb.
Bessent, a billionaire hedge fund manager, said last week: “Access to cheap goods is not the essence of the American Dream.”
Bessent dismisses price rises as a “detox period” and tariffs as “a one-time price” rise.
It is not what was promised in the campaign. “A vote for Trump means your groceries will be cheaper,” he told CNN.
The cost of living was a major election issue.
Before any tariff, inflation in America increased in January to 3%, above the Federal Reserve’s target of 2%. The Federal Reserve’s fund rate of 4.5% is higher than New Zealand.
US inflationary expectations, usually self-fulfilling, are rising.
Last week’s Time Magazine ran a story “Is the US heading into a recession under Trump?” “According to Bloomberg, US consumer confidence has dropped this month the most since August 2021, with recession fears on the rise. The Atlanta Federal Reserve model has also suggested that economic growth might be negative in Q1 2025.”
Unemployment is just 4.1%. Around 151,000 jobs were added in February, but the numbers forced to work part-time jumped by 460,000.
Trump’s actions have confused American business. The economic policy uncertainty index has spiked 41% to a level of 334.5. In the past, this level of uncertainty has signalled a recession.
Bessent is going to regret being appointed Treasury Secretary. US debt is 100% of GDP. Deficits are 6% of GDP. The Committee for a Responsible Federal Budget estimates Trump’s policies will add a further US$8 trillion to US debt. It is unsustainable.
It is Stein’s Law: “If something cannot go on forever, it will stop.”
If lenders lose confidence in the dollar, then the cost of the debt will rise.
Trump promised an economic boom. The Republicans will probably lose the House in the mid-terms. A Trump recession will turn the loss into a Republican bloodbath and the loss of the Senate. In just 18 months Trump, who seems all-powerful today, will be a weak, lame-duck President.
We will soon learn if Trump is negotiating or if he will allow his tariffs to cause stagflation.
When the elephant is dancing, the mice should stay off the dance floor.
