Inside Christopher Luxon and Winston Peters’ Donald Trump bust-up - Thomas Coughlan

Prime Minister Christopher Luxon and Deputy Prime Minister Winston Peters are not happy about each other's trade policy. Photo / Mark Mitchell

• Prime Minister Christopher Luxon has been calling world leaders to bolster international free trade in response to Donald Trump’s tariffs.
• Winston Peters criticised this effort as “premature”.
• Peters has been touring the pacific.

OPINION

When Prime Minister Christopher Luxon first responded to the Trump Administration’s tariffs, he warned that it would be the second-round effects on global growth, rather than the tariffs themselves, that would be most disruptive to New Zealand.

He cannot have known then that one of the most disruptive second-round effects would be that which Deputy Prime Minister Winston Peters wrought upon the coalition when he cleared his throat over the weekend, obliquely (and occasionally not so obliquely) laying into Luxon’s response to the brewing trade war.

From Thursday through to Monday, from Wellington to Nuku’alofa, to Honolulu, Peters huffed and puffed like a Krakatoa of discontent, blanketing the Pacific in his complaint. No one, anywhere in this vast ocean, could be in any doubt about what his intent or meaning.

Well, no one, that is, apart from Luxon himself, who used his Monday morning media round to pour a Pacific portion of cold water on any speculation of a rift between coalition partners.

It was “a real media beat-up”, Luxon told Mike Hosking, perhaps using a mutual enmity for the media as the basis for papering over any rift with Peters.

But the spat is real. There’s clear grumpiness in the coalition about how last week ended.

Prime Minister Christopher Luxon with his coalition partners David Seymour and Winston Peters. Photo / Michael Cunningham

Luxon told media on Monday afternoon that his response to the tariffs was exactly what Cabinet had agreed, which was that ministers should respond “pretty calmly”, in his words.

Peters would appear to see things differently – and he’s not the only one; others seem to think Luxon’s White Pages diplomacy strayed beyond Cabinet’s agreed response too.

The key break occurred last Wednesday, when Luxon tossed out the script and decided to build an informal coalition of countries in support of free trade.

A fairly standard speech Luxon had intended to deliver on Thursday morning to the Wellington Chamber of Commerce was rewritten to focus on Luxon’s decision to become a champion of free trade. Accompanying the rewritten speech was the idea of calling around world leaders to build a loose and informal coalition of support for the rules-based trading system. This too appeared to be concocted quite quickly.

The National part of the coalition would appear to view this strategy as within the “pretty calmly” response Cabinet had agreed – NZ First and Act seem to see it as a strategic shift significant enough that it should have been circulated more widely among the coalition partners.

Things began falling apart almost immediately, with Peters lashing Luxon’s idea of some CPTPP-EU trade tie-up as “premature” on his way into Question Time on Thursday.

“We’re trying to sort out this other thing with America and China’s trade war… let’s find out what happened there first,” Peters said (more on his use of the term “trade war” later).

By Friday, Peters had left the capital for Tonga on the first leg of his Pacific mission. He grumbled to an RNZ reporter accompanying him about the fact Luxon had not consulted on the speech and the plan (Peters was asked about this on Thursday but stormed off instead of giving an answer).

“I hope that he’ll get my message and he’ll call me next time,” Peters said.

The rift deepened on Sunday, when, in a pre-prepared speech in Hawaii, Peters appeared to criticise not just the lack of consultation, but the strategy itself.

He criticised the way tensions had ratcheted up in the region, singling out at some of the rhetoric deployed in response to the tariffs: “the use of military language – of a ‘trade war’, of the need to ‘fight’”.

He said this language was unnecessarily black and white and forced countries into one or another camp. There’s a slight hypocrisy here: Peters himself used the term “trade war” regarding the US and China on his way into the House just earlier.

But far more important than that was the fact the remarks seemed to be directed at Luxon himself, who uses the term “trade war” frequently.

Peters could have omitted these remarks and used language more obviously directed at others — instead, he chose to leave that language in the speech, likely knowing that it would be interpreted as an attack on Luxon.

Consultation

The consultation issue is a complicated one.

As Act Leader David Seymour told The Country on Monday, “it is generally accepted and respected that the Prime Minister is always the de facto foreign minister”.

Luxon enjoys, as did his predecessors, a broad latitude to conduct foreign affairs with other world leaders — a latitude that should be respected by the rest of the Cabinet, including the Foreign Minister.

For Peters to use his speech to undermine that effort — not just by attacking the lack of consultation, but Luxon’s response itself — could reasonably be felt to be bad form. No one wins when this spills into the open.

There’s also a slight element of hypocrisy here: Peters sacked UK High Commissioner Phil Goff without consulting Luxon, and was not shy about saying so. Peters might not have been required to consult Luxon about Goff, but Luxon, publicly at least, did the right thing by his Government by not complaining, magnanimously saying the decision was “entirely appropriate”.

Foreign Minister Winston Peters, who is in Tonga for his first stop on a week-long Pacific tour, has announced he is easing visa restrictions for visitors from Pacific Island nations. Photo / Grace Tinetali-Fiavaai

But Luxon cannot be left entirely off the hook.

Peters and his team have been moving carefully in their response to the volatile Trump Administration. The risk of being singled out is high – indeed, Trump has been clear that retaliation may be punished. There’s even a risk that action will be misconstrued as retaliation — witness US Senator Ted Cruz’s mini-meltdown over an incorrect report that New Zealand was restricting visas for some Israelis.

If Luxon is going to toss out Peters’ carefully prepared script and start dialling foreign leaders, would it kill him if the first number he called was that of Peters himself?

The problem runs much deeper than foreign affairs — and cuts across portfolios on both the NZ First and Act side of the coalition.

The critique is that Luxon can occasionally see the Cabinet as an extension of the National Party. The reality is that unlike his immediate predecessors, John Key and Bill English, he leads a National Party that holds a smaller share of seats around the Cabinet table than any National Government in history – even the 1996–99 coalition. Key-style prime ministering simply won’t cut it.

Like Key, Luxon leans heavily on his Kitchen Cabinet and, like in Key’s time, this group only includes National ministers. But if the Kitchen Cabinet is really to live up to its name – and not be an informal pep talk for National ministers – it might be time to draw in the second- and third-ranked Cabinet Ministers, Peters and Seymour.

Head above the parapet

A separate issue is who is in the right over what Luxon and Peters are actually saying.

The irony of this bust-up is that no one really disagrees substantively with Luxon’s message – not even the opposition. Where the disagreement really lies is whether Luxon should be voicing these thoughts at all, or saving them for his memoir.

In the offending speech, Luxon said New Zealand had to “position ourselves as advocates both for our own economic interests and the institutions that underpin them”.

Peters very clearly seems to disagree over whether the Government is wise to draw attention to this advocacy, or whether it is best to go about things more subtly.

Nearly everyone in Parliament believes in free, low-tariff trade to a greater or lesser extent – but believing in free trade is quite different from proclaiming that belief so loudly you provoke a war of words with the most powerful (and volatile) man in the world.

Luxon may win domestically by galvanising support for his free trade push (indeed, the potential for the push to galvanise his leadership may be his motivation for doing it) – but the strategy comes with the risk of an almighty US response, particularly if the calls to world leaders, which are not themselves offensive to Peters, are marketed as some kind of thinly veiled attempt to build a coalition to oppose the Trump Administration’s trade policy.

Diplomacy is the art of letting other people have your way – the Peters argument appears to be that opposing the tariff policy without proclaiming this opposition so loudly might be more effective. That’s challenging for Luxon, however, who was likely buoyed over the weekend by the strong domestic response his diplomacy achieved.

It may be a while before the pair see each other. Peters arrives back in the country on Thursday, and Luxon jets off on Sunday for the UK. It may fall to Luxon’s National Party deputy, Nicola Willis, to get out the whisky and talk things over with the Deputy Prime Minister.

She’s off to a good start, telling Heather du Plessis-Allan Drive on Monday she’s sourced something good for Peters’ 80th birthday last week.

She wouldn’t reveal precisely what, only that it’s train-related (and doesn’t involve rail-enabled ferries).

Maybe Luxon’s double deputies can, to borrow a phrase, get the Government back on track.

Thomas Coughlan is political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.