US President Donald Trump holds up a chart while during his “Make America Wealthy Again” trade announcement event in the Rose Garden at the White House on April 2 in Washington DC. Photo / Getty Images
Donald Trump’s “Liberation Day” has had ripple effects across the globe.
Last week, the US President announced what he dubbed ‘reciprocal tariffs’ on almost every country on Earth - including some islands uninhabited by humans.
New Zealand was not as heavily impacted as most – with a 10% tariff on our goods imported into the US. Other countries haven’t been so lucky. The European Union has had a 20% bump and China has an additional 34% tariff.
More than 50 countries have reportedly sought talks with Trump, scrambling to ease the punishing duties. This is despite there being little clarity on whether there’ll be any wiggle room to negotiate.
Markets around the world have begun to react. Trillions of dollars have been wiped from the US stock market and Asia’s markets plunged on Monday. New Zealand’s NZX 50 lost more than 3.5%.
NZ Herald business editor-at-large Liam Dann told The Front Page it brings back feelings of the Global Financial Crisis (GFC).
“There was a big meltdown when Covid hit – a massive sell-off for a few days. But then, of course, the Government came in with stimulus, and the same happened with the GFC. Eventually, the Government comes in and the Federal Reserve comes in to support.
“In this case, the Government is not coming to the rescue. The US Government is the reason this has happened. This is a historic sell-off. This is a global market meltdown. The world has changed and it’ll be in the history books,” he said.
Trump intends to strengthen the US’ economic position and protect American workers. A White House media statement reads: “President Donald J. Trump declares national emergency to increase our competitive edge, protect our sovereignty, and strengthen our national and economic security.
“He is the first President in modern history to stand strong for hardworking Americans by asking other countries to follow the golden rule on trade: Treat us like we treat you,” it said.
He also seeks to increase domestic manufacturing. According to the White House, from 1997 to 2024, the US lost around five million manufacturing jobs.
The reintroduction of tariffs has sparked comparisons to the market crash 1929, and the introduction of the Smoot-Hawley Tariff Act.
Signed into law in 1930 by then-US President Herbert Hoover, the act was intended to protect the country’s agricultural industry.
Dann said kids all over the US are taught about what is “universally accepted as a failure in economics”.
“Trump says that’s wrong. He has a different view on that and his advisers have a different view. They think the problem was that the tariffs were taken off in the first place in 1909. I think he said that the Smoot-Hawley Act was too little, too late.
“He’s harking back to the ‘great days of the late 19th century’ when the US had very high tariffs and low income tax, what they called the Gilded Age. It was a great time for billionaires, JP Morgan and all those sorts. He’s literally saying that’s what they want to get back to – those ‘great days of America’,” he said.
Some of the countries and territories targeted by the tariffs have amused social media users.
The Heard and McDonald Islands, an Australian territory in the Indian Ocean, are mostly barren Antarctic islands inhabited by only penguins and seals. They’re among the most remote places on Earth – yet also hit with tariffs.
Similarly, Norfolk Island – a tiny Australian island in the South Pacific with a population of about 2000 – has been hit with 29% tariffs, despite having no trade relationship with the US.
“The White House has come back and said they did that because they wanna make sure that Australia doesn’t use them as a loophole. The idea that Australia would funnel all its steel exports through Norfolk Island or something, it just seems a bit crazy to me,” Dann said.
Listen to the full episode to hear more about how Trump’s tariffs are affecting global markets.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.
You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.
MetService is warning the worst is yet to come.