Tariff war might not go the way we hope
Source: dairynews.today
Amidst the escalation of tariffs on goods from China, Canada, and Mexico, history provides a cautionary tale for the US's latest trade measures.
The US has undertaken this strategy before, and history suggests it may not end well.
Connor English, director of Silvereye, a Wellington-based PR firm, remarks that the current US strategy of using tariffs as bargaining chips might yield unforeseen consequences similar to past instances. History, particularly the Smoot-Hawley Tariff Act of the 1930s, shows a crippling effect on trade where US imports fell dramatically from $4.4 billion in 1929 to $1.5 billion by 1933, with exports also declining by 61%.
Mike Tyson famously remarked, “Everyone has a plan until they get punched in the face," highlighting the risks of unpredictable outcomes in such trade wars.
Currently, the US has initiated a new plan imposing a 10% tariff on Chinese goods and energy products from Canada, with a 25% tariff on most other goods from Canada and Mexico. These measures are being used to pressure changes in drug, migration, and manufacturing policies favorable to the US.
New Zealand, once reliant on tariffs, now supports free trade, recognizing the importance of frameworks like the World Trade Organization for small trading countries. New Zealand expects to feel the impacts of these tariffs indirectly through economic shifts, possibly affecting exchange rates, commodity prices, and international relations.
Connor English outlines the potential impacts on New Zealand, stating that “we get impacted very quickly by changes in exchange rates, interest rates, and trade flows,” and underscores the necessity for adaptation and a strategic approach to these external pressures.
Connor English, director of Silvereye, a Wellington-based PR firm, remarks that the current US strategy of using tariffs as bargaining chips might yield unforeseen consequences similar to past instances. History, particularly the Smoot-Hawley Tariff Act of the 1930s, shows a crippling effect on trade where US imports fell dramatically from $4.4 billion in 1929 to $1.5 billion by 1933, with exports also declining by 61%.
Mike Tyson famously remarked, “Everyone has a plan until they get punched in the face," highlighting the risks of unpredictable outcomes in such trade wars.
Currently, the US has initiated a new plan imposing a 10% tariff on Chinese goods and energy products from Canada, with a 25% tariff on most other goods from Canada and Mexico. These measures are being used to pressure changes in drug, migration, and manufacturing policies favorable to the US.
New Zealand, once reliant on tariffs, now supports free trade, recognizing the importance of frameworks like the World Trade Organization for small trading countries. New Zealand expects to feel the impacts of these tariffs indirectly through economic shifts, possibly affecting exchange rates, commodity prices, and international relations.
Connor English outlines the potential impacts on New Zealand, stating that “we get impacted very quickly by changes in exchange rates, interest rates, and trade flows,” and underscores the necessity for adaptation and a strategic approach to these external pressures.
