Thursday, 10 November 2016 11:57

NZ markets not ready for Trump upset

Written by  Adam Fricker
The most concerning aspects of Trump’s proposed economic policies are his views on trade. The most concerning aspects of Trump’s proposed economic policies are his views on trade.

The US sharemarket has “largely priced in a Clinton victory”, says the NZIER, but what impact would an upset win to Donald Trump have on our economy?

When the NZIER released its report, Trupmonomics, late last week, the pollsters gave Trump a 20-30% chance of victory. Today a Reuters/Ipsos survey gave Hillary Clinton a 90% chance of taking the White House. However, Trump has bucked expectations time after time during the run-up to election day.

If he does win today, will the shock of the unexpected result impact markets like the Brexit result in the United Kingdom did? NZIER expects the immediate impact would be seen in credit conditions, the exchange rate and the US sharemarkets. Funding costs could rise as lenders became more risk averse.

Softer US economic growth could reduce demand for New Zealand’s exports, says NZIER. And it says “no reputable economic assessment” of Trump’s economic policies has demonstrated how his ideas will generate sustained productivity growth.

“One estimate is that Trump’s trade policies alone – namely imposing 35-45% tariffs on Mexican and Chinese imports – could result in the loss of up to 4.8 million US jobs. Ouch.”

Anything that hurt the US economy would reduce demand for New Zealand exports.

“We exported $8.4 billion of goods and services there in CY2015, accounting 12% of our total export revenue.”

Key products are beef ($1.6 billion), dairy ($1b), wine ($432m), lamb ($288m) and wood ($182m).

NZIER says that from our perspective, the most concerning aspects of Trump’s proposed economic policies are his views on trade. “He has run on a platform of protectionist and mercantilist rhetoric.”

As for the chances of the US backing the Trans-Pacific Partnership, both Trump and Clinton appeared to be ruling this out during their campaigning.

More like this

Tightened US rules an opportunity

OPINION: The updated US Department of Agriculture (USDA) rule for “grass-fed” or “pasture-fed” milk or meat is very restrictive.



Change of tune needed

OPINION: It has been some weeks since we have had to face the ideological rhetoric, in any quantity, that has pervaded our lives for much of the last three years – and I haven’t missed it one bit!

Farmers adapt well to new sales model

Fonterra’s rural service subsidiary, Farm Source says farmer shareholders are adapting well to its new trading model under COVID-19 restrictions. 

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Flying high

This old mutt would like to know how the sanctimonious Green Party and its MPs can continue to lecture everyone…

Put it down

Your canine crusader notes that the woke folk at Landcorp – sorry Pāmu – were recently crowing about recording a…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter

Popular Reads

Rules driving farmers out

New farming rules around sustainability are driving elderly farmers out of the dairy industry, says agri-economist Phil Journeaux.