Avoiding a trade war is paramount

Donald Trump.
Donald Trump.
A trade dispute caused by United States President Donald Trump threatens to engulf the world's superpowers, with some obvious effects for New Zealand.

As Trade and Export Growth Minister David Parker prepares to leave for Paraguay and Chile for the CPTPP signing, he and other global trade ministers will be considering their positions.

Mr Parker says the Comprehensive and Progressive Agreement for Trans-Pacific Partnership will help the Government's efforts to create jobs and deliver a better standard of living for New Zealanders.

The 11-nation deal will create new opportunities and international trade, including preferential access for the first time to Japan, the world's third-largest economy. Preferential access will also be available for New Zealand to Canada, Mexico and Peru.

Protests against the Government signing continued at the weekend and Jane Kelsey remains adamant New Zealand should not be part of it, which opponents claim sells New Zealand's independence.

The US President plans to impose a 25% tariff on steel imports and a 10% tariff on aluminium. As a result, Canada and the European Union say they will bring forward their own countermeasures to the tariffs.

Mexico, China and Brazil also say they are weighing up retaliatory steps. New Zealand International Business Forum executive director Stephen Jacobi says the tariffs will be regrettable.

New Zealand may be caught in the crossfire if Mr Trump's actions lead to a weakening of world trading organisation rules.

Britain Prime Minister Theresa May told Mr Trump multilateral action is the only way to resolve the problem of global capacity. However, Mr Trump is holding firm.

After speaking to multiple world leaders about the tariff changes, he still has no plan for exemptions.

Alarmed American industry leaders, typically supporters of Mr Trump's ``America first'' policy, have been left stunned. Sharemarkets have fallen because, before the announcement, there was no indication Mr Trump was considering this policy.

Mr Parker wisely says New Zealand will not make any threats of retaliation. New Zealand is a small player in global exports but exports remain the lifeblood of the Kiwi economy. Any threats to a country the size of the US would be economic suicide.

Instead, New Zealand must focus on the trade agreement Mr Parker will sign in Chile. If there is any doubt about the need to protect New Zealand's trade markets, it should be erased quickly.

The EU's threats of retaliatory tariffs on flagship American products, including Harley-Davidson motorcycles, bourbon and Levi's jeans, have been called trivial and a ``rounding error'' by US commerce officials. They amount to about $NZ3.5 billion.

But in response, Mr Trump threatened European car makers with a tax on imports if the EU retaliates.

The US has huge trade deficits with countries like China and trading blocs such as the EU. These deficits are unimaginable to New Zealanders. In January, the trade deficit the US had with China alone reached a record $NZ518.2 billion.

A trade war is damaging to a wide group of countries - in a different way from erecting economic barriers. Mr Trump is already trying to renegotiate the North American Free Trade Agreement (Nafta).

While in Paraguay, Mr Parker will also advance New Zealand's interests in strengthening trade with Latin America. Paraguay is the current president of the Mercosur trading group made up of Brazil, Argentina, Uruguay and Paraguay.

New Zealand already has close trading links with China and they will no doubt be strengthened as China looks to alienate the US in response to any new tariffs.

If there is ever a time for a New Zealand trade and export growth minister to push for wider access to every possible market, it is now. Mr Trump has made it so.

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