Donald Trump is looking to pressure one of its biggest rivals, China, by more than doubling tariffs on US$200 billion (NZ$294 billion) worth of Chinese goods, marking the escalation of the trade war of two of the world’s biggest economies, a war that, according to University of Auckland Professor Stephen Hoadley, would result in products like office furniture in NZ going up in cost as the country gets caught in the crossfire.
Professor Hoadley, an Associate Professor in Politics and International Relations at the University of Auckland, says that the escalating trade war will bump up prices for things like air conditioners and other products, and not just the finished goods themselves, but also the components used in manufacturing.
Hoadley says that US consumers are worried, and rightfully so, because Chinese products are very popular across the world. He says that the government’s plan is to gamble on China ending up suffering more thanks to the imposed tariff, but he disagrees with that idea.
According to the professor, Chinese products remain more attractive thanks to their lower currency, which results in them being cheaper overall. There might be a short-term boost for products like office furniture in NZ as the country experiences an upside, but only if China diverts its products to other markets.
There might be a positive effect on the country, Hoadley says, with prices going down thanks to the increase of supply available, but that’s only a probability. The professor says that, should the US economy tank or the Chinese economy suffers hard, then they’ll cut down on buying exports, which, given that they’re some of the biggest economies in the world, means that New Zealand’s exporting would take a hit in the long term.
The Trump administration is proposing an increase in the tariffs imposed on China, up from 10% to 25%, which may take effect sometime before the end of 2018. The imposed increases have met resistance, not only from economists but House Republicans, saying that these measures would only hurt the US, instead of the intended effect, though the risk of said increases going up is still something that people are keeping an eye on.