While most New Zealanders feel negatively towards US President Donald Trump, his policies may produce winners as well as losers here. The following eight dark clouds may have silver linings from which to take visual comfort even as the downpour approaches.
Trump’s utterances encourage right-wing populism, nationalism, selfishness, disdain of ‘establishment’ experts, and alt-truth. They may inspire like-minded people and movements in Europe. But so far no New Zealand political leader has emulated Trump. A healthy reaction to Trump’s irresponsible impulsiveness may inoculate us, and by negative example inspire us to behave better in public life. Also, Sir Geoffrey Palmer’s campaign for a written constitution appears to have a new rationale, to guard against Trump-ism here.
The president’s ‘America first’ underfunding and delegitimation of international institutions such as the UN will undermine not only their credibility and good works but also New Zealand’s voice in them. But this threat may spur New Zealand and other states’ diplomats to devote more energy to maintaining international cooperation, with or without the US.
Trump’s pull-out from the Trans Pacific Partnership was a blow to multilateral trade liberalisation. But it offers NZ some hope of a bilateral free trade agreement with the United States, a goal long sought by Wellington and the NZ US Council. The negotiations would be fraught since the US would surely demand Investor State Dispute Settlement provisions and the curbing of PHARMAC, and possibly a relaxation of the bans on genetically modified foods and hormone-fed beef. New Zealand trade ministers have been forthright in asserting that no deal might be better than a bad deal, and they have new options for bilateral deals with other members of the TPP, not to mention with the EU and the UK, so they won’t cave in to US pressure.
Foreshadowed new US tariffs could price NZ exports, especially beef, dairy, and wine, out of the US market, and also hit the exports of NZ partners in Asia and Europe, reducing their ability to afford quality imports from NZ. But US corporations and consumers, and the free-trade inclined Republican Party, are already gearing up to resist tariffs, which would damage their interests. New Zealand and other governments will be quick to challenge illegal US tariffs through the World Trade Organisation.
Trump’s ‘clean sweep’ of Obama appointees has deprived him of valuable experienced officials, and also deprived NZ of useful contacts and good friends in Washington. NZ ministers and NZ Embassy diplomats are challenged to search out fresh contacts in the new US administration. Our ambassador in Washington, former Trade Minister Tim Groser, and his team appear to have taken initiatives already to engage with Washington insiders to re-establish the personal links necessary to gain information and exert influence. Even higher levels of NZ diplomats’ skill could be the result.
The impending 10 percent boost of defence spending along with cuts to the State Department, the UN, and aid agencies, foreshadow less US ‘soft power’ and a more militaristic foreign policy. Trump may expect New Zealand to support his more assertive policies in the Asia Pacific, raising the risk of entanglement in a US-led conflict with China. But so far NZ-China relations have been exemplary, signalled by the recent visit of PRC Prime Minister Li Keqiang. Chinese leaders may see New Zealand as a subtle counterbalance to Trump, which could be advantageous in impending free trade agreement upgrade talks.
If US Federal infrastructure spending raises the value of the US dollar, NZ importers of consumer goods and industrial components and raw materials will be able to afford less. Paying off debts denominated in US dollars will be more costly. NZ banks will have to pay more to borrow from US banks, passing the cost to mortgagees as higher interest rates. On the other hand, NZ exporters can sell more to the US, and US tourists will find NZ less expensive and come in greater numbers. Both will reduce the trade balance deficit and raise tax revenue, allowing Prime Minister Bill English to lower income taxes and pay down the sovereign debt.
Recent reports indicate that applications for immigration by Americans have rocketed by 70 percent since Trump’s election. Will they bid up Auckland house prices even further? The actual figure of new applicants is only 70, up from 100 the previous year. Inasmuch as new immigrants bring youth, energy, and skills (and money!) we are all better off.
The Government’s response to these challenges should be cautious and measured, not least because some of them are not manifest yet. Trump may not be able to achieve all his aims and traditional US policies may endure. Other opportunities for New Zealand may emerge in the US and around the world.
New Zealand’s diplomatic and economic models are sound, and need only to be adapted to whatever changes emanate from Washington, and around the world, as a result of the Trump presidency.
Stephen Hoadley, Associate Professor of Politics and International Relations at the University of Auckland, is author of New Zealand United States Relations (2nd ed, 2016) and New Zealand Trade Negotiations (forthcoming May 2017).