How Trump's Win Could Impact Your Finances

As people around the world reflect on the implications of Donald Trump's recent election victory, there is growing curiosity about how this might influence New Zealand. Economists and commentators have identified several areas where our economy and personal finances could be affected.

Cheaper Goods (Sometimes)

One of Trump's main focuses has been on tariffs, especially targeting imports from China. While this could pose challenges for New Zealand exporters, who rely heavily on the U.S. market (the second largest for New Zealand after China), it could also lead to some benefits for consumers.

According to Kelly Eckhold, chief economist at Westpac, if Trump pursues tariffs and trade restrictions, China might redirect its manufactured products to other markets, including New Zealand. This could result in lower prices for imported goods, such as cars, for Kiwi consumers. However, Shamubeel Eaqub, chief economist at Simplicity, cautions against wishing for this outcome as the U.S. economy plays a crucial role in balancing any downturns from China, affecting New Zealand exporters.

Oil Prices

Eckhold mentions that Trump's administration appears less willing to support Ukraine against Russian aggression. If Ukraine reaches a ceasefire, this may lead to a reduction in sanctions on Russia, potentially easing restrictions on its oil industry. With more oil reaching the market, we could see lower oil and petrol prices, although he notes that fluctuations in interest rates could mitigate this effect.

The Dollar

Eckhold also highlights that U.S. interest rates will likely remain high due to Trump's policies. This could weaken the New Zealand dollar as the U.S. dollar strengthens overall. The connection between these two currencies is significant for international trade.

Inflation Trends

If Trump’s policies of tax cuts and increased spending come into play, global inflation may rise as a result. Eckhold emphasizes that changing financial conditions could lead to a shift from stable to rising prices for imported goods, which may affect New Zealand’s consumer prices. Eaqub adds that increased U.S. borrowing and spending could push fixed mortgage rates higher in New Zealand, further straining household budgets.

Market Movements

With Trump likely to pursue expansive fiscal policies, U.S. equity markets may experience a boost. Eckhold points out that this could positively impact KiwiSaver investments for New Zealanders in the short term. Nevertheless, Eaqub warns that market performance is influenced more by economic and business conditions than by political party rule. At KiwiSaver provider Kernel, founder Dean Anderson has noticed rising stocks in companies like Trump Media and Tesla since the election outcome.

However, he advises against making impulsive investment decisions based on short-term market reactions, which can often be driven by speculation and emotion. He advocates for taking a long-term view and investing based on personal financial goals, allowing the markets to play out over time.

Trump, Economy, Inflation, Market, Oil