What’s the Government doing about Trump’s tariffs, and are ministers on the same page?
Monday, 14 April 2025
Prime Minister Christopher Luxon has been hitting the phones to world leaders, pitching an alliance that could help power through the trade war. But bringing together a global coalition of free trade champions could be easier than bringing together his own coalition.
While Luxon spent the end of last week speaking to leaders from Europe, the Pacific and Asia about a free trade bloc, Foreign Minister Winston Peters was criticising the “hysterical” response to US President Donald Trump’s tariffs.
The two coalition leaders, Luxon and his deputy prime minister, have not been singing from the same song sheet when it comes to Trump’s tariffs. Peters said New Zealand should slow down and “wait for the dust to settle”.
Labour leader Chris Hipkins said it looked like the coalition Government hadn’t worked out a plan. He called the recent comments “unhelpful and immature”.
“Christopher Luxon and Winston Peters need to stop their bickering and act like a functioning Government. New Zealand needs a steady hand on the tiller to navigate this,” Hipkins said, on Sunday.
On Sunday, speaking at an event in Honolulu, Hawaii, Peters argued it was unhelpful to characterise the situation as a “trade war”. That’s a term other ministers are using, and Peters himself ‒ before he left Wellington last week ‒ had described the global situation as a “tariff war”.
What is Luxon proposing?
Luxon and Australian foreign minister Penny Wong have undertaken rapid fire calls with leaders across Europe, Asia and the Pacific to discuss a joint response to protect free trade and defend economies amid the tariff war.
On Thursday and Friday, Luxon spoke with the prime ministers of Thailand, Fiji, Singapore, Vietnam, Malaysia, the taoiseach of Ireland and the president of of the Philippines. He also spoke with Ursula von der Leyen, the president of the European Commission.
Von der Leyen then called Canada’s new prime minister, Mark Carney, to discuss the escalating conflict.
Before the calls, Luxon explained to the Wellington Chamber of Commerce what he was trying to achieve.
'One possibility is that members of the CPTPP and the European Union work together to champion rules-based trade and make specific commitments on how that support plays out in practice,' he said, on Thursday morning.
The CPTPP is the Trans-Pacific Partnership, a group of 12 countries around the Pacific Ocean and also the UK, who have entered into a free trade deal. It includes Canada and Mexico, as well as countries in Asia and South America, and Australia and New Zealand.
Luxon has ruled out reciprocal tariffs on the US, so his talks with counterparts across the free trading world focused more on reinforcing that commitment to trade.
He suggested a commitment between the CPTPP and European Union to enshrine free trade, which could put pressure on the rest of the world to join in on that free trade arrangement.
“My vision is that includes action to prevent restrictions on exports and efforts to ensure any retaliation is consistent with existing rules,” he told the Wellington business group.
How has Peters responded?
But the foreign minister has been sceptical of the prime minister’s efforts.
On Thursday, shortly before departing on a diplomatic trip across the Pacific ‒ including to the US state of Hawaii ‒ Peters told reporters, “It’s all very premature”.
He added, “I’ve taken the stance that experience matters, in this case wait until we see what emerges with the tariff war that’s going on. It will come to a resolution,” he said.
The next day, speaking in Tonga, Peters criticised Luxon for embarking on his free trade call-a-thon without first consulting him.
He told RNZ the prime minister hadn’t spoken to him beforehand. “I hope that he'll get my message and he'll call me next time,” he said.
And on Sunday, speaking from Honolulu, RNZ reported that Peters delivered a speech critical of the “hysterical” reaction to Trump’s tariffs and the trade war.
“In recent weeks, the tendency to hype up a debate about how international trade works into a black-and-white, polarising issue has been unfortunate and misguided. The use of military language ‒ of a 'trade war', of the need to 'fight', of the imperative to form alliances in order to oppose the actions of one country ‒ has at times come across as hysterical and short-sighted,” he said.
He said New Zealand should be “cautious” and “modest” when considering its next steps, moving only when after the dust settles.
How have world leaders responded to Luxon’s calls?
In statements issued following these calls, many of the leaders around Asia indicated they were taking cautious approaches. Vietnam’s prime minister, Pham Minh Chinh, said he welcomed Luxon’s call and told him Vietnam was focused on “avoiding confrontation that could worsen the situation”.
Von der Leyen, the head of the European Union, has made the most promising comments following her call.
She said she hoped to speak further, in-person, with Luxon and was keen to look at how the CPTPP and EU could work together to strengthen global free trade.