Peters says Luxon ‘premature’ to suggest Asia-Pacific, Europe push back on tariffs

Thursday, 10 April 2025

Foreign Minister Winston Peters has dismissed as “premature” the suggestion from Prime Minister Christopher Luxon that free-trading Asia-Pacific nations and the European Union could form a bloc to collectively retaliate to United States tariffs.

As US President Donald Trump throws markets into further disarray, there appears to be conflict between how Luxon and his deputy, Peters, believe the Government should approach the issue.

Luxon left Parliament on Thursday for Auckland, where he was to make phone calls with world leaders. By early Thursday evening he had spoken to the prime minister of Malaysia, Anwar Ibrahim, Vietnam prime minister Pham Mionh Chinh and Singapore prime minister Lawrence Wong.

Earlier in the day he floated the idea of a combined response to the US tariffs in a speech, delivered hours after Trump declared a 90-day pause on severe tariffs he promised to impose on many allies and trading partners, instead imposing a 10% “baseline” tariffs on goods, while negotiations proceed.

However, Trump further upped a tariff on China, from 104% to 125%, as Beijing fights the US trade action by levelling tariffs in response.

Peters said he and Luxon had not discussed the idea of trying to bring the CPTPP and EU countries together.

“This is all very premature.

“Well, what would you talk about [with other leaders]? What's the tariff regime going to be in the end? Do we know what that's going to be? No … What would you actually talk about? Think about it.”

He said the developments of Thursday morning were “what we expected, actually”.

“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'll come to a resolution much quicker than people think and as in the last 24 hours, we've already seen the beginnings of that. So let's not panic here.”

Luxon made the remarks - which he later described as “my thought” - at a Wellington Chamber of Commerce breakfast at Te Papa, in Wellington, on Thursday morning.

He said despite the “welcome news of some de-escalation this morning” and impact on New Zealand “limited”, the second-order consequences from retreating trade would be “more significant”.

Recounting how New Zealand’s lifting of trade barriers improved quality of life and the “failed policies” of import controls in the 70s, Luxon said he was “not ready to throw in the towel quite yet” on free trade.

He said member countries of the CPTPP, a Pacific Ocean-spanning free trade agreement of some 12 countries including the United Kingdom, covering “roughly 15% of global economic activity”, could have a significant role in continuing to promote free trade. The CPTPP does not include China and Taiwan; both have applied to join.

“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,” Luxon said.

“My vision is that includes action to prevent restrictions on exports and efforts to ensure any retaliation is consistent with existing rules.

“Collective action, and a collective commitment, by a large portion of the global economy would be a significant step towards preserving free trade flows and protecting supply chains.”

Luxon said he would be talking to world leaders.

“Later on today I will be on the phone talking to world leaders comparing notes on world trade, and testing what we can do together to buttress the rules-based trading system.”

He will also be heading to the United Kingdom this month to meet Prime Minister Keir Starmer and talk trade and security.

“We can’t make the case for New Zealand sitting at home,” Luxon said.

“We have to position ourselves as advocates both for our own economic interests and the institutions that underpin them.”

As of Thursday morning, New Zealand was still expected to receive a 10% tariff announced by Trump last week.

A spokesperson for Trade Minister Todd McClay said on Thursday morning “it appears that NZ would remain subject to the 10% tariff”, though diplomats in Washington were seeking to clarify this.

The tariffs have caused major falls in stock markets across the globe as concerns of widespread trade wars grow. But Trump’s announcement on Thursday morning had stocks surge.