What do Trump’s latest tariffs mean for New Zealanders?

Source: Radio New Zealand

New Zealand exporters are relatively better off after the latest tariff move from the United States.

NZ Post wrote to exporters on Wednesday morning, explaining how the new 10 percent tariff will apply.

The levy came into effect late on Tuesday evening after the Supreme Court last week blocked many of President Donald Trump’s earlier sweeping import taxes. New Zealand exporters had previously been facing a 15 percent tariff.

The administration is applying the 10 percent levy to all imports, including those coming from New Zealand.

However, Trump – angered by the Supreme Court ruling – has threatened to raise the tariff to 15 percent but has not yet issued an official directive.

NZ Post said the measure was scheduled to last until 24 July unless extended or amended.

“In most cases, a 10 percent import duty will apply unless the item falls within an excluded category…

“Some product categories are excluded from the temporary import duty, including certain pharmaceuticals, electronics, passenger vehicles, aerospace products, and qualifying goods from Canada and Mexico.”

NZ Post said its tools and systems would be updated to reflect the new requirements and people could continue to send items as normal.

Part of doing business with US

Kiwibank chief economist Jarrod Kerr said a 10 percent tariff was annoying and a “good revenue generator” for the US government.

But he said it did not do a lot to divert trade. “Particularly in New Zealand where our currency is a bit weaker than where it was, that kind of helps digest that sort of traffic. From what I’ve heard from many of our exporting clients, particularly those going into the United States, the United States is quite a profitable market for them. They pay good prices. I got the feeling they could wear a lot of this.”

He said tariffs of 10 percent or even 15 percent, as previously expected to apply to many New Zealand exports, would just become part of the cost of doing business. “If it’s a 30 percent tariff and higher he [the US President] was originally throwing around, that means much more discomfort in markets and more diversion of trade elsewhere. You might just give up on the US and start exporting more to Australia or trying to get more into China or somewhere else. Isn’t it great we’ve got a free-trade agreement with India? These sort of things all matter a lot more.”

Trump was causing volatility and uncertainty at a time when businesses wanted less volatility and more certainty. “But I don’t think it’s enough to derail us.”

‘A winner in the short term’

Westpac chief economist Kelly Eckhold said it was an improvement for New Zealand.

“We were on 15 percent and it does seem that the categories of exports that had concessions under the previous regime continue to have them, so beef and horticulture are not subject to that 10 percent tariff so in that sense we’re a winner at least in the short term.”

He said what happened in the medium term would depend on what the US decided to do. “[Trump] has this tool available to him for 150 days and he has indicated an intention to replace the previous tariffs with tariffs under different authorities. Those authorities require him to appeal to national security and also trade and balance of payments imbalance issues to justify them. Most of those things I think are difficult to apply to New Zealand’s exports. I’m hopeful we do have some uncertainty but the range of surprises can be capped.”

He was cautiously optimistic. “The really good thing I think is that the discretionary ability to raise tariffs to really high levels … that’s the power that’s been removed by the Supreme Court and that has been the thing that’s really raised uncertainty and driven behaviours in the last year.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand