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When the Trump administration arbitrarily imposed 15% tariffs on New Zealand exports on August 1, up from a previously announced 10%, no one should have been surprised.

“Reciprocal” tariffs, based on the difference in value between what the United States imports from and exports to other countries, were signalled on April 2, Trump’s “Liberation Day”. New Zealand’s latest tariffs are higher than some, lower than many.

Many governments are now frenetically seeking deals before the tariffs take effect on August 7. New Zealand’s chief trade negotiator Vangelis Vitalis has been dispatched to Washington urgently to plead New Zealand’s case, with Trade Minister Todd McClay also on his way.

Labour’s trade spokesperson has declared the lack of a deal for lower tariffs – along similar lines to ones struck by the European Union and United Kingdom – a “major fail”.

But politicians should be careful what they wish for. Bigger countries have already caved in to Trump’s demands, signing vague deals at a high political and economic price with no real guarantees.

Trump’s economic rationale

Trump has a long expressed love for tariffs as leverage over countries that depend on US markets. Essentially, these are taxes the US charges on imported goods.

It’s not New Zealand exporters who “pay” these taxes, it is US importers, and likely their customers. Similarly, New Zealand exporters don’t “save” millions from tariff cuts.

Trump hopes making imports more expensive will spur domestic production, support local business and create jobs, and the trade imbalance with the US would decline. As a bonus, in June alone, tariffs earned the US$26 billion in revenue, partly compensating for massive tax cuts contained in Trump’s “One Big Beautiful Bill”.

By imposing tariffs unilaterally, Trump breaches the US tariff limits at the World Trade Organization (WTO) and its “most-favoured-nation” rule of treating all countries equally. But the US has already paralysed the WTO’s dispute system. US tariff limits and other trade rules in US free trade agreements are also being ignored.

Domestically, Trump has used the 1977 International Emergency Economic Powers Act to justify bypassing Congress to impose tariffs, on the basis that threats to the US economy constitute a “national emergency”.

This was ruled unlawful by the Court of International Trade and is currently under appeal at the Federal Circuit Court of Appeals. Meanwhile, the tariffs continue. The Trump-friendly Supreme Court would likely endorse them.

US economist Paul Krugman predicts this approach will not be rolled back by future administrations and will become “the new normal”.

Exaggerated claims, few guarantees

The various bilateral “deals” other countries have sought to mitigate Trump’s tariffs look vague and precarious.

The talks and the outcomes remain secret. The vaguely worded “frameworks” – not signed agreements – lack detail and allow Trump to make exaggerated claims at odds with the other country’s statements. Krugman describes these “understandings” as, for the most part, “vaporware”.

Take the European Union’s promise to buy goods worth US$250 billion a year for three years, mainly in fossil fuels such as liquefied natural gas. One commentator described this as as “delusional” and “totally unrealistic”, given EU imports of energy in 2024 were only worth about $65 billion.

The EU also admits it lacks the power to deliver on a promise to invest $600 billion in the US economy, because that would come entirely from private sector investment over which Brussels has no authority.

Nor is there any guarantee Trump will uphold his part of the deal or not demand more. The EU said its landmark regulations on Big Tech survived unscathed; Trump says they remain on the table as further “non-tariff barriers” – trade-speak for anti-business regulations.

To take another example, Japan has said its 15% tariff deal operates from August 1, while the US gives no start date.

The White House said “Japan will invest $550 billion directed by the United States to rebuild and expand core American industries” to be spent at “President Trump’s direction”. The investment will be in a list of industries, including energy, semiconductors, pharmaceuticals, critical minerals and shipbuilding, with the US retaining 90% of the profits.

Bloomberg reports Japan expects only 1–2% of that $550 billion to be actual investment, with the rest made up of loans, and makes no reference to Trump having control.

Trump’s political agenda

Trump’s demands are not just about trade. His strong-arm tactics – which Brazil, China and France have termed economic blackmail – aim to punish political foes and damage competing powers, notably China and Russia.

They are also a form of retaliation over other countries’ foreign policy decisions (such as Canada’s intention to recognise Palestinian statehood), a way to exploit foreign natural resources (such as Pakistan’s oil), and to remove obstacles to corporate donors (such as Canada’s digital services taxes).

What will Trump demand, and get, from New Zealand in these secret negotiations? Governments face high political costs as they navigate their own domestic processes to “secure” such deals.

At the very least, New Zealand’s negotiations need to be transparent and consulted on before commitments are made. More broadly, the country will need to rethink of its trade strategy in the light of the new international realities.

Jane Kelsey does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

– ref. NZ is looking for a deal over Trump’s new tariffs – that could come with a high political price – https://theconversation.com/nz-is-looking-for-a-deal-over-trumps-new-tariffs-that-could-come-with-a-high-political-price-262497

Norfolk Island sees its United States tariff as an acknowledgment of independence from Australia.

Norfolk Island, despite being an Australian territory, has been included on Trump’s tariff list.

The territory has been given a 29 percent tariff, despite Australia getting only 10 percent.

It is home to just over 2000 people, sitting between New Zealand and Australia in the South Pacific

The islands’ Chamber of Commerce said the decision by the US “raises critical questions about Norfolk Island’s international recognition as an independent sovereign nation” and Norfolk Island not being part of Australia.

“The classification of Norfolk Island as distinct from Australia in this tariff decision reinforces what the Norfolk Island community has long asserted: Norfolk Island is not an extension of Australia.”

Norfolk Island previously had a significant level of autonomy from Australia, but was absorbed directly into the country’s local government system in 2015.

Norfolk Islanders angered
The move angered many Norfolk Island people and inspired a number of campaigns, including appeals to the United Nations and the International Court of Justice, by groups wishing to re-establish a measure of their autonomy, or to sue for independence.

The Chamber of Commerce has taken the tariff as a chance to reemphasis the islands’ call for independence, including, “restoration of economic rights” and exclusive access to its exclusive economic zone.

The statement said Norfolk Island is a “sovereign nation [and] must have the ability to engage directly with international trade partners rather than through Australian officials who do not represent Norfolk Island’s interests”.

Australian Prime Minister Anthony Albanese told reporters yesterday: “Norfolk Island has got a 29 percent tariff. I’m not quite sure that Norfolk Island, with respect to it, is a trade competitor with the giant economy of the United States.”

“But that just shows and exemplifies the fact that nowhere on Earth is safe from this.”

The base tariff of 10 percent is also included for Tokelau, a non-self-governing territory of New Zealand, with a population of only about 1500 people living on the atoll islands.

US ‘don’t really understand’, says PANG
Pacific Network on Globalisation (PANG) deputy coordinator Adam Wolfenden said he did not understand why Norfolk Island and Tokelau were added to the tariff list.

“I think this reflects the approach that’s been taken, which seems very rushed and very divorced from a common sense approach,” Wolfenden said.

“The inclusion of these territories, to me, is indicative that they don’t really understand what they’re doing.”

In the Pacific, Fiji is set to be charged the most at 32 percent.

Nauru has been slapped with a 30 percent tariff, Vanuatu 22 percent, and other Pacific nations were given the 10 percent base tariff.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

Although New Zealand and Australia seem to have escaped the worst of Donald Trump’s latest tariffs, some Pacific Islands stand to be hit hard — including a few that aren’t even “countries”.

The US will impose a base tariff of 10 percent on all foreign imports, with rates between 20 and 50 percent for countries judged to have major tariffs on US goods.

In the Pacific, Fiji is set to be charged the most at 32 percent, the US claiming this was a reciprocal tariff for the island nation imposing a 63 percent tariff on it.

Nauru, one of the smallest nations in the world, has been slapped with a 30 percent tariff, the US claimed they are imposing a 59 percent tariff.

Vanuatu will be given a 22 percent tariff.

Norfolk Island, which is an Australian territory, has been given a 29 percent tariff, this is despite Australia getting only 10 percent.

Most other Pacific nations were given the 10 percent base tariff.

This included Tokelau, despite it being a non-self-governing territory of New Zealand, with a population of only about 1500 people living on the atoll islands.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz