The United States economy is set to see some "disturbance" from tariffs, President Donald Trump says, but he touts levies as a tool that would help domestic industries boom.
The United States President has said he would impose 25% tariffs on global car imports, with no countries exempt. The US will start collecting the cartariffs next Thursday, April 3.
And a day before that, Trump is set to announce wider trade actions described as reciprocal tariffs.
New Zealand is not a car manufacturer or major exporter but multiple observers are closely watching how broader global trade tensions could play out.
The Motor Trade Association (MTA) has told its members Trump’s tariffs could increase costs for imported parts and vehicles.
“However, New Zealand’s strong trade relationships and diversified markets should help cushion these effects,” the MTA added.
Aimee Wiley, Motor Industry Association (MIA) chief executive, said the sector was a big free market advocate but not overly worried about the Trump tariffs’ impact on New Zealand.
“A very small number of vehicles come into New Zealand every year from the US. We’re talking 3%.”
Wiley said if the US proceeded with the tariffs, Chinese carmakers might look to sell more vehicles in other markets including New Zealand.
Wiley said Chinese car manufacturers made both left-hand and right-hand drive vehicles already.
More cars from China might soon be driving on Kiwi roads. Photo / Jason Oxenham
BYD and MG were already Chinese-owned carmakers selling in New Zealand.
Wiley said some car parts might get more expensive if highly specialised suppliers overseas were impacted by tariffs.
She told the Herald the MIA would be very displeased if the New Zealand Government imposed tariffs on cars.
New Zealand has not had a locally-designed mass-produced car since the Trekka from 1966 to 1972. And it has not had any local motor assembly since 1998.
“New Zealand is, particularly from an automotive perspective, a technology-taker and a destination market,” Wiley added.
Overall, imports of vehicles, car parts, and accessories fell from $11.3 billion in 2023 to $8.6b last year, according to Stats NZ.
The Trekka was the first and only mass-produced New Zealand-designed vehicle.
Most imported goods incur no tariffs in New Zealand but 5% nominal tariff duties apply to some goods.
Generally those duties are waived for free-trade deals.
According to New Zealand Customs, wild pork, chicken livers, and whole cooked crustaceans incur a 5% nominal tariff. But so does whole milk powder.
In an article last month, commercial law firm Dentons said some textiles, footwear, processed foods, machinery, steel, and plastic items faced tariffs of 5% or 10%.
“Given New Zealand’s reliance on exports, tariffs imposed on New Zealand imported goods and services could significantly impact the country’s economy,” law partners Gerard Dale and Bruce Bernacchi wrote.
“It does appear that next week we will be getting tariffs for everyone,” Westpac senior economist Darren Gibbs told the Herald today.
He said for most people he spoke to the biggest concern was not about immediate impacts on New Zealand exporters.
“It’s more what the whole trade war means for global growth, in particular for growth in our major trading partners such as China.”
He added: “The Chinese will obviously react. Their economy’s put under pressure by the tariffs.”
Gibbs said the Trump administration had made special mention of the so-called “Dirty 15″ countries with whom it had the largest trade deficits.
That group did not include New Zealand.
The US last year had deficits with China, Mexico, and Vietnam in excess of US$100b each, a US$63b deficit with Canada, and deficits of at least US$20b with at least 10 other Asian and European countries, the Wall Street Journal reported.
The world’s biggest credit ratings agency, S&P Global, said indirect exposure to tariff turmoil could threaten a delicate recovery in Australia and New Zealand.
“Adverse outcomes of US tariffs, such as a global slowdown, could deliver substantial indirect hits through the Pacific’s large export sector,” said S&P Global Ratings credit analyst Aldrin Ang.
But S&P Global also said New Zealand and Australia may face less risk from new US tariffs, relative to other Asia-Pacific economies.
