Why the US 20% tariff figure is ‘garbage economics’

Economists have been scrambling to reverse-engineer where the White House’s 20% tariff figure on United States goods imported into New Zealand is generated from.

John Ballingall, an economist and partner at firm Sense Partners, said the likely theory that resulted in a 10% tariff on New Zealand goods going into the US was “garbage economics”.

That figure was not a tariff imposed on US products coming into the country, he explained.

He believed it was derived from the bilateral trade deficit, divided by how much the US imported from New Zealand, which was equal to about 19.6%.

“That’s the measure they are using to indicate we are cheating on the US.

“Now, this is garbage economics.”

A conflicting number bandied around in the past 24 hours was an average tariff of about 1.8% on US goods imported here, he said.

Ballingall had his own measure for determining the correct tariff figure, which he said would still be near 20%, give or take.

Watch John Ballingall discuss an alternative calculation, the impact tariffs could have on the global economy, and if there was any way to wind back the collateral damage to New Zealand, in today’s episode of Markets with Madison above.

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Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.

Madison Malone (nee Reidy) is host and executive producer of the NZ Herald’s investment show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.