But from aluminium to Tennessee whisky, how do governments choose what to target?
First, what are tariffs?
Tariffs are taxes or duties levied on goods imported from other countries.
To be clear, companies that import the goods pay the tax to the Government. (Some or all of the cost can be passed on to consumers.) Typically, the tax is a percentage of a product’s value.
The main purpose of a tariff is usually to shift demand away from imported goods and towards domestically produced ones. This can be in response to industry lobbying. For example, the US meat industry has previously called for increased tariffs on New Zealand lamb, in a bid to help struggling local producers.
Tariffs can also be used to coerce other nations to implement certain policies. US technology giants have encouraged the Trump administration to target Australia, over its rules governing social media and streaming services.
Tariffs were once big money-makers for governments in the US, New Zealand, and other countries. But in recent decades they have played much less of a role.
Tariffs to date
Trump has talked about a phased rollout of universal tariffs on all US imports.
He has also talked about reciprocal tariffs, on countries that tax US imports or have non-tariff barriers such as safety standards that exclude US manufacturers.
Key trade partners Mexico and Canada have been targeted, along with China, following warnings about halting the flow of illicit drugs and immigrants into the US.
And the tit-for-tat between the US and the European Union is ongoing.
We will know more after April 2, the day Trump has dubbed “liberation day”, when he will announce reciprocal tariffs on other nations.
He has promised to overhaul the global trading system, matching the levies and other policies countries impose on American exports. He has argued his moves will end years of the US being “ripped off”.
US President Donald Trump plans reciprocal tariffs starting April 2, calling it "liberation day." Photo / Getty Images
Whisky, motorcycles, and jeans: retaliatory tariffs
In general, there are three options for countries on the receiving end of policies like these, said Dr Matthew Castle, an international relations senior lecturer at Victoria University of Wellington - Te Herenga Waka: “You can retaliate, accommodate, or you can figure out a workaround.”
When it comes to retaliation, while the items taxed can seem random - there’s been a lot of talk about whisky, motorcycles, and jeans, for example - in fact, they’re strategically selected.
“Countries are careful with which products they choose to raise retaliatory barriers on.
“They choose those products not to impose economic pain, but the maximum amount of political pain to the recipient country.”
Products with high symbolic value, for example, such as Levi jeans and Harley Davidson motorbikes. Or products from where prominent politicians have their home base.
“What you’re trying to do with retaliatory tariffs is force your partner back to the table. You’re trying to create the biggest political lever with the smallest amount of cost to your own consumers. Because we know imposing tariffs hurts your own people.”
Tariffs can be disruptive in two ways, Castle explained.
First, there is the immediate impact of fewer sales, because products become more expensive in a foreign market.
“But [tariffs are] also disruptive because everybody faces the challenge of figuring out what to do with stuff they’d usually be sending to the US, so they’ll be looking to other markets.”
Plus, trade relationships can’t be “turned on and off”, he said. “It’s not straightforward to suddenly change where you export things.”
This is where New Zealand’s other trade agreements could put the country in an advantageous position: “One way they help us is if our trade agreements make our imports more competitive than imports from elsewhere.”
It’s not always obvious who, at the end of the day, is making money versus who’s paying.
Typically, governments benefit from the tariffs they impose, Castle said. “But from a political economy perspective, the main beneficiaries are import-competing industries. Producers in a country who are less competitive than their overseas counterparts, who would otherwise be competing against them.”
Trump has argued tariffs will protect home-grown manufacturers.
But, “tariffs are going to make everything more expensive for us consumers”, Castle added.
“And because global markets are so integrated - you import materials you transform in some way before exporting them - producers will also be paying more for stuff.”
Professor of economics at Auckland University of Technology Niven Winchester agreed, saying modelling confirmed the “well-known” result that trade wars decrease global economic activity and routinely make all nations worse off.
“The US is playing a dangerous game,” said Winchester, also a senior fellow at independent public policy research institute Motu. “Mexico and Canada will get hit hard, with up to 80% of their exports going to the US.
“But if the US takes on a number of big players, and they retaliate, the US is going to come off second best. If it’s the US against the world, the US will lose.”
Consumers will take the toll in the price increase of goods because of the tariffs. Photo / Getty Images
How does all this affect New Zealand?
As a small nation, New Zealand is heavily trade-dependent.
From the 1840s, the Government relied on border tariffs on imported goods for revenue. Income tax was introduced in 1891, but tariffs remained the biggest source of tax revenue until World War I.
By the 2000s, as the country pursued free trade agreements, most of New Zealand’s tariffs were gone.
In 2024, the US overtook Australia to become the second-largest export destination for New Zealand goods, with a total value of $9 billion, according to Stats NZ. China remained New Zealand’s largest export destination, with a total value of nearly $18b.
Meanwhile, Aotearoa ranked outside the top 50 countries from which the US purchases goods.
A report from leading credit agency S&P Global Ratings suggested New Zealand may escape relatively lightly from any US tariffs imposed on the Asia-Pacific region.
The region would feel a “squeeze” from US tariffs, but would not be “choked” by them.
Winchester told RNZ the situation presented both opportunities and challenges for New Zealand.
The tariffs targeting the likes of Canada, Mexico, and China could put New Zealand producers exporting to the US at a slight advantage. And if the US targets Australia, that could also benefit Aotearoa.
But the levies will decrease incomes in these other countries, meaning they will have less money to spend on New Zealand goods.
And because, as mentioned earlier, global markets are so integrated, the price of US goods (those shipped to New Zealand included) will increase.
“At a national level, the proposed tariffs will have a relatively small impact on New Zealand, but there will be pockets of the economy that experience large impacts,” Winchester said. “For example, a farmer purchasing specialised farm equipment produced in the US may face a substantial price increase.”
Another uncertainty is how the US will adjust for non-tariff trade barriers, too: “In response to quarantine requirements, for example, we could see some really high agricultural tariffs coming in.”
It’s not just the tariffs themselves but the uncertainty around them that’s damaging for the economy, he said. Companies and consumers will be holding off making long-term investments.
“There’s that saying that businesses would rather live with known bad outcomes, than not know what the outcome is going to be.”
