Donald Trump and the US government has imposed 15% tariffs on New Zealand goods. Photos / NZME / Getty Images
The United States has imposed a 15% tariff on New Zealand goods, up from a previously advised 10%.
US President Donald Trump announced the tariffs during his “Liberation Day” speech in April, saying he would impose sweeping tariffs on more than 125 countries.
He has since reached 11 deals and agreed to pause tariff increases for Mexico, before his deadline of 4pm today (New Zealand time).
The US was the second-largest export destination for New Zealand goods last year, with a total value of $9 billion, according to Stats NZ.
The US overtook Australia in that year but remained behind China.
America is a key export destination for respiratory products maker Fisher & Paykel Healthcare, which has extensive manufacturing assets in New Zealand and Mexico.
By late-afternoon, shares in F&P Healthcare - the sharemarket’s biggest stock with a 16% weighting on the S&P/NZX50 index - were down by 74c or 2% at $36.06.
The index itself was down 57 points or 0.45% at 12,775.
The US was New Zealand’s largest market for red meat in the year to June, and industry representatives said the increased tariff would put farmers and exporters at a clear competitive disadvantage.
Minister of Trade Todd McClay told RNZ the new tariff appeared to be based on countries with a trade surplus.
“In New Zealand’s case, that’s about half a billion US dollars ... it’s really not significant or meaningful.”
McClay said New Zealand would be making the case about why it shouldn’t have happened and talking with US officials to seek changes.
McClay told RNZ the 15% tariff rate would be meaningful. At 10%, exporters could pass that on to US consumers.
“But at 15%, that’s going to change the equation,” the trade minister added.
“We’re getting some pretty urgent advice now that we have detail on what’s been announced.
“It’s not good for New Zealand, but it’s also not good for the world.”
McClay said it would be inflationary for US consumers and make it harder for traders all around the world.
Trade expert Stephen Jacobi said the tariff was unjustified at 10%.
“And it’s now even more unjustified,” he said.
“We impose very few tariffs on the United States.
“They have no major trade issues with us.”
He said the impact of the revised tariff regime on New Zealand exports would depend on the individual sector.
“I think it’s going to depend, of course, but there may be some water to flow under the bridge on this.”
Today the White House said the Australian tariff would stay at 10%.
“Britain obviously is at 10%, but we don’t really compete directly with them,” Jacobi said.
“The EU is at 15%, so that’s the same rate applying to our wine exports.
“15% might not sound like a lot more than 10%, but it is now a very substantial tariff.”
Westpac senior economist Darren Gibbs said the 15% tariff would be disappointing for many New Zealanders, especially exporters.
But he said it aligned with what Trump had been implying for the past fortnight.
“It’s clearly not helpful.”
He said the salient feature for New Zealand was the benefit Australia had with only 10% tariffs.
That meant Australian exporters could get a competitive advantage over New Zealanders.
“We both sell beef into the US ... and lamb as well.”
The wine industry was also likely to keenly feel effects of the tariffs, Gibbs said - something backed by the New Zealand Winegrowers industry body.
“The 15% tariff on New Zealand wine exported to the United States is very concerning and will have a significant impact on the entire New Zealand wine industry,” general manager advocacy Sarah Wilson warned.
“The United States is our largest export market, and this announcement represents a substantial increase to the tariff rates that were in effect at the start of this year.”
Wilson said the announcement would see the tariff on a typical bottle of NZ wine increase from under 10c per bottle to around $1.10 per bottle.
“With New Zealand wine exports to the USA each year of around NZ$750m, this 15% rate equates to approximately NZ$112m in additional tariffs annually,” she said.
What the Trump administration referred to as “reciprocal” tariffs were in fact the US President’s assessment of the real value of non-tariff barriers.
Gibbs said Australia and the UK, both facing a 10% baseline, were being rewarded for closer political and military ties with the US.
“Australia and the UK are strategic friends with a big ‘F’.
He added: “We’re a sort of Anzus subsidiary.”
Gibbs said he didn’t expect much reaction from currency markets to the announcement.
Harbour Asset Management portfolio manager Shane Solly said exporters would have to adjust to the new regime.
“The horrible reality is that where tariffs have gone in, US buyers are basically saying you, as a producer, will have to absorb that - you can’t put your prices up,” he said.
Beef + Lamb New Zealand chair Kate Acland said the move placed New Zealand farmers and exporters at a clear competitive disadvantage.
“New Zealand now faces higher additional tariffs than many of our competitors in the US market, including Australia,” Acland said.
“Only Brazil and Nicaragua face higher additional tariff levels now.
“The increase undermines the level playing field and risks diverting trade flows away from New Zealand, despite extremely strong demand for our products,” she said.
Nathan Guy, chair of the Meat Industry Association, said it was a setback for farmers.
“While New Zealand has a robust trade strategy with well-established positive relationships across more than 100 markets, this decision is a setback to our red meat exporters.
“Tariffs distort trade and reduce market efficiency, ultimately forcing exporters and producers to accept lower prices while leaving consumers with fewer choices and higher costs,” Guy said.
“The US is a key importer and exporter of beef, so this is likely to have implications for the global beef market,” he said.
“However, with the US beef herd at historically low levels and record domestic beef consumption, we’re optimistic the demand from the US for beef and lamb will remain, despite the tariff increase.”
Deputy Prime Minister David Seymour said the tariff was a choice for the US Government.
“Our choices are to continue expanding to new markets with new trade deals and make New Zealand a place where businesses can innovate and create goods that everyone wants to buy, regardless of tariffs.”
He said New Zealand had a bipartisan consensus in favour of free trade.
“Successive New Zealand governments have argued for low tariffs right around the world, and I have no doubt that will continue.”
Seymour added: “We can’t control other countries’ policy ... We can seek new markets and new trade deals.”
He said if New Zealand built more innovative products, “people will beat a path to our door rather than us begging them to open theirs”.
Seymour said New Zealand should negotiate new trade agreements, and try to open up new markets such as India.
Trump’s internationally unpopular tariffs are at least having the desired effect on US revenue.
The Financial Times, quoting US Treasury data, reported US revenues from customs duties hit a record high of US$64 billion ($108b) in the second quarter — US$47b more than over the same period last year.
TRUMP TARIFFS
Additional reporting: John Weekes, Adam Pearse