Trade Minister Todd McClay insisted he was not blindsided by the US tariff announcement. Photo / Mark Mitchell
By Craig McCulloch of RNZ
Newly released documents lay bare the Government’s alarm and “dismay”, after being blindsided by the United States’ sudden tariff hike on New Zealand exports in August.
That’s despite Trade Minister Todd McClay’s public insistence at the time that the new 15% rate was “not surprising” and did not come as a blindside.
Correspondence – released to RNZ under the Official Information Act – shows a scramble inside the Ministry of Foreign Affairs and Trade (MFAT) and Beehive to respond to the “deeply disappointing development”.
Officials described the rate increase as an “unwelcome surprise”, which was “clearly unfair”. One email noted the Prime Minister’s view that New Zealand had “been led to believe” it would be no worse off than other countries.
The papers confirm New Zealand was given no advance warning before US President Donald Trump signed his executive order about 11am on Friday, August 1 (NZT).
Six minutes later, NZ’s top trade diplomat, Vangelis Vitalis, fired off a Blackberry email marked: “URGENT: US: Tariffs on NZ up to 15 per cent but others will stay on 10 per cent.”
Almost everything in the message is redacted, except his final sentence: “This Note is obviously rushed.”
MFAT deputy secretary Grahame Morton replied within minutes: “This is extremely disappointing news.”
A flurry of messages followed. One email noted the finance minister’s office was “clearly unaware” of the development and needed advice on its possible impact.
“I know full well this is not an easy answer and requires deep analysis, but to the extent possible if the note coming over could talk to that, that would be helpful.”
By 11.52am, a senior public servant reported Prime Minister Christopher Luxon had been briefed while en route to Christchurch for the National Party conference that weekend.
The staffer requested “hard data” on the extra costs of the tariff and New Zealand’s surplus/deficit with the United States for the past 5-10 years.
“We are going to need talking points pronto.”
The message noted Luxon’s suggested public response, including the line: “We’re incredibly disappointed: we see no reason for NZ to have less than baseline and we’d been led to believe we would be.”
An email later that afternoon thanked MFAT officials for their work on “what has been a hectic day”.
MFAT officials moved swiftly to convey the country’s “serious concern and disappointment”, formally calling in the US acting head of mission “to register New Zealand’s dismay”.
New Zealand’s embassy in Washington also went into overdrive, contacting senior figures across the US trade representative’s office, the Departments of Commerce and State and the National Security Council to raise “deep concern”.
“We registered our surprise and extreme disappointment at the decision,” an update noted.
A formal situation report noted the team had “pressed hard” to secure McClay a one-on-one “urgent call” with US counterpart Jamieson Greer – which took place the following morning.
Briefing notes encouraged McClay to register “strong disappointment” at the “unwelcome surprise”, noting the tariff hike did not befit the relationship of a close friend and strategic partner.
The stated goal of the call was to urge the White House to reverse the decision or at least pause its August 7 implementation date.
The document referenced an early proposal for McClay to fly to the US within the week, although he ultimately visited about three weeks later.
However, Vitalis was dispatched almost immediately, leaving New Zealand on August 4 for three days, lobbying officials on the ground.
“I am totally realistic about what [meetings] we can secure given the short notice,” Vitalis wrote in his departing email. “Will take what I can get.”
An MFAT briefing paper noted Foreign Affairs Minister Winston Peters had also spoken with the US acting head of mission in an “unplanned meeting” at Wellington airport.
Despite their advocacy for rolling back the additional tariffs, officials also showed a degree of realism about their chances.
They concluded the “single factor” for the higher rate was that New Zealand exported more to the US than it imported.
“Market access issues or any perceived political divergences were not part of what was a simple surplus/deficit equation.”
Washington-based staff warned that the only way to reduce the tariff would be to address that deficit, perhaps by making major purchases, like aircraft, from US suppliers.
“Any change to the EO [Executive Order] will only be possible with a decision by the President,” one document said.
On the afternoon of the announcement, both McClay and Economic Growth Minister Nicola Willis held a media conference at Wellington airport.
Both ministers conveyed their disappointment, but McClay told reporters the Government had not been blindsided by the news.
“The announcement today is not surprising,” he said. “There have been signals out of the US that there was likely to be a change [and] that New Zealand could be impacted by that.”
In a new statement to RNZ this week, a spokesperson for McClay reiterated that the “additional changes were not surprising”, given Trump’s campaign promises and speculation about tariff changes at the time.
However, McClay’s office said the higher rate was unwelcome and disappointing, particularly given New Zealand’s “extremely small surplus” compared to overall trade.
- RNZ
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