Finance Minister Nicola Willis and Trade Minister Todd McClay say the Government is disappointed with the Trump administration’s decision to hike tariffs on New Zealand.
They said New Zealand officials in Washington were making efforts to lower the tariff rate, and McClay said he had requested a phone call with top American trade official, US Trade Representative Jamieson Greer, to plead New Zealand’s case.
In April, US President Donald Trump announced proposed tariffs on America’s trading partners, including a 10% tariff on New Zealand.
That base tariff has been increased to 15%. Other countries, such as Australia and Britain, have secured tariffs of 10%.
“This is a disappointing development,” Willis said. She said a “blunt formula” was applied by the Trump administration to calculate tariff rates, with countries that have a trade surplus with the US, such as New Zealand, hit with higher tariffs than countries with a trade deficit, like Australia.
Willis said New Zealand has far lower effective tariffs on the US than it has on New Zealand. She said the Government will continue to make its case to American officials about this.
“We will be talking to our friends in the United States about that,” she said.
Willis said the tariffs were bad news but needed to be put into perspective. While the US was a large trading partner, it represents only a fraction of New Zealand’s overall trade.
McClay said New Zealand was not blindsided by the change, with a disruptive trade policy hinted at by the Trump administration for weeks.
He said the Government will try to push back on the higher rate.
McClay said the New Zealand Embassy in Washington was given a heads-up about the tariff announcement.
He defended his decision not to explicitly enter negotiations with the US to lower the proposed tariff after it was announced in April. McClay said he engaged with his US counterpart on a trip to South Korea, where he was told of the limited US “bandwidth” to conduct negotiations with several countries.
McClay said New Zealand may soon have a trade deficit with the US and he will make this case to the Trump administration. This is because there are some substantial purchases from the US planned, including new aircraft purchased by the Government and Air New Zealand, which could come from American aerospace firm Boeing.
Labour pointed the finger at the coalition, with trade spokesman Damien O’Connor saying the episode was “a major fail for the Government and for our relationship with the US”.
“Christopher Luxon has failed to secure a low tariff rate for our exports, while others around the world, such as the EU and UK, have managed to make a deal,” he said.
“Businesses will have to decide whether to pass the costs on to American customers, or weather those themselves. They may have to explore new markets. None of these options are good for business confidence here at home.”
Deputy Prime Minister and Act leader David Seymour said the tariffs were “a choice” for the US Government.
“Our choice is to continue expanding to new markets with new trade deals,” he said.
Seymour said New Zealand believes in free trade and would continue to advocate for low tariffs around the world.
“We can’t control other countries’ policy at the end of the day. We can seek new markets and new trade deals,” he said.
Seymour would not say whether he believed the tariffs would be inflationary.
“There is so much going on in the world economy. One person’s reckons are probably not worth the paper they’re written on. There are things we can change, there are things we can’t change.
“We can’t change other countries’ political choices, that’s their right to make, what we can change is that this is a place that’s good to build a business, things that people will beat a path to our door for, rather than us begging them to open theirs,” he said.
Trade expert Stephen Jacobi said the tariff was unjustified at 10% “and it’s now even more unjustified”.
“We impose very few tariffs on the United States,” he said.
“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’s statement from 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.