New Zealand won’t be caught by Donald Trump’s reciprocal tariffs on April 2, Trade Minister Todd McClay says after talks with senior United States officials.
The US President has asked his economic advisers to list all the tariffs and unfair trade rules that affect American exporters and to match them with equivalent tariffs.
In a TV interview, Treasury Secretary Scott Bessent said the reciprocal tariffs would take into account non-tariff barriers, currency manipulation, unfair subsidies, and labor suppression.
“Each country will receive a number we believe represents their tariff. For some countries it could be quite low, for some countries it could be quite high,” he said.
McClay spoke with US Trade Representative Jamieson Greer last week before flying to India for the Prime Minister’s official visit, and found the discussion to be encouraging.
“I don’t expect we will be caught or captured directly. Our tariff rates are generally lower [for the US] coming into New Zealand than New Zealand is going into the US,” he told Interest.co.nz.
“At the moment there is no indication that we are captured or that they are unhappy with the type of trade that we do”.
Meanwhile, Foreign Minister Winston Peters met with US Secretary of State Marco Rubio on Wednesday and was also reassured by the conversation on trade.
“We came away [from that meeting] much more confident than when we arrived,” he told reporters in Washington DC.
Peters said Rubio understood that New Zealand had “set the standard” for fairness in trade decades ago and other countries were still catching up.
Free the trade
McClay said the US administration itself still seemed to be working through the details of its trade policy, so it was hard to say for certain how it might impact New Zealand.
But he believed officials had been speaking with some countries that have a significant trade surplus with the US, and high tariffs which were prohibitive for exporters.
“We are not one of the countries they are having those conversations with,” he said.
Law firm MinterEllisonRuddWatts said in a note that the Trump administration’s reciprocal tariffs would have little impact if they were based on average bilateral rates.
New Zealand applies an average tariff of 1.5% on US imports, while American tariffs on Kiwi goods average 3.4%. However, nobody is sure how the reciprocal tariffs will be calculated and individual items could see their tariffs increase.
McClay has been in India to restart free trade negotiations. This work began well before Trump took office, but rising levels of trade uncertainty may have sped up the announcement.
“It’s not because of tariffs or uncertainty that this has happened but it probably has made it a little bit easier to get to the point of launch a bit sooner,” he said.
New Zealand’s strategy for dealing with the shifting trade environment is to open up as many markets as possible, so that exporters had a range of options to choose from.
The India–NZ free trade negotiations have been made a top priority for both countries and trade officials have been told to focus on getting a deal done as soon as possible.
4 Comments
“reciprocal tariffs are unlikely to affect NZ exporters.” Therein lies an acknowledgment that tariffs are not always going to be imposed on the consumers of the country of import. In other words if they were to be, why would NZ exporters need to have any concerns at all. The USA tariff announcements are still ongoing and there is a possibility that a tariff could be imposed globally, eg a blanket 25% on all agricultural imports. If an exporter needs the market more than the market need the product then most likely the tariff, while paid by the importer, will be compensated for by a relative deduction in the CIF price on the invoice. That way it is win win for the USA. The government collects the tariff and the consumer pays nothing extra.
US is 8% - $4.5b thereabouts of exports. Could that be redirected to somewhere like...India?
I'm sure Trade Minister Todd McClay is aware that there are already tariffs in place for Aluminium and steel product from NZ (and other countries). Courtesy DT in the first round and not lifted by Biden for New Zealand. According to chatgpt they have not been lifted for New Zealand.
This article assumes that Trump is a logical, reliable and fair person. That's hell of an assumption!
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