PM Christopher Luxon says ‘tariffs not the way to go’ as US President Donald Trump slaps 10% tariff on NZ
Prime Minister Christopher Luxon says “tariffs are not the way to go” and expects US consumers will face higher prices for New Zealand goods in his reaction to US President Donald Trump’s global tariff application.
While he was not surprised by today’s announcement, Luxon said New Zealand didn’t support the idea of applying tariffs and was concerned about the “tit-for-tat” nature of Trump’s policy.
Many exporters still see long-term growth in the US, Luxon said, and he believed New Zealand was “well-positioned” to look at other opportunities globally, such as India.
Asked if this was the act of a friend, Luxon repeated it was not a surprise. He said New Zealand would not retaliate as he believed the country benefited from being a low-tariff country.
If we were to hike tariffs ourselves, that would lead to prices increasing here, he added.
He also made the point that the “sad reality” was that the cost of goods would increase for US consumers because of the tariffs.
Story continues below live blog
What do tariffs mean for your KiwiSaver?
Scott Palmer
On the NZ Herald's personal finance podcast, The Prosperity Project, Nadine Higgins talked with Mark Riggall, a portfolio manager for Milford Asset Management, on what all these tariffs mean for your KiwiSaver and investments.
Scott Palmer
Luxon's standup is now over
Human Rights Commissioner apology
Scott Palmer
Luxon says the Human Rights Commissioner mischaracterised a SIS report and was "wrong".
He has apologised and the Justice Minister is speaking to him about that.
No comment around Treaty Principles Bill
Scott Palmer
Luxon won't comment on the Justice Select Committee's processes around the Treaty Principles Bill.
He won't respond to allegations from Labour that the Bill is being rushed through Select Committee.
He believes Labour is sending out "mixed messages" after previously wanting to Kill the Bill.
Questions over how 20% figure
Scott Palmer
On the 20% figure, "we don't understand how that number has been calculated" and there will be discussions with the Trump Administration, Luxon says.
But the main focus is on the 10% tariff rate.
He says there is a "sad reality" where prices increase for US consumers.
Luxon warns tariffs will create huge uncertainty
Scott Palmer
Asked if this was the act of a friend, Luxon repeats it is not a surprise.
Our issue is we don't believe tariffs are good for the global economy, the Prime Minister says.
It creates huge uncertainty, high inflation, currency impacts and affects growth globally.
It is "not ideal", but we are on a level playing field with other countries. The United States is sovereign and it can do as it wishes, Luxon says.
NZ won't retaliate to US tariffs
Scott Palmer
New Zealand won't be retaliating as we have benefited from being a low-tariff country.
We don't want to raise prices here in New Zealand, which is what would happen if we were to hike tariffs ourselves, Luxon says.
Govt looking for new export opportunities
Scott Palmer
It is not a surprise as Donald Trump campaigned on a "tariff agenda", but New Zealand doesn't believe tariffs are the right direction for the world, Luxon says.
New Zealand is relatively well-positioned and the Government has been working hard to look for new opportunities for exporters, like India.
US consumer will feel the brunt, Luxon warns
Scott Palmer
It means exporters will be hit with a 10% tariff.
Other countries will have higher tariffs. That means we may have a better relative position going into the US, Luxon says.
He says the US consumer will feel the brunt and that is why tariffs are not the way to go.
Luxon says trade war not good for global economy
Scott Palmer
A trade war is not good for global economics, Luxon says.
New Zealand has done well without tariffs, as has the rest of the world, he says.
Tariffs not the way forward - Luxon
Scott Palmer
Prime Minister Christopher Luxon says while we don't believe tariffs are the way forward for the world, the reality is New Zealand has got the baseline tariff rate and others have got more.
We need to find the right consumers and markets.
Many exporters still see long-term growth in the US.
Luxon to speak
Scott Palmer
Prime Minister Christopher Luxon is set to react to US President Donald Trump slapping 10% tariffs on NZ goods.
He will speak at a press conference at 3.30pm.
Trump’s tariffs: The key details
Cameron Smith
- Trump pledged reciprocal tariffs at “approximately half of what they are and have been charging us”.
- A 10% “baseline tariff” for all countries that impose tariffs on US goods. This includes New Zealand.
- Other countries were hit harder by the reciprocal tariffs, including China (34%); the European Union (20%); India (26%); and Japan (24%).
- Major US partners Canada and Mexico are not subject to the new tariffs due to separate 25% tariffs imposed on them last month.
- A 25% tariff has been imposed on all foreign-made cars.
- A 25% levy on goods from countries importing Venezuelan oil.
Dairy giant Fonterra reacts to tariff news
Cameron Smith
Simon Tucker, Fonterra's group director of global external affairs, said the co-op was working to fully understand and assess the exact implications of the tariffs for its business.
"Obviously, we always want to avoid any increases in tariffs or other trade barriers across all the markets we operate in. Tariffs and other trade barriers create additional costs across the supply chain, which are ultimately borne by local consumers.
"The US will continue to be an important market for New Zealand dairy and Fonterra.
"Fonterra has a long history of navigating difficult and protected trade environments, and we will continue to do so during the period ahead."
Which countries are taking NZ's exports?
Cameron Smith
Sea of red: $46b wiped from Aussie sharemarket
Cameron Smith
The Australian sharemarket had A$42.8b ($46.8b) wiped from its market capitalisation in the first hour of trading, the Australian Financial Review reported.
The S&P/ASX 200 dropped 142.6 points, or 1.8%, to 7791 by 11.04am. The index was a sea of red.
What you need to know about tariffs
Cameron Smith
NZ to wear some impact from the tariffs - ASB
Cameron Smith
ASB economists said New Zealand will inevitably wear some impact from the tariffs.
“The moderate tariff on New Zealand will limit the direct impact on [us] (we have a slightly higher proportionate GDP exposure to the US than China and Australia).
“But there are inevitably the indirect effects from countries with large outright trade exposures.”
ASB economists said there could be short-term inflation lifts through any imported goods affected by higher production costs.
“But diversion of exports produced by affected countries from the US market to our own could dampen inflation.”
Kiwibank economist: NZ getting off relatively lightly
Cameron Smith
“It could have been worse… but it’s still bad enough," Kiwibank chief economist Jarrod Kerr said.
"NZ may be getting off relatively lightly, with the blanket 10% tariff. But a heavier hand was dealt on China and other Southeast Asian countries.
“It has left us contemplating how much all these tariffs will weigh on global growth. And it’s still hard to quantify, but negative nonetheless.”
NZ dollar drops
Cameron Smith
By late morning the New Zealand dollar had dropped by about half a US cent to US56.90c on the news. The currencies of those countries more severely affected, such as China's yuan and Thailand's baht, were sharply down.
Trade Minister Todd McClay says Government ‘relieved’
Cameron Smith
Trade Minister Todd McClay said that despite tariffs being put on New Zealand exports, the low tariff applied to New Zealand goods compared to other countries suggests the Americans view trade as relatively balanced.
“We are no worse off than anybody else, in some cases other countries face higher tariff rates,” McClay said.
He said the Government felt “relieved” by the tariffs, but tariffs were still bad for trade.
McClay said New Zealand would not be looking to apply retaliatory tariffs.
“That would put up prices on consumers and that would be inflationary,” McClay said.
Cameron Smith
NZ meat industry representatives react
Cameron Smith
“Our global markets are inter-connected and we need to take the time to fully assess the implications of any disruption to trade flows,” says Sirma Karapeeva, chief executive of the Meat Industry Association (MIA).
“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.
“New Zealand red meat exporters have undertaken significant planning to mitigate potential disruptions, maintain market positions, and navigate shifts in global trade patterns.”
Alan Thomson, chief executive of Beef + Lamb New Zealand (B+LNZ), said it is unfortunate the US is imposing tariffs on New Zealand exports.
“It is too early to tell what the ultimate impact of this will be on farm-gate prices. What is positive is that we have strong demand globally at present for red meat."
Chris Hipkins responds to tariff news
Cameron Smith
“It’s not going to be great for New Zealand overall,” Labour leader Chris Hipkins said.
“We can hand on heart say that these [tariffs] aren’t justified as in a retaliatory sense.”
Cameron Smith
Former Trade Minister calls tariffs ‘disappointing’
Cameron Smith
Labour’s trade spokesman and former Trade Minister Damien O’Connor said the way tariffs would impact the US market could have a bigger impact on New Zealand’s exporters than the 10% tariff they themselves will be paying.
With tariffs applying across the board to exports into the US, costs for goods in the US will rise, dampening demand for goods, O’Connor warned.
“The effect on our competitors is just as crucial as the impact on our exporters.”
He said the American figure of New Zealand charging 20% tariffs appears to include GST.
“It's hard to understand how the US has calculated that [20%]. We have a very low tariff regime for US exports. It's disappointing that we weren't able to convince the US of a truly reciprocal trade arrangement,” he said.
Aussie PM: 'Not the act of a friend'
Cameron Smith
Australian Prime Minister Anthony Albanese said Trump's tariffs were "totally unwarranted".
"The administration's tariffs have no basis in logic and they go against the basis of our two nation's partnership.
"This is not the act of a friend."
'10% will make a difference' - David Seymour
Cameron Smith
Act leader David Seymour said the tariff news was concerning.
“…the margins are slim in parts of that market, through competition, and 10% will make a difference.”
“We’re looking very carefully at the development.”
He said the Government won’t be rushing or antagonised and “will come up with a considered respectful response that continues a strong relationship with the United States as we work through these issues.”
NZ sharemarket falls sharply
Cameron Smith
The New Zealand sharemarket fell sharply in the opening minutes of trade on the back of Trump's tariff announcements.
The benchmark S&P/NZX50 Index dropped 1.1% to 12,187, mostly driven by a 6% fall in Fisher and Paykel Healthcare to $33.01.
F&P Healthcare - the market's biggest stock - has substantial manufacturing assets in Mexico, upon which the US has placed a 25% tariff.
Cameron Smith
US stocks fall in after hours trading
Cameron Smith
US stocks dropped 2% in after hours trading, according to CNBC.
Stocks had been positive prior to Trump's announcement.
Cameron Smith
So far, the tariff announcements have had little impact on the New Zealand dollar, which is trading at around US57.25c.
10% tariff announced for the UK
Cameron Smith
The US will impose a 10% tariff on the UK, he said.
“For decades our country has been looted, pillaged and raped,” said Trump to an audience that included cabinet members and autoworkers.
“It’s not going to happen any more.”
“We will calculate the combined rate of all their tariffs… and because we are being very kind … we will charge them roughly half of what they are charging us.”
Trump hits China with 34% tariff
Cameron Smith
Trump says he will put a 34% tariff on China after claiming that it put a 67% tariff on America.
“We’re going to be charging a discounted reciprocal tariff of 34%,” Trump said.
Trump targets Aussie beef
Cameron Smith
Trump mentioned Australian beef during his speech, saying tariffs will be imposed on imports starting tonight.
He said the US imported about US$3 billion (NZ$5.2 billion) of Australian beef – but Australia “won’t take any of our beef”.
“They’re wonderful people and wonderful everything, but they ban American beef."
Full list of reciprocal tariffs on countries
Cameron Smith
Reciprocal tariffs of 10% on New Zealand goods
Cameron Smith
Cameron Smith
Trump will charge other countries a reciprocal tariff of half.
“We will charge them approximately half of what they are and have been charging us," he said.
“So, the tariffs will be not be full reciprocal."
"They're ripping us off," Trump said of other countries imposing tariffs on America.
Cameron Smith
Trump says he is putting America first.
"The American people are paying a very big price," he said.
"We take care of countries all over the world."
"We have to take care of our people."
25% tariffs on automobiles
Cameron Smith
Trump says, from midnight (US time), America will impose a 25% tariff on all foreign-made automobiles.
Cameron Smith
Trump says he will proceed with reciprocal tariffs against countries worldwide.
"They do it to us, we do it to them."
US President Donald Trump has taken the stage
Cameron Smith
The President says he is going to make America wealthy again.
Cameron Smith
Experts warn of economic damage
Cameron Smith
Cameron Smith
ASB economists said global markets have taken a cautiously optimistic view overnight.
Wall Street stocks rose ahead of Trump's fresh wave of tariffs, while European stocks ended the day lower.
The Dow and S&P 500 were up 0.4% and the Nasdaq rose 0.5%.
Trump's tariffs: What’s been done and what is to come?
Cameron Smith
Cameron Smith
Welcome to the Herald's live blog of US President Donald Trump's trade policy and tariffs announcement.
An announcement is expected at 9am New Zealand time.
Story continues
US President Donald Trump on Thursday morning NZT announced his administration would slap tariffs on goods being exported from countries around the globe. The tariffs being handed out by the US are being described as “reciprocal”. The US says they are at least half of the tariffs being applied by those countries on the US.
New Zealand has been given a 10% tariff; the minimum being applied on all countries. However, the US has also claimed New Zealand is currently charging it 20%.
It is unclear what makes up that 20%. Trade Minister Todd McClay this morning said he had asked New Zealand officials to clarify it with the US.
He said that the most-favoured nation World Trade Organisation average tariffs, of the kind US exporters would face entering New Zealand, would be closer to 1.9%.
McClay said that despite the tariffs being applied, New Zealand was “no worse off than anybody else”.
“Although tariffs are not good for trade, our exporters are telling me they still see opportunity in the US market.”
Former Trade Minister Damien O’Connor, Labour’s trade spokesman, said the way tariffs would affect the US market could have a bigger impact on New Zealand’s exporters than the 10% tariff they themselves will be paying.
With tariffs applying across the board to exports into the US, costs for goods in the US will rise, dampening demand for goods, O’Connor warned.
O’Connor said the Government “needs to go through carefully with the sectors and see what the implications may be”.
The New Zealand sharemarket fell sharply in the opening minutes of trade after Trump’s tariff announcements.
By late morning the New Zealand dollar had dropped by about half a US cent to US56.90c on the news.