NZ could face 12.5% tariff in US crackdown on forced labour imports

New Zealand could soon face a new 12.5 percent tariff from the United States, as the Trump administration cracks down on 60 countries it says aren’t doing enough to prevent the importation of goods made by forced labour.

The United States Trade Representative (USTR) says 54 economies - including New Zealand - “have failed to impose and effectively enforce a prohibition” on goods produced with forced labour, which it says “is unreasonable and burdens or restricts U.S. commerce”.

It’s proposing an additional 12.5 percent duty on this group of countries, which also includes Australia, the United Kingdom, India, Russia, China and Singapore.

Washington said a further six countries that have prohibitions on such imports are failing to “effectively enforce” them, and could be subject to an extra 10 percent tariff.

It said failing to restrict goods made by forced labour “undermines the universal aim of eliminating forced labor” and companies that imported such goods were unfairly advantaged by lower costs.

It also argued countries that didn’t crack down on the practice restricted US commerce “by displacing foreign goods produced without forced labor or forced labor inputs into the United States and other markets”.

Hearings about the proposed tariffs would be held on 7 July 2026 (US), USTR said. It did not specify what kind of goods might be being imported from New Zealand or other countries that have been made using forced labour.

Speaking to Morning Report, Trade Minister Todd McClay said he wasn’t surprised by the announcement.

But it was harmful to trade and could put costs up for US consumers.

McClay said this tariff would replace the 10 percent tariff already in place - and what did surprise him was that Trump hadn’t made it 15 percent.

McClay told Morning Report New Zealand was one of about 60 countries named and there was some suggestion “we are somehow part of forced labour”.

“I reject that very strongly.”

He said overall, exporters would find it difficult to factor in the tariffs and the “changing nature of what the tariff regime or policy might be in the future”.

But this year, McClay said New Zealand had sold about four percent more by value to the US than last year when there was no tariff.

That meant US consumers still wanted what New Zealand produced and “are happy to pay more for it”.

New Zealand International Business Forum executive director Felicity Roxburgh told Morning Report it was just another way to get a global tariff in place.

Like McClay, she “rejected entirely” that New Zealand had forced labour.

What the increased tariff did was create cost and uncertainty for exporters in the US market.

Roxburgh said some had reluctantly priced the current tariff into their pricing while some were passing the extra cost on to the importer.

Ultimately, she said, it was the American consumer that was paying more for “our high quality, premium products”.

As she understood, beef and kiwifruit remained exempt from the tariff. Wood and timber - which was part of a separate tariff - was also exempt, she said.

More tariffs possible

Currently, most New Zealand exports to the US face a blanket global tariff rate of 10 percent, which was imposed after an earlier 15 percent tariff on New Zealand exports was deemed illegal by the US Supreme Court.

Last month Trade Minister Todd McClay said he was expecting the US government to announce a trade investigation into New Zealand and Australian lamb imports.

US trade officials were thought to be launching investigations into so-called unfair trade practices, as a way to reintroduce tariffs deemed illegal by the Supreme Court.

“We know they are doing investigations at the moment, so-called investigations, they are looking for other ways to put that tariff wall back up,” McClay said.

McClay said an investigation into lamb was likely and it was possible that if the president needed to shore up votes in some states, he could hit New Zealand and Australia with tariffs.

He said that his officials were talking to their US counterparts and reminding them that New Zealand was providing good product, was not flooding the market and was helping US farmers grow the market for lamb.

The Ministry of Foreign Affairs and Trade declined a request for comment and directed questions to the minister’s office.

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