Explained: Five ways Trump’s tariffs could affect you
Wednesday, 12 March 2025
Another day, another twist (or two) in the tale of US President Donald Trump’s tariffs.
Wednesday brought threats, counter-threats and reversals from the US and Canada over planned surcharges on goods flowing between the countries.
All the flipping and flopping left Wall St rattled and fuelled the fire of uncertainty over how Trump's tariffs will affect the North American economies.
But what does all the tariff talk mean for Kiwis, tucked away as we are at the bottom of the world?
Experts say there are several ways the escalating trade war could affect us. Here are five of them.
Jobs
The biggest effects of tariffs for Kiwis would be indirect, Infometrics chief forecaster Gareth Kiernan said, with a global slowdown leading to softer export revenue and weaker economic growth here.
That would stunt the recovery many had been hoping for during 2025, he said.
“For the ordinary person, they could be faced with more prolonged weakness in the labour market.”
According to Stats NZ, the unemployment rate has been rising since late 2022 and is currently 5.1%, or roughly 156,000 people.
Interest rates
Borrowers could benefit from lower long-term interest rates if weaker global growth reduced longer-term rates overseas.
Westpac chief economist Kelly Eckhold said the likes of five-year fixed rates are driven more by offshore tends than by what the Reserve Bank is up to.
“If New Zealand’s economic growth outlook is significantly weakened, then the prospect of RBNZ rate cuts comes into play,” he said.
“Right now, that doesn’t look a strong prospect beyond the next couple of rate cuts the RBNZ have signalled.
“But if the recovery was derailed then its easy to imagine the RBNZ moving rates to levels they see as stimulatory – perhaps towards the 2.5% level.”
Wine
Wine is one of New Zealand’s most valuable exports to the US ‒ data shows we sent $692 million worth of plonk to the States in the 2024 calendar year.
But the industry has been struggling with a post-Covid hangover for the past couple of years, with demand for our adult beverages remaining stubbornly lower than exporters would like.
Kiernan said any tariff-related reduction in demand would be likely to further depress wine prices ‒ good news for Kiwi wine connoisseurs who would see the cost of a tipple fall, but not so great for the economy in key wine producing regions like Marlborough.
Meat
If you like to pair your wine with a nice cut of meat, tariffs could bring more good news at the checkout.
“Meat prices have been strengthening since the end of 2023 after a tough couple of years, but we know there is still pressure on land use for conversion to forestry,” Kiernan said.
“So the return of weaker demand and lower prices [caused by tariffs] could exacerbate that pressure – although low animal numbers in the US combined with Americans’ love of hamburgers might mean that any dip in commodity prices is limited.”
And as with wine, Kiernan warned the the positive impact of lower meat prices on household budgets wouldn’t outweigh the total negative economic effects of a global slowdown.
Travel
Trump talked a big economic game during his re-election campaign and financial markets had pushed the US dollar up on the back of his promises of faster growth.
Unfortunately for the US, those promises haven’t yet come true and the Greenback’s upward trend now seems to be reversing, Kiernan said.
“If that continues, it will improve the affordability of travel to the US. Once again, the only trouble is, if households are under pressure and consumer confidence is low, people will be less likely to travel and therefore unable to take advantage of a more favourable exchange rate.”