What the Trump tariffs mean for New Zealand, explained

Thursday, 3 April 2025

US President Donald Trump has announced sweeping new tariffs in what he's calling “Liberation Day”.

Under the new tariff regime some countries will be hit with levies of up to 49% on exports to the US. New Zealand is facing a 10% tariff.

Here’s what this might mean for Aotearoa.

Where does the US sit on our list of trading partners?

Currently second only to China.

Last year we exported $9 billion worth of goods to the US. That’s about 12% of our total exports by value.

According to Stats NZ, meat exports to the States were worth $2.6 billion and dairy exports came in at $883 million.

So what’s the impact of a 10% tariff likely to be?

Worst case scenario on $9 billion worth of exports, you’d be looking at a tax of $900 million on Kiwi exporters. However…

Yes?

Well, Trump’s plan is still incredibly murky and specifics on potential impacts are very hard to come by, according to Westpac chief economist Kelly Eckhold.

How the tariffs might affect our beef exports is one example.

“Last year we exported about 170,000 metric tonnes of beef to the US, but we have a tariff-free quota of about 213,000 tonnes,” Eckhold said.

“We don’t know if that is going to be changed, but I suspect that might be something Congress has to be involved with.”

Wait, was that not all worked out and documented before the announcement?

If it was, the information isn’t easy to find. Eckhold, who has his finger right on the pulse, said on Thursday morning he hadn’t seen any document spelling out the specifics of the tariffs as they relate to New Zealand.

“The devil will be in the detail, but when we get that detail is still anyone’s guess.”

What do we do if we can’t get our goods into the US?

The US is obviously one of our key markets and a tariff on our exports would mean Kiwi businesses had to either lower their prices to entice importers to keep buying their goods, even with the tariff, or find somewhere else to sell their product.

In the short-term, we might be able to ride that out by getting our key commodities ‒ beef, wine and dairy ‒ into other markets.

But the wider the tariffs reach, the tougher that becomes.

And what if a full-on trade war breaks out?

Then we’re probably going to have a bad time. Infometrics chief forecaster Gareth Kiernan previously warned the outbreak of a trade war would likely lead to slower economic growth and higher inflation in the countries caught up in it.

Businesses and consumers would have to adjust to paying more for less due to the tariffs being introduced, and some of the demand would be redirected to domestically produced goods or, at least in the first instance, products from countries where import tariffs hadn’t been imposed.

But while Kiwi exporters might benefit in the short-term from a switch in US demand away from Canada, Mexico, and China, any positive effects were likely to be outweighed pretty quickly by weaker underlying demand conditions, Kiernan said.

“Slower economic growth for the US, in particular, is problematic given that it has been the main engine of global growth over the last few years.

“It will inhibit global economic growth at a time when there’s already a lack of momentum in Europe and China.”

This is all a bit of a bummer. Was there any good news from Thursday’s announcement?

Not really, no. But things definitely could have been worse for New Zealand.

“At least we aren’t being hit with a tariff that’s higher than anyone else,” Eckhold said.

“There are a lot of countries with much, much higher rates than us. They’ll probably go into negotiation mode to see what they can do to get those down.

“We’ll just have to wait and see how it all plays out.”