Kiwi economist warns about pushing back on US tariffs hike, ‘we’ve got to be cautious’
Saturday, 2 August 2025
An economist is urging caution after New Zealand was included in a large list of countries that will be subject to an additional 15% tariff for goods imported into the US.
US President Donald Trump on Friday signed an executive order for new tariff rates on a wide swathe of US trading partners that had not yet reached a trade deal with his administration. The new rates were due to go into effect next week.
The new tariff rate for New Zealand goods was 15%, and was an increase from the “baseline” 10% that Trump announced during his “Liberation Day” event on April 2.
Australia dodged the hike, with its rate staying at the 10% level.
Trade Minister Todd McClay said this country would be engaging quickly with US officials to seek changes around the new tariffs put on New Zealand products.
Many businesses had been saying they had been able to absorb a 10% tariff, he said, but at 15% “that becomes much harder”.
Finance Minister Nicola Willis said “we will be talking to our friends in the United States” about the higher tariff rate, but brushed off the idea of implementing reciprocal tariffs on US goods.
Infometrics principal economist Brad Olsen said there was clearly concern from exporters about the higher tariff rate. But he was wary of trying to negotiate a lower US tariff rate.
“I guess there are two options. We sort of either stick to our guns at the moment, which is to stay under the radar and just keep moving forward,” Olsen said, “or, we could make a bit more noise. We could try and negotiate.”
But that negotiation could be fraught, Olsen said. “I think for New Zealand we’ve got to be cautious about how much might we give up to get a very, very small change back,” he said.
It looked as though the 15% tariff rate was now something of a baseline. “So for New Zealand I don’t feel like we’ve been singled out at all in this process,” Olsen said.
He did point out it was a challenge for this country that Australia had been able to achieve the lower 10% rate.
Beef + Lamb New Zealand (B+LNZ) chair Kate Acland said the organisation was “deeply disappointed” by the US tariff decision.
It placed New Zealand farmers and exporters at a clear competitive disadvantage in one of our most valuable markets, Acland said.
“There is strong demand for New Zealand red meat, which has been reflected in rising prices. These tariffs are getting in the way of fair returns for our farmers.
“The increase means New Zealand faces higher additional tariffs than many of our competitors in the US market, including Australia. Only Brazil and Nicaragua now face higher additional higher levels.
“This undermines the level playing field and risks diverting trade away from New Zealand.”
B+LNZ urged the Government to engage with the Trump administration to seek a resolution that restored fair access for New Zealand red meat exports.
Fonterra group director global external affairs Simon Tucker said the tariff hike was “disappointing news”. Fonterra would continue to work through the implications for its business, he said.
“However, global demand for dairy remains strong and Fonterra’s size, scale, and broad product portfolio, and market mix, means we are well positioned to navigate changes in market dynamics,” Tucker said.
The US was New Zealand’s second biggest export market in the year to June, buying $9.35 billion worth of products from this country, Stats NZ said. While annual exports to the US were up 6.3% for the year, they were down 8.8% in June from the same month in 2024.
Meat was the biggest seller to the US in 2024, at $2.6b. That was up 17% on 2023. Dairy was next, with the US buying $883m worth of New Zealand milk powder, butter and cheese in 2024. Wine was third at $702m.