Trump claims NZ has a 20% tariff on US goods. That’s not true, says minister

Thursday, 3 April 2025

US President Donald Trump has unveiled tariffs of between 10% and 49% for almost all countries. But what are they - and how will they affect the world economy?

Everyone at the Beehive was left scratching their heads on Thursday after US President Donald Trump’s tariffs announcement claimed New Zealand imposed significant taxes on American goods.

On his grand “Liberation Day” stage, Trump had a man hold a big cardboard poster that claimed to show the tariffs American exporters currently pay. It also revealed the tariffs Trump will impose.

NZ Trade Minister Todd McClay responds to Trump tariffs on NZ.

For New Zealand, the poster showed a new 10% tariff would come into force. That was Trump’s baseline. As part of his hyper-protectionist trade policies, the American president ordered that every nation would face a tariff of at least 10%.

But beside New Zealand’s 10% tariff order, there was the figure “20%” - indicating the White House believes American exporters are currently facing an, on average, 20% tariff when they sell goods to New Zealand.

A tariff is a tax paid on goods imported into a country. This new imports tax would mean Americans wanting to buy New Zealand’s products, everything from wool to luxury yachts, would need to pay an extra 10% for those goods. That 10% fee would go to the American government.

20% tariff claim is wrong

In the moments after Trump’s grandiose announcement, which was watched in offices throughout the Beehive, nobody at Parliament could work out how the Trump administration had come to that “20%” conclusion.

US President Donald Trump holds a cardboard poster for his “Liberation Day” tariffs announcement.

Trade Minister Todd McClay, speaking to reporters at Parliament, said he had officials trying to “clarify” with American counterparts where that 20% allegation had come from.

“Our tariff rates are not 20%. No. For US exporters, the average is about 1.9%, on the face of it,” he said.

For a while Trump had claimed that even something like GST, which is a tax paid on even locally produced products and services, was a “tariff”. So even if the White House had added that 15% tax on, the total “tariff” for American exporters would be less than 17%.

Trade Minister Todd McClay says the Government is working to find out how the White House came up with its 20% figure.

“We’ll see,” McClay said. “I’ve asked officials to clarify.”

Labour Party trade spokesperson Damien O’Connor said it was hard to know what the Trump administration was thinking.

“It would be a very brave person do some calculations on how the US is working,” he said.

“We have a very low tariff, about 2% on goods from the US, if they are to be reciprocal tariffs - which is what Donald Trump said - we should have been able to better explain the realities of our situation,” he told reporters following Trump’s announcement.

How the Trump administration calculated its ‘tariffs’

The blue column on Trump’s tariffs posters claimed to show “current manipulation and trade barriers”. But in essentially every case, that’s now what it showed.

For New Zealand and most other nations, the supposed tariffs figure showed the US goods’ trade deficit.

The Office of the United States Trade Representative reported that New Zealand purchased $4.5 billion wroth of goods from the US last year. New Zealand sold $5.6 billion worth of goods during the same time.

It appeared that to calculate its 20% “tariff” claim, the US divided the goods defect - $1.1 billion - with the total New Zealand exports.

The US used the same formula to calculate its other current “tariff” totals.

But a goods deficit is not a tariff. And that figure also excludes the trade of services, which the US excels at - with multi-nations service providers based in the US such as Meta, Amazon, American and United airlines, Disney, and others.