Exporters fear the US will raise tariffs on NZ dairy to almost 30%

Thursday, 3 April 2025

Dairy exporters fear that the 10% “reciprocal” tariff on New Zealand imports to the United States announced on Thursday will take tariffs into the ‘Land of the Free’ to nearly 30%.

That’s despite the effective New Zealand tariff on US dairy imports being zero.

Trade Minister Todd McClay said he was seeking more details about US President Donald Trump’s announcement.

Kimberly Crewther from the Dairy Companies Association of New Zealand said: “We understand that the US will impose an additional 10% tariff on New Zealand dairy products.”

If true it would hurt exports, and take the United States’ effective tariff rate on New Zealand dairy to 29.6%.

“This is obviously very disappointing,” Crewther said.

“The US already maintains far higher trade barriers on imports of dairy products than New Zealand does. For example, in a 2023 report, Sense Partners calculated the average tariff that the US applies on New Zealand dairy products as 19.6%.”

The US has told its citizens that a reciprocal tariff on New Zealand should be 20%, but it has opted instead to be “kind”, and to only impose a 10% additional tariff.

But it appears to include GST in its tariff calculations, despite GST being charged on both imported goods and services (and not only from the US), but from domestic producers as well.

The average tariff on US goods and services is around 1.9%, the New Zealand Government says.

It was not entirely clear what this morning’s announcement meant for tariffs as Trump’s announcement lacked detail, Kiwibank chief economist Jarrod Kerr said.

“We’re still trying to figure out what the tariffs actually are,” he said.

He expected the details to become clear in the coming days. But, he said: “It’s not good for our exporters.”

As well as having a direct impact on exporters, the slow-down in global growth Trump’s tariff moves would create would also damage businesses.

Crewther said: “We will be engaging closely with the New Zealand Government as we assess the impacts on New Zealand dairy exports. How other US trading partners respond will also be relevant to the dairy market impacts. There is still a lot of water to flow under this bridge.”

And, she said: “The New Zealand dairy industry has a long history of navigating international trade disruption and will continue to do so. New Zealand products have a reputation for their quality and are valued by US customers, where they are often an ingredient into further manufacturing that supports US jobs.”

Simon Tucker, group director for global external affairs at Fonterra, said: “We are working to fully understand and assess the exact implications for our business.

“Obviously, we always want to avoid any increases in tariffs or other trade barriers across all the markets we operate in. Tariffs and other trade barriers create additional costs across the supply chain, which are ultimately borne by local consumers.”

But, he said: “The US will continue to be an important market for New Zealand dairy and Fonterra.”

Sirma Karapeeva, chief executive of the Meat Industry Association, said: “The US is a key importer and exporter of beef, therefore the US announcement is likely to impact the global beef market, for instance, exporting countries may re-direct their products to markets where New Zealand also operates.

“Furthermore, with the US beef herd at historically low levels and record domestic beef consumption, we are still expecting high demand from the US for beef, despite the tariff measures.”