Surprise as United States tariff on NZ exports hiked to 15%

Friday, 1 August 2025

Finance Minister Nicola Willis says it is disappointing the White House has announced New Zealand will face a 15% tariff on exports to the United States.

Addressing reporters at a media conference at Wellington Airport, Willis said the country appeared to be victim of a “very blunt formula which does not take account of the low tariffs we impose on US products”.

The Government would seek a better deal, she said.

The tariff rate is higher than the 10% rate that US President Donald Trump had originally announced would apply in April.

Australia has remained on a 10% tariff, according to a White House statement.

Trade Minister Todd McClay said he had asked officials to lodge a formal request for him for to have a conversation with US trade representative Ambassador Jamieson Greer.

“I've also sent a message to him, requesting that so that we can talk about the difference of their approach or the harm that we think it will do not only to trade, but also to consumers in the US,” he said.

Willis said the advice she had been given from the Treasury was that “while obviously this will have a negative impact on some individual exporters”, it did need to be seen in context of “a much broader export industry with tens of billions of dollars of goods being exported every year”.

“The potential impact to returns at the extreme end is about 0.6%. To put that in context, export returns can typically fluctuate by 8% in a year.

“I'm also advised that, at the margin, it would have a downward impact for inflation and interest rates,” she said.

Labour Party trade spokesperson Damien O’Connor said the Government’s strategy “to keep its head down and try and avoid being caught in a crossfire” had failed.

“This is a major fail when it comes to the coalition Government’s negotiations and trade relationship with the US.”

The increased tariff would be a significant trade barrier for New Zealand exporters, he said.

“It's a shame that the opening of the FBI office didn't allow better communication through to the White House on the realities of our relationship.”

Willis defended the work the Government had done.

New Zealand faced the 15% tariff because it exported more to the US than it imported, she said.

“No amount of talking would have changed that,” she said.

Japan and South Korea had also been hit with 15% tariffs despite “negotiating extensively” with the US, she said.

Willis downplayed the idea of New Zealand retaliating with tariffs of its own, saying it was not clear that would get a better deal for exporters.

Speculation that New Zealand could face a 15% or 20% tariff emerged two weeks ago, but that was based on comments Trump made to US broadcaster NBC that suggested that could be a new baseline for all imports to the US.

McClay appeared hopeful at the time that might be avoided.

A spokesperson for McClay said at the time that he was aware of the reports but had “no clear or direct communication from the US suggesting any change to New Zealand’s current tariff status”.

The Government had made clear its main concern was that New Zealand remained on the lowest tariff tier and confirmation that is not the case is expected to cause alarm.

The Sydney Morning Herald reported Australian officials had confirmed Australia's tariff would remain at 10% — the same as the United Kingdom and a number of other countries including Brazil.

Westpac strategy head Imre Speizer said last month that the tariff rate New Zealand faced relative to other countries was more important than the actual headline rate — given that in practice the US couldn’t suddenly replace all its imports with domestically produced goods.

BusinessNZ advocacy director Catherine Beard said it was “very disappointing” that there were countries with more favourable rates.

“We need to take a bit of time to analyse the impacts on our various exporters,” she said.

The United States is New Zealand’ second-largest export market, after China, though exports have now declined for two straight months amid the uncertainty over tariff rates.

There was no direct explanation given for why the Trump administration chose to level a 15% tariff on New Zealand. The US Embassy in Wellington said it didn’t have any further detail to provide.

A statement from the White House listed a series of developments since Trump first announced details of his tariff regime in April.

On this list was that some trade deals had been struck or were near completion, that some countries offered terms that Trump decided insufficient address the “national emergency” he declared, and some countries “have not negotiated at all with the United States”.

New Zealand did not enter negotiations with the US. Prime Minister Christopher Luxon and Foreign Minister Winston Peters had spoken positively in recent months of New Zealand receiving the best outcome, 10%, in the Trump tariff regime, meaning Kiwi exporters were no worse off.

McClay said it looked like Trump had chosen the 15% tariff based on the US having a trade deficit with New Zealand, meaning New Zealand exports more to the US than it imports.

“It's about half a billion US dollars as a trade deficit, which is not meaningful,” he said. “It's not that long ago where actually the US had a significant trade surplus to us, when we buy air-planes as an example.”

“I know Air New Zealand are going to be looking to do that quite soon. So we have made the case, and we'll make it again, that actually the trade is very well balanced,” he said.

Australia buys more from the US than it sells.

Last year, New Zealand exported $16 billion in goods and services to the US, which amounted to 15% of total exports for the year. It imported $12b in good and services from the US, making for a total two-way trade of $28b, and a trade deficit of $4b for the US.