US tariffs hit NZ exports, pressure builds on RBNZ to cut rates

The global trade war took another recently, with no last-minute reprieves, extensions, or “chickening out” from the Trump Administration. New Zealand has been dealt a reciprocal tariff of 15%, revised up from 10%.

We have fared better than some countries (Switzerland copped 39%), but there has been a degree of shock from some quarters, including over the treatment we have received from our second-largest trading partner when compared with that meted out to our export competitors such as Australia, which has been let off with a 10% rate.

The suggested reasons have ranged from NZ running a trade surplus with the US (albeit a small one), and our GST rate of 15%. It also has been suggested that our political ties with the US aren’t as strong as some others (the FBI opening an office in Wellington may have been too little too late), while we also have a nuclear-free policy. Ultimately, not having a bilateral free trade agreement (while Australia does) may also be a factor.

The epilogue to the announcement is now likely to see some lobbying by our officials (and those of other countries) to get a better deal. This will, though, as we have seen with other agreed deals, have to include something on the other side, as there are no free lunches in Trump’s trade offensive.