Photo: AFP / Brendan Smialowski
Trade Minister Todd McClay says his United States counterparts have clarified some details around how the new tariffs regime will work.
He said he had asked his officials to engage quickly with the US administration and they had been in contact overnight (New Zealand time), mainly to clarify two things: that New Zealand does not have a 20 percent tariff against US exports, and to clarify how the 10 percent base tariff rate would be applied.
He told RNZ the flat 10 percent duty being applied to US imports would apply on top of any existing tariffs, but there were some exceptions for goods already facing high fees.
"So, the 10 percent goes on everything New Zealand exports, except for... steel and aluminium, there won't be any additional and that's because they already sit at 25 percent, which was a new tariff they put in place; and no tariff upon wood products at the moment because of a separate investigation they have underway."
He said that investigation was due back by November, and there was still "a lot more work to do there to make the case that there shouldn't be any additional cost upon New Zealand wood being sent to the US".
He had not heard of any other exemptions, however, meaning other goods being exported to the United States would face a 10 percent duty on top of any tariffs already being paid.
US President Donald Trump had pitched the tariffs as reciprocal - matching other countries' tariffs on US goods - but instead of calculating other countries' average tariffs and what has been described as non-tariff trade barriers, his administration simply divided the country's trade deficit by its exports to the US.
Todd McClay. Photo: RNZ / REECE BAKER
McClay suggested the United States' calculation of other countries' tariffs and trade barriers was not so much a misunderstanding as a mislabelling, saying the US seemed to be talking about a trade imbalance.
"So, they've said that's a tariff, that's not correct. The tariff rate is 1.9 percent, our tariff rates are lower... for US exporters into New Zealand than New Zealand's facing the other direction.
"I think it's sending a signal they want a balance in trade. They want countries of the world to buy more from the US. I would make the case... that actually our trade is already very well-balanced.
"We are selling them more than we're buying at the moment, it's about a billion dollars difference a year. That fluctuates. It's not that many years ago that we were buying a lot more from than we were selling them, and that will continue.
"So, I'll be making the case to my counterpart, both in writing and when I hope to see him early sometime next month, that actually the relationship is well balanced, it's complementary, New Zealand respects the rules, and we don't think that the 10 percent should be there - albeit that the US has signalled this is a new tariff regime they have where all countries will face at least 10 percent."
He said, however, that regardless of the calculation, the result was that New Zealand was facing a 10 percent tariff - the same as Australia and the United Kingdom - and as low as any other country. This also meant some potential advantages for New Zealand exports, both into the United States, and into other markets.
"Some of our exporters now that had a chance to work through the detail that's available, are telling me they think they'll have opportunities to perhaps increase their sales against other countries in the US market.
"Anecdotally, some of our exporters are telling me that since China put a tariff on US beef and other restrictions in place - I understand there is not US beef going into China at this time - they've been receiving calls from their customers with increased interest in getting product out of New Zealand [and into China].
"Consumers in China, as other parts of the world, still need steaks in the restaurants and on the supermarket shelves and so they will be looking to other areas of the world to buy these products. We have trading arrangements with 100 countries in the world and so, you know, our exporters are nimble, I back them to find those opportunities and where there is demand."
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