Prime Minister Christopher Luxon says New Zealand is "relatively well positioned" to weather Donald Trump's new sweeping global tariffs, because it's been hit with the "baseline tariff" by the US whereas other countries had received "much higher".
Speaking to reporters this afternoon, Luxon said he doesn't believe "tariffs and trade wars" are the way forward for the world, and warned about the impact to the global economy.
He said New Zealand would not respond with reciprocal tariffs, because "we are a low tariff country and have benefited from that".
"What we wouldn't want to do is raise prices here in New Zealand and add to inflation here in New Zealand by doing that, which is exactly what would happen."
Explaining why New Zealand is well-positioned, he also reiterated the "good relationships" the government has with this administration and that New Zealand has "balanced complementary" trade with the Americans.
"We are not contributing to their trade deficits that they're experiencing."
Luxon said the impact is "not so much the impact in our trading relationship with the US, it's more about what this means for global economics and global headwinds".
"For us it's about making sure we find the right consumers and the right customers in large markets like the US."
He said exporters he'd spoken to recently can still see "really good long term growth opportunities," and there's good demand for New Zealand products and services.
"Our exporters are some of the most agile in the world, they're very, very competitive, and we're going to make sure we do everything to support our exporters and advance New Zealand's national interest."
Prime Minister Christopher Luxon speaks to media at Lanocorp following US President Donald Trump's tariff announcement on New Zealand. Photo: RNZ / Nathan Mckinnon
He said Thursday's announcement didn't come as a surprise given the US president campaigned on this policy.
"New Zealand is relatively well positioned" and the government had worked hard over the last year to create "new opportunities everywhere", Luxon said.
But he emphasised tariffs were "not the way to go".
"But let's be clear, tariffs and a trade war - it's not good for global economics.
"There's about $900 million worth of tariff being levelled at New Zealand exporters, and that will be passed onto US consumers sadly."
He said the "bigger worry" would be the global impact and "washup of the tit for tat trade wars that may ensue."
On the 20 percent tariff rate the US said New Zealand imposed on it, Luxon said he didn't understand how that number had been calculated.
"That is something we will be discussing with the administration."
Trade Minister Todd McClay said he is seeking clarification from Washington overnight tonight over incorrect information regarding NZ tariffs.
McClay said Trump had got this number wrong.
He told Checkpoint he wants officials to follow up with their Washington counterparts quickly.
Speaking in Auckland, Labour leader Chris Hipkins described the new Trump tariff regime as disappointing.
He said the tariff roll-out will be hugely disruptive to the global economy and will hurt New Zealand exporters.
"It's not just the impact that Trump's tariffs will have on New Zealand exporters to the US, but it'll also have an effect on the global economy which will affect our exporters. It'll be a hugely disruptive move for the global economy," he said.
He added it would lead to a "realignment" of global trade and urged New Zealand to continue speaking out against them.
Photo: RNZ / Samuel Rillstone
Hipkins said the government had taken a principled decision in saying it would not retaliate by imposing higher tariffs of its own.
"A tariff war, where tariffs just rapidly escalate, would be a disaster for exporting countries like New Zealand. Ten percent is bad news, twenty percent would be disastrous news. Let's not engage in a ratcheting up of tariffs."
Trade Minister responds
Trade Minister Todd McClay has confirmed New Zealand exporters will face a 10 percent tariff on all goods to the United States, from this weekend.
There is no indication at this stage there will be any change or duties imposed on New Zealand services.
President Donald Trump announced on Thursday he would instigate reciprocal tariffs on countries imposing duties on other countries - including responding to what he said was a 20 percent tariff on US goods from New Zealand.
McClay has confirmed New Zealand does not have a 20 percent tariff rate that it subjects US exports too.
New Zealand officials would be tasked with passing on that message to US counterparts, who McClay said were possibly assuming New Zealand applies 20 percent due to a rate connected to the World Trade Organisation.
In reality, New Zealand applied a much lower rate for US exports into New Zealand, McClay said.
Foreign Affairs minister Winston Peters said the US' calculations were a mistake, but it was "immaterial" and questioned why it was a concern.
"If you think that's significant, then we got a much more reasonable deal out of them than anybody else did."
He said it was "a day of celebration" as many countries closer to the United States had done worse than New Zealand, and paid tribute to those who had worked behind the scenes engaging with the US.
"I'm delighted today that that is the outcome. Many of our exporters need to know that they've got a 15 percent-plus advantage over their competitors in the United States, and we'll turn this around real fast if they take it positively," Peters said.
Peters travelled to the US last month where he met with his counterpart Secretary of State Marco Rubio, to get more information about any potential tariff hikes and advocate for New Zealand to not be too heavily stung.
Over the past few days McClay has spoken with a number of businesses who export to the US and they have told him they "still see opportunity for them" in that market.
He added, it was "important to note many other countries around the world are facing much higher tariffs".
"Whilst not unexpected, it will have an impact on New Zealand exports."
Todd McClay speaking to reporters after Donald Trump's announcement. Photo: RNZ / Reece Baker
McClay told reporters at Parliament on Thursday morning, there was no sense of relief in only 10 percent being applied because tariffs were "not good for trade, so we're not feeling relieved".
"Although I think there is recognition that New Zealand isn't seen as one of the countries that has an unbalanced trading relationship with the US."
He said it wasn't surprising to be captured by the tariffs in one way or another, and regardless, New Zealand will continue to have a "constructive and very positive relationship" with America.
Trade officials are also clarifying with the US whether the 10 percent is in addition to tariffs already paid.
"It appears it is a blanket tariff but we're looking to clarify that quickly."
New Zealand has no plans to retaliate against the US tariffs because that would "put up prices on New Zealand consumers and be inflationary," he said.
New Zealand exports about $9 billion worth of goods to the US, so the cost of a 10 percent tariff would be about $900 million to exporters.
"I think there is some pretty clear evidence that will be worn by US consumers, not New Zealand exporters," he told reporters.
As for what New Zealand's average tariff rate is on the US, McClay said it was around 2 percent.
That figure, and how low it is, is a point that has been made to the US in talks between the two countries, he said.
Labour's trade spokesperson Damien O'Connor said it was disappointing New Zealand could not secure a lower rate, and questioned the success of Peters' talks in Washington D.C.
O'Connor said he had no idea how the US landed on the 20 percent tariff rate figure that New Zealand subjects US exports to.
"I think it'd be a very brave person to try and do some calculations on how the US works out a lot at the moment. That's quite unfortunate, not just for New Zealand but actually for all those others who are facing 10 percent, at least, plus, tariff on goods they export to the US."
O'Connor said it was hard to imagine any friend would disrupt the world of trade the way the US had, but New Zealand would continue to trade with its second biggest trading partner.
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
