Australia got only a 10% slap. Labour calls this difference a “major fail”.
Our negotiators rushed to Washington but came back empty-handed. The EU and UK got deals. We did not. Americans will buy Australia’s exports rather than ours, unless we accept lower prices. That cuts our incomes.
For some, the urge to hit back is strong.
Countries with economic clout might hit back ─ in the hope that the US will change its mind. New Zealand has no such clout.
Happily, nobody in New Zealand seems to be calling for retaliatory tariffs. No politicians are demanding we match Trump’s tariffs.
This restraint is good news.
Tariffs hurt everyone. Normally, it is best to sell to whoever pays the most and to buy from whoever charges the least. Tariffs mess with this system. Trump’s tariff will hurt American consumers (who will pay more) and New Zealand exporters (who will earn less).
Consider smartphones. American companies import chips from Asia because they are cheaper and better. With tariffs, phone makers pay more for these chips. Both imported and locally made phones in the US get more expensive.
If New Zealand imposed a 15% tariff on incoming American goods New Zealanders’ living standards would drop even more. Our businesses would pay more for software and machinery. Our exporters, already struggling, would face higher costs for equipment. Kiwi shoppers would pay more. We would be hurting ourselves for no gain.
Worse, hitting back could push Trump to raise his tariff on us even higher. Maybe to 25%. Maybe 40%.
This is where size matters. America can threaten other countries because everyone wants to sell to its huge market. Trump’s threats carry weight.
New Zealand’s small market is insignificant to the US giant.
Globally, this attack on free trade is made more damaging by the wilful nature of these decrees. When businesses do not know if tariffs will be 10%, 15% or 50% next year, they stop building factories. Growth slows, even in the US. Everyone loses.
Our government’s response has been sensible. Express regret. Adapt to reality.
That restraint serves New Zealand well.
Dr Bryce Wilkinson is a Senior Fellow at The New Zealand Initiative, Director of Capital Economics, and former Director of the New Zealand Treasury. His articles can be seen HERE. - where this article was sourced.
For some, the urge to hit back is strong.
Countries with economic clout might hit back ─ in the hope that the US will change its mind. New Zealand has no such clout.
Happily, nobody in New Zealand seems to be calling for retaliatory tariffs. No politicians are demanding we match Trump’s tariffs.
This restraint is good news.
Tariffs hurt everyone. Normally, it is best to sell to whoever pays the most and to buy from whoever charges the least. Tariffs mess with this system. Trump’s tariff will hurt American consumers (who will pay more) and New Zealand exporters (who will earn less).
Consider smartphones. American companies import chips from Asia because they are cheaper and better. With tariffs, phone makers pay more for these chips. Both imported and locally made phones in the US get more expensive.
If New Zealand imposed a 15% tariff on incoming American goods New Zealanders’ living standards would drop even more. Our businesses would pay more for software and machinery. Our exporters, already struggling, would face higher costs for equipment. Kiwi shoppers would pay more. We would be hurting ourselves for no gain.
Worse, hitting back could push Trump to raise his tariff on us even higher. Maybe to 25%. Maybe 40%.
This is where size matters. America can threaten other countries because everyone wants to sell to its huge market. Trump’s threats carry weight.
New Zealand’s small market is insignificant to the US giant.
Globally, this attack on free trade is made more damaging by the wilful nature of these decrees. When businesses do not know if tariffs will be 10%, 15% or 50% next year, they stop building factories. Growth slows, even in the US. Everyone loses.
Our government’s response has been sensible. Express regret. Adapt to reality.
That restraint serves New Zealand well.
Dr Bryce Wilkinson is a Senior Fellow at The New Zealand Initiative, Director of Capital Economics, and former Director of the New Zealand Treasury. His articles can be seen HERE. - where this article was sourced.
7 comments:
I wonder if the recently ensconced FBI spooks have anything to do with said restraint?
Seems to me with 15% GST sending a deputation on a junket to the US was a certain pure waste.
Opp ure economics says Bryce is right. Geo-Politics though says different.
The USA has recognised 1/ its mining and industrial bases are degraded. 2/ it is over dependent on. The PRC for a number materials and important products... Rare earths, high tech magnets & batteries for example 3/ The PRC IS a Geo Strategic threat to America
Tying those items together and the US strategy is not about trade but about preperation for a war and tariffs are a fence to build behind while undermining The PRCs economy...
Sometimes things arent just about trade and money
Surely a 15% tax NZ has is a tariff?
when we got our 'free trade' deal with the EU in 2024 it was heralded as a massive win - 'free trade' lumped us with a 20% duty on milk powder, 20% on butter and quotas - so nothings really changed - this time we got ripped off less.
this 2024 EU document said it all really - a 4000 page 😳 sledge hammer aimed to wreck NZ - this is 'free trade' EU style.
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L_202400866
I presume Anon 10.25's rather laboured comment is a reference to our GST. If so, s/he has got it wrong. A tariff may be a type of tax, but a tax is never a type of tariff. Tariffs are imposed to protect New Zealand producers of goods from predatory pricing by overseas suppliers. But NZ also imposes a 15% GST on virtually all goods sold in New Zealand irrespective of their country of origin. That's how GST has to work. Why would any Government exempt an imported item from GST thereby handing it a market advantage over an identical item produced in New Zealand. The local business will struggle and the Government's revenue base will then be eroded. So GST is most certainly not a tariff. It takes a peculiarly Trumpian world-view to believe otherwise. Which is sad, not just because it's ignorant, but also because it's embarrassing to hear the President of the United States articulating his ignorance in public. But it's not surprising. After all, Trump isn't known for his enquiring mind. And straight away we can see the twisted logic for the 15% "reciprocal" tariff imposed on us. And the reason why our negotiators returned from Washington empty-handed. So let's just do what the Canadians are doing, and quietly redirect our export business elsewhere. We have done it before. Who can forget how the British stabbed us in the back when they joined the then EEC? So roll on that trade agreement with India.
Nobody can reasonably know what impact the tariffs will have on NZ suppliers. My guess is that Americans like NZ wine not because of its exclusivity but because it comes from a little known hence exotic place.
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