How bad is the tariff news for NZ, really?
ARNE DEDERT / AFP
New Zealand has been hit with a higher tariff rate than Australia on exports to the US - but economists say the situation could have been worse.
It was revealed on Friday that New Zealand exports would
have a 15 percent tariff
applied, up from 10 percent announced earlier.
Australia remains at 10 percent.
Brad Olsen, chief executive at Infometrics, said that was a clear challenge for New Zealand.
"There is now a wedge between us and Australia."
There were other parts of the world that previously had a higher tariff rate that were now on the same level as New Zealand, such as Europe.
"Wine, for example, under the original tariffs, we might have had a slight advantage. Now we don't."
But he said it was not necessarily true that the country would have been better off had it negotiated a deal.
He said New Zealand did not have a lot to "give up" in those negotiations, and it could have
ended up being costly
.
"I'm a little bit surprised by comments, including from the opposition's trade spokesperson, that the government failed to achieve a lower tariff rate.
"The comments seem to make the implication that New Zealand could have found a way to come up with a trade agreement that might have given us a lower tariff rate.
"That might be true, but we have no idea what we would have had to give up to achieve that… some of what had to be given up by other countries to get a 15 percent tariffs rate is consequential - Japan and other countries had to give up to half a trillion dollars of further investment into the US."
He said the impact on New Zealand's trading partners might not be as bad as had been expected, which should prove positive for the economy.
"It will be slightly more challenging to export to the US from a New Zealand point of view, but our trading partner activity might not be hit as bad as was feared in April. That's probably a net benefit for us."
Mike Jones, chief economist at BNZ, said the increase was not unexpected given indications of the past few weeks.
"It's obviously unhelpful for NZ exports into the US, particularly how we line up with those coming from Australia and the UK, given the lower 10 percent baseline tariff rate for those countries.
"Beef and wine exports could be affected. It's interesting in this context that we've seen the NZD/AUD exchange rate fall a little today in the wake of the announcements."
Kelly Eckhold, chief economist at Westpac, said he thought New Zealand was in roughly the same position as in April.
"On one hand, the tariff is higher, so there is a bigger direct cost, but it's a bit lower for a lot of our trading partners, so it's better for the economy than would otherwise be the case."
He said how the lingering elements of uncertainty played out over the coming weeks would be important.
"The legal basis of these tariffs, whether they're going to be able to continue or need to be replaced with a different type of tariff, is an issue. And the sectoral tariffs have not yet really been negotiated.
"While I don't think these things affect the sort of goods New Zealand trades with the US, there may be some impact on our trading partners."
He said it seemed strange that the US was calculating tariffs based on which countries exported more than they imported.
"The concept that US authorities have had of countries ripping them off by selling more stuff to America than they're been buying is quite myopic.
"We're only talking about goods trade here, we buy a lot of services from the US.
"In large part, the trade imbalance is a cyclical rather than a structural story.
"In the last few years, the economy has been relatively weak compared to the US. We're not sucking in as many imports, and the exchange rate has been lower than would normally be the case, which has encouraged export revenues.
"I would have thought trade policy metrics like tariffs would be determined on the basis of structural, not cyclical factors.
"All those things could easily be the other way around in a few years' time."
Sign up for Ngā Pitopito Kōrero
,
a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NZ Herald
4 minutes ago
- NZ Herald
Red tape slows New Zealand's adoption of biological farming products
Total alcohol consumption has been falling over recent years, though data on home consumption aren't yet available. Demand for dairy products has increased across the board, not just those targeting older consumers. Adoption of autonomous vehicles on-farm is not yet apparent (topography on a typical New Zealand farm might prove a deterrent). The last of the top five was about on-farm usage of 'biologicals'. These were described as natural products which 'can enhance plant growth and health by improving nutrient uptake, pest resistance and soil health'. This description resonates with the increased interest in achieving more (or at least the same) for less. Much has been written about the potential benefits of 'biologicals' and there's a growing view that more 'natural' options such as biologicals can replace 'chemistry'. The products tend to fall into one of three categories: bio-fertilisers (providing nutrition such as nitrogen), bio-stimulants (enhancing growth) and bio-pesticides (providing crop protection). The most advanced in terms of use and proof within a productive system are the bio-pesticides. Many countries are already using formulations not yet approved in New Zealand. Following Bayer's exit from research because of regulatory delays, there are now concerns that other companies will follow suit. The New Zealand market is small in comparison with markets in other countries, where new active ingredients are being embraced, and the cost-benefit analysis isn't stacking up here. Last month, Kent Davies, the commercial unit leader for this area for Corteva, told Agriculture Minister Todd McClay that New Zealand farmers used to have access to the latest and best innovations. This reflected a regulatory approval framework that ensured timely evaluation. In the last five years, however, New Zealand has slipped from being a world leader, resulting in other countries getting earlier access, Davies said. He stated that the regulatory process in Australia was roughly two years from submission to approval, whereas in New Zealand, regulatory delays resulted in a process that took upwards of three years. Corteva is a global leader in developing and commercialising new active ingredients, particularly in the biological sector. For any company to release a new product on the market, a functioning, reliable and timely regulatory system is critical for it to recoup the investment made. That investment is millions of dollars. It ensures that new products are safe and do what is claimed – and meets the requirements of regulators, conditions of registration, sector codes of conduct, and policies and programmes. The Animal and Plant Health Association New Zealand (Aphanz) is the peak industry association of companies that make, sell and distribute animal and crop health products, including biologicals. The Aphanz's global member companies spend an estimated annual US$3.8 billion ($6.43b) on crop protection research and development before the release of any new product. By 2030, another US$4.32b will be spent on biologicals (and another US$2.32b on precision and digital technologies). This money is more than New Zealand has in its total national research budget, let alone that for agriculture. More data indicate that companies' expenditure on research and development takes the bulk of the funding but registration costs now account for 13.9% – almost double the costs from 1995. This explains the concern about whether companies will stick with New Zealand. If they leave, so will their developments. All regulators have rigorous internationally accepted guidelines that are designed to ensure the safety of any product introduced. While all countries are focused on reducing exposure to hazards, some are not invoking the precautionary principle as much as in New Zealand. Road cones are an example. The New Zealand Environmental Protection Authority, with a vision of 'An environment protected, enhancing our way of life and the economy', explains the precautionary principle as: 'If we're unsure, we pause and say no for now.' However, a recent paper from the University of Massachusetts states that 'precautionary principle-based decisions reflect outdated science and risk-management principles' and 'failure to use updated science and decision science may result in more harm than good'. New Zealand regulatory bodies, the Aphanz and its member companies all want the same thing – a system that allows New Zealand farmers and growers to have access to a broad suite of new developments. Farmers and growers want access so that they can continue to support a vibrant economy. The Government is committed to change and is serious about supporting innovation in New Zealand. Time is ticking while other countries move ahead. This doesn't bode well for the export economy.
RNZ News
34 minutes ago
- RNZ News
Businesses urged to bypass free MBIE employment mediation service due to wait-list
There is currently a seven-week waiting list to access the Ministry of Innovation, Business and Employment's mediation service. Photo: 123RF An employment lawyer is advising businesses to bypass the government's free employment mediation service. There was currently a seven-week waiting list to access the Ministry of Innovation, Business and Employment's mediation service, which was supposed to be a way to avoid drawn-out disputes between employers and their employees. "Don't wait," Rotorua employment lawyer Michelle Urquhart said, adding the cost of accessing private services was well worth it given the risks associated with leaving a dispute to fester. MBIE advised availability was limited due to high demand and apologised for the inconvenience, though wait time was an improvement from the peak 11-week wait in February. "There has been a sustained demand for employment mediation services, with a 12 percent increase in mediations delivered in 2024/25 compared to the previous year," MBIE director Pele Walker said, adding full-day mediations rose by 25 percent over the past three years, which reduced overall mediator availability. "Mediators report that the complexity of issues being brought to mediation has increased, contributing to longer sessions and more time needed to reach resolution." Urquhart said it was more than an inconvenience for businesses, as the longer it took to resolve an issue the more complicated and costly it became. "Having to wait more than two months for mediation - which is meant to be an early intervention service - is far from ideal in the current economic environment," Urquhart said. She said the delay means an increasing number of businesses were turning to independent specialists - or not dealing with the issue at all. "The second option is a lose-lose for both parties," she said, given current labour market conditions. "No one wants to be looking for a new job. For an employer, it can cost up to 1.5 times a person's salary to replace them, including recruitment, onboarding and lost productivity." She said the parties involved in a dispute should seek help quickly, even if they have to pay to use private services. "A dispute will initially impact the people directly involved, but it doesn't take long for it to start impacting wider teams, productivity, morale and ultimately, the bottom line. "Getting on top of the concern early, having calm conversations, and developing a resolution plan that works for everyone is critical to moving forward before too much damage is done." Urquhart said businesses could find a private employment mediator online through the Arbitrators and Mediators Institute or the Resolution Institute. MBIE also offered an early resolution service with most cases resolved within 15 working days, though urgent cases, such as those involving strikes or collective bargaining, continued to be prioritised.
RNZ News
an hour ago
- RNZ News
Dairies providing cash as banks restrict access
Dairies say they are having to act like banks as more and more customers ask to get cash-out with their purchases, and local banks reduce services and access to cash. Dairy and Business owners group's Ankit Bansal spoke to Charlotte Cook. Tags: To embed this content on your own webpage, cut and paste the following: See terms of use.
