United States confirms new 12.5% tariff on New Zealand imports for 'failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor'

With the United States Trade Representative confirming it will impose an increased 12.5% tariff on New Zealand goods, Trade Minister Todd McClay says the decision is disappointing but not unexpected. 

On Friday, (New Zealand time) US Trade Representative Ambassador Jamieson Greer announced that, under President Donald Trump’s direction, the US will impose tariffs on 60 economies; “for their failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor.”

But McClay disagreed, saying "it's just not credible that imports created with forced labour play any measurable role in New Zealand's economy".

Countries like Canada, Argentina, India and the United Kingdom were hit with a 10% tariff on their goods under the "forced labour" claim. Like New Zealand, Australia was given a 12.5% tariff.

An increase from 10%, the 12.5% tariff on NZ takes effect from July 24 US time.

'Unfair foreign practices affecting US commerce'

The Office of the US Trade Representative said: “Today’s action comes after the Office of the United States Trade Representative’s (USTR) investigations, which included two rounds of public hearings, more than 2100 public comments, and engagement with our trading partners to remedy these longstanding concerns."

These imposed tariffs are being done under section 301 of the United States Trade Act, which aims to address “unfair foreign practices affecting US commerce.”

On New Zealand, the US Trade Representative's office said on Friday: “Based on the findings in the investigation of New Zealand, considering the public comments, testimony, and the advice of the Section 301 Committee, as well as the advice of advisory committees, and in accordance with the specific direction of the President, the Trade Representative has determined to impose 12.5% tariffs on products of New Zealand.”

“The Trade Representative has determined, in accordance with the specific direction of the President that the tariff rate to be applied, and the scope of tariffs and exemptions are appropriate to obtain the elimination of the acts, policies, and practices determined to be actionable in the investigation.”

NZ rejects findings of US investigation

McClay said the US process was "not rigorous" and New Zealand rejected the findings of the investigation.

"New Zealand engaged in the process in good faith and made our position clear to US Trade Representative and the US State Department. The investigation just provides a legal pretext for broad tariffs rather than effectively combating forced labour."

"These actions create more uncertainty at a time when the world trading system is under real pressure," McClay said.

"It is more important than ever that like-minded countries work together to strengthen trade and investment including reducing barriers that make it easier for everybody to trade."

NZ and other countries have been bracing themselves for a tariff change, following an announcement from the US Trade Representative in June. The US currently imposes a 10% import tax on NZ products but through the law this is under, it’s only valid for 150 days. 

Greer said: “President Trump recognizes that decades of moral suasion have not eradicated forced labor from global supply chains.”

“The United States has had a forced labor import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same," he said.

“Today’s action will begin to correct what is both a human rights abuse and distortive trade practice to improve the welfare of workers everywhere. I am encouraged by the trading partners who have moved quickly to adopt forced labor import prohibitions, and look forward to ensuring their effective enforcement.”