New Zealand has lost some of its competitive edge in the United States after President Donald Trump hiked its baseline import tariff to 15% while leaving some countries at 10%.
Australia, the United Kingdom, Brazil, and the Falkland Islands have retained the 10% baseline rate, while others have lifted to between 15% and 40%.
This puts Kiwi exports at a disadvantage in several key categories.
New Zealand’s largest exports to the U.S. are red meat and wine, which compete directly with similar Australian products that now enter with lower import costs.
The United Kingdom recently secured a quota allowing 13,000 tonnes of beef to enter the U.S. duty-free before the 10% baseline tariff applies. This beef is typically destined for niche, higher-value markets, unlike the 150,000 tonnes New Zealand exports for bulk processing.
Brazil is another major red meat exporter but currently faces a 50% tariff due to political problems. But that could revert to 10% if the situation gets resolved.
Most European Union products—including wine and dairy—are still subject to a 15% tariff under a deal signed last week.
John Ballingall, a trade expert at Sense Partners, said the 15% rate was not ideal but many exporters were already shifting into markets such as the UK, Taiwan, Indonesia, and China.
“The overall impact is not likely to be earth-shattering, albeit painful for some businesses. Especially smaller ones with less ability to redirect,” he said.
Foreshadowed
Trade Minister Todd McClay warned on Thursday that New Zealand’s rate might rise to the 15% seen in various recent trade deals — but didn’t appear to anticipate other countries remaining at 10%.
“If the tariff rate for New Zealand and other countries goes to 15% tomorrow, whilst it won't be welcome, our exporters have adjusted well, and they tell me, we'll be able to deal with it,” he told reporters.
Many exporters have managed to pass the tariff on to US buyers without losing demand, while others have shifted some product to more lucrative markets.
“We are [also] hearing that in some cases, requests or inquiries out of China or the European Union have increased quite significantly,” McClay said on Thursday.
The minister is expected to make more comments on the new tariff later today
24 Comments
Beef prices in the U.S. have reached record highs due to a combination of supply constraints, persistent demand, and rising production costs. The national average for all fresh beef is now over $8 per pound, with ground beef up 10-12% and steaks 8-12% higher than a year ago.
Farmers and ranchers are facing elevated prices for feed, labor, and energy, alongside broader inflation.
Just my reckon, but the U.S. taking care of #1 and protecting their own producers. Leveling the playing field with Aotearoa beef producers or at least looking to be doing so.
John Ballingall, a trade expert at Sense Partners, said the 15% rate was not ideal but many exporters were already shifting into markets such as the UK, Taiwan, Indonesia, and China.
China - OK, but price premiums are falling. If anyone tells you different, don't believe the hype.
UK - Similar to China, only good if you're selling to the top brass of consumer.
Indonesia - Vast majority of population not willing to pay premium prices. Tough market to navigate so cost / effort to serve is high.
Taiwan - Demand is hardly sufficient to replace the U.S.
Entrepreneurship addresses this sort of thing, and profits doing so.
Entrepreneurship addresses this sort of thing, and profits doing so.
If you don't understand your market, you're not really an entrepreneur.
Sure. It's just that other minds will likely overcome many of the concrete walls you envisage.
Watch the left/economically challenged meltdown at this.
NZ has been in trade surplus with the US for at least 15 years, likely much longer. The free ride is over, & we'll have to cut costs, be more productive & find alternative export markets.
Lower than the 21% tariff Japan imposes on Aotearoa beef.
Free trade improves economic prosperity to the point where imbalances create instability (I would argue >30% with China is a ticking bomb).
The US, under Trump, have decided they are going to stop exporting jobs to China etc. The transition may be painful, but not nearly as much as if we wait another decade, China invade Taiwan, and we have to sanction them. Australia's GDP share of manufacturing has fallen from 30% to 6% and still falling. They don't even make lightbulbs anymore. Our standard of living would collapse overnight if China is sanctioned.
Correct me if I am wrong but has there not been a longstanding about 10% duty anyway?That being US$0.45pkg. If so then another 5% will just need to be absorbed or coped with as firstly the US market is essential in terms of volume and secondly the net return, quid pro quo of that, will still be competitive with any other market.
Before the new reciprocal tariffs was announced, Aotearoa beef faced a Tariff Rate Quota (TRQ) system, under which up to 213,402 tonnes of beef could enter the U.S. annually at an “in-quota” tariff rate of US 4.4 cents per kg. Shipments above this quota (out-of-quota) were, and technically still are per trade rules, subject to a much higher 26.4% ad valorem tariff plus possible safeguard duties in certain situations. However, the new 15% tariff appears to be a blanket rate, overriding the previous lower in-quota tariff for the time being.
The "left" are the people that believe in free trade / free markets?
The “left,” as at present in NZ at least, don’t quite seem to know what’s left of the left. In either sense.
I think both "left" and "right" have become confused - maybe because we keep associating the terms "left" and "right" with the parties that used to represent them.
I always associate left with "Big Government", and right with "Small Government". But now the right wing governments want to control the world more than the left do.
The NZ left are opposed to Trump (restrictive anti-immigrant, pro-tariff MAGA) and Seymour (full throttle immigration, free trade ACT).
The NZ right of course disagrees with them.
Politics is mostly just a team sport.
How can Trump and Seymour both be considered right? They seem to represent completely different ideologies. The only real link between the two is that the rich will end up better off at the expense of the poor.
If a left wing politician had policies similar to Trump, he would be considered an extreme left communist nut job.
I was debating this recently. On a compass, the left are at south west and the right at south east, very different or very similar depending which way you look at it. Both are totalitarian at the extremes, you could argue the Nazi's were both far right and far left. I tend to look at it from an economic perspective - free markets, small government, many firms providing services. The Left is more centralised planning, the state provides goods and services.
Then there are the culture wars.
Free markets - like not being able to build apartments in Epsom, or getting hit with a tax/tariff because Trump doesn't like you? To be honest I think most left wing parties are more free market than the right.
I always find myself in between a rock and a hard place. I believe in free markets, personal freedom and personal responsibility. I feel like I'm the only one...
By the way I think the left are equally screwed up. Once the supporters of the working class, now they seem to mainly represent the bludgers and academics.
Perhaps the Australian decision to switch supply of its forthcoming nuke submarine fleet from France to USA, the $billions involved, has now eventuated to their advantage?
Those submarines are never going to be delivered. The US is currently producing 50% of the volume required to maintain it's Virginia Class capability. There is a clause in the contract that states the US has to be fully up to date on it's own requirements before it provided them, to be signed off by Head of Defence.
Thanks hadn’t caught up with that. Interesting conflicts coming to the fore. Australia undoubtedly wants the subs for the purpose of deterrence in which case if the USA can’t and/or won’t supply them, then there was every reason not to welch on the French contract.
"The dynamic starts to shift pretty dramatically when you realise your counterpart is willing to shoot the hostage,"
https://www.rnz.co.nz/news/on-the-inside/568739/how-trump-used-america-…
I guess the question is what the long term effects are. If the world starts trading less with the US and more with each other, does the US become less relevant?
I am not a Trump fan by any means, but I do kind of agree that the US was getting a pretty raw deal. But there is a reasonable chance they will do a lot worse with tariffs. Do they really want the jobs that Trump is trying to bring back?
Lol...15% this week.....next week, who knows?
Watch the Trump. Starmer press conference of a few days ago (if you can bear it) and witness Trump make foreign policy on a whim. ...and all the current (trade) deals he has made are as solid as the wind.
It is a farce writ large
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