Todd McClay: Trade Minister on the new tariffs coming out of the US

Our Government is asking the US for more details on its new import rules for New Zealand. 

Donald Trump's announced 10% tariffs on almost all goods entering the country from around the world – including New Zealand. 

Many countries face much higher tariffs, with goods from China being hit by a combined 54% levy. 

Trade Minister Todd McClay has confirmed officials are still seeking information. 

He told Kerre Woodham that while a trade war isn’t ideal, New Zealand has a very diverse trade strategy, with agreements with most parts of the world.  

He says that trade will adapt, and exporters will have other opportunities.  

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Kerry Wood and Morning's podcast from
News Talks.

Speaker 2 (00:10):
He'd b as you know, US President Donald Trump is
rolling out sweeping tariff's on almost all important goods, including
those from New Zealand. Trump has imposed ten percent tariffs
on New Zealand goods. Minister for Trade and Investment also
Agriculture Minister Todd McLay joins me. Now, a very good
morning to you.

Speaker 3 (00:30):
Hi, Carey. Sorry to take a bit a bit of
time to come on the show with you.

Speaker 2 (00:33):
It's okay, you're a busy man. I'd well understand that
where did the twenty percent imposition of tariff's on American
goods come from? On his famous chart.

Speaker 3 (00:43):
We're going back to clarify that with them. We don't
think that's correct. It's one of two things. It's either
it's a little bit complicated, but under the doublego you
have a most favored neighbor and nation rate that you
have to apply, and in essence, that's probably what that is,
although we apply a much lower rate than that to
the US. On average, US exporters in New Zealand phase
one point nine percent tariff rate, not twenty percent. We

(01:06):
face a bit more than two percent in the other direction,
so both a low and our error rates lower. There
is also been talk around VAT and GST rates, but
you know maybe that they factored that, and either way,
we do sell. Exporters from this weekend will face a
ten percent tariff into the US and although that is
not good for our exporters, we're no less competitive in

(01:29):
that market than any other exporter, because ten percent is
a minimum everybody and form many. If you take wine
as an example, wine out of the European Union, we
do compete with them in the US market, They're facing
thirty or forty percent, so much much higher.

Speaker 2 (01:44):
Well interesting, I've just had a release from Damian O'Connor
land in my inbox and he said the government strategy
of keeping its head down hasn't given New Zealand any
advantage over our competitors. Disappoint But I had Chris Hipkins
on earlier who said they wouldn't have done much differently.

Speaker 3 (02:04):
I think Damien probably wrote that press released before I
had a chance to talk to him, because I have
spoken with him and I've offered him officials to brief them.
He's not correct. Look, he would be correct if Australia
was at ten percent and we were at twenty percent.
Of Australia is the represented we're at ten percent. Ultimately,
there is a minimum of ten percent for countries of
the world. But if we look in China, through Southeast Asia,

(02:25):
the European Union, to India, to a lot of South America,
certainly Canada and Mexico, their tariff rates are much higher.
Now ten percent tariff rate is not good for New
Zealand exporters, but largely so you think about the state
that's sent up to America. Right. You might go into
a restaurant and most of the things we send up
there are very high value. You might go into a
restaurant and I don't know New York and you'd get

(02:47):
a state meal for one hundred dollars and it's New
Zealand's stake there. Well, that'll probably cost you one hundred
and four dollars now for your meal. The extra ten
percent is going to be absorbed by US consumers. I
don't expect in many cases, and New Zealand exporters will
face it. And if it was a Brazilian stake or sorry,
European stake, you wanted to eat it might be thirty

(03:08):
dollars more expensive. So the tariff rates and themselves are
not good for world trade. It is going to have
an impact, particularly if there is a very big trade
fight or war around the world. But actually we haven't
been keeping our head down. We've been engaging and talking
directly to the US a lot and that we've come
and at the lower level it could be much worse.
Of New Zealand exporterers, we're facing thirty percent today, Damien

(03:30):
would have something to talk about, but we're not.

Speaker 2 (03:33):
Do you think there's any chance of getting it lowered
still further? Although you would be I mean, you know,
when you think of all the other nations that will
be trying desperately to plead their case, I imagine we'd
be very low on the list.

Speaker 3 (03:46):
Well, I'm of urstar officials to engage straight away with
the US to clarify that figure that you mentioned earlier
that we don't think is correct. It hasn't had any
implication on our ten percent because that's the minimum. We
will continue to make the case to them, as I
have directly with my counterpart Winston did when he was
up there in an official are a lot that our

(04:07):
trade is complementary. The tariff rates are very very low,
and we want to you know that we we think
that we you know, they shouldn't be there. But ultimately
you're right. There are many other countries of the world
that are facing twenty thirty forty percent hower of rates.
I would assume they will be up there talking to
the US about getting closed down or they will be reciprocating.

(04:28):
But we will be making the case and standing up
for New Zealand in this Many of the exporters that
I've been talking to during the week and we've been
talking to today to better understand the situation telling me
they still see opportunity in that market and they can
still do well up there. So we're going to get
as much information as we can today. Put that together,
talk to exporters, and Cabinet will have a chance to

(04:49):
fully consider, you know, what has been announced in the
implications for New Zealand on Monday.

Speaker 2 (04:55):
The implications aren't just from the US, are they. Because
a trade war benefits no one.

Speaker 3 (05:02):
That's exactly right, creates uncertainty, demand goes down, currency rates
can go up, it can add to inflation, and I
do think we will see these tariff rates reciprocated. The
European Union will be very clear that they will do that.
Of course, we know that Canada has an election at
the moment, but they said they will reciprocate. China has

(05:24):
as well other countries may You're right, that is not
good for the world's economy. However, New Zealand has a
very diverse trade strategy. We have trade agreements with most
parts of the world, from the EU to the UK,
the CPTPP, China. We did two deals last year with
the UA and GCC, and of course we've launched negotiations
with India just two weeks ago when the Prime Minister

(05:46):
and I are up in India. So our exporters have
opportunities in other markets, and look, this is likely to happen.
It doesn't matter which country of the world. If in
the end they are not importing beef as an example
from the US, because it's tariff rate, their consumers still
want to eat beef, they still need in their restaurants
and they will often look towards countries like New Zealand.
So you know trade will will will adapt. But the

(06:10):
tariff rates it itself is harmful. It's not good and
it is going to have impact upon New Zealand exporters,
although as I said earlier, they do tell me that
they still see a big opportunity in the US market
for them.

Speaker 2 (06:22):
Well, we've certainly been not letting the grass grounder your
feet and been putting in the air miles, that's for sure.
I thank you very very much for your time. I
do appreciate how busy you are, especially today.

Speaker 3 (06:31):
You're welcome. Thank you.

Speaker 2 (06:32):
That is the honorable.

Speaker 1 (06:33):
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