Todd McClay: Trade Minister reacts to new tariffs set by the Trump administration

The Government's questioning the numbers the US is using to justify new tariffs.

The Trump administration claims it is imposing a 10 percent tariff on our goods, in response to New Zealand's 20 percent tariff on US goods.

But Trade Minister Todd McClay says our tariffs average under 2 percent, with the highest about 5 percent.

"It looks like they've used a different type of calculation as to balance of trade as opposed to tariff rate for some reason."

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Episode Transcript

Speaker 1 (00:00):
Ten percent. That's the tariff rate that Trump's slapping on
Key we export stateside. It'll affect the nine billion dollars
worth of goods that we see in that as our
second largest market for goods. Of course, there are indirect
consequences as well through our Asian partners. But right now
we're going to the Trade Minister Tom McClay. Good evening,
Minister Ryan Good afternoon. Good to have you on the show.

(00:21):
So I know you're going to go back and question
this number in Washington. Have you had any update from that?

Speaker 2 (00:28):
Do you mean the twenty percent?

Speaker 1 (00:30):
Yeah?

Speaker 2 (00:31):
Yeah, So what they've done is when President Trump put
up with a comparison all the countries that showed that
New Zealand's tariff rates for exports from the US and
New Zealand's twenty percent and therefore the ten percent tariff
levied on us, they have published some more information. Of course,
it's nighttime there, so our officials will get into its
first thing when they're away. It looks like what they've

(00:51):
done is they've taken the amount that we export to
them minus so the amount that they export to us
there's a twenty percent different. And they've just said, well,
that's the difference of the tariff rate, which is not
our tariff rate for a US selling into New Zealand
on average is one point nine percent. We face about
two point two percent up there, but we'll be discussing
that with them tomorrow and providing some clarity. Irrespective of that,

(01:16):
the lowest tariff rate they are putting on anybody in
the world is ten percent across the board, So even
if we move that number around, it's not clear that
we would fall below ten percent Australia. Many other countries
are in the same same category as we are, although
compared to I suppose the Europeans that are facing a
thirty four percent tariff rate as challenging as this is

(01:37):
for our export as they are no worse off when
it comes to competing its other exports to the US
as a result of this.

Speaker 1 (01:44):
Yeah, would you call it the best case scenario in
a way?

Speaker 2 (01:47):
It's Look, it's much better than many countries, most certainly.
But tariff rates put on New Zealand exports is not
a good thing.

Speaker 1 (01:54):
Number that's wrong, isn't it.

Speaker 2 (01:58):
So it is wrong, and it is wrong. And as
far as that is not the tariff rates we put
in place. I think the highest tariff rate we have
on anything that the US can send to US is
about five percent. But it looks like they've used a
different type of calculation as to balance of trade as
opposed to tariff rate for some reason.

Speaker 1 (02:15):
But they clearly said on that. You know, the chart
that Trump held up said New Zealand that the rate
that America is charged teriff rate. Charge That is wrong,
isn't it.

Speaker 2 (02:27):
That's that is not correct. That's right. The average the
average rate that US pays on experts in New Zealand
is one point nine percent.

Speaker 1 (02:35):
So why are they using this weird calculation on the
trade deficit and then you know, somehow, somehow relating that
to a terif rate.

Speaker 2 (02:45):
Yeah, it's really not clear, and that those would be
one of the things that we're asking officials to sort
of clarify and discuss with the US. I mean, at
the one level, what they are probably saying is the
USS two trillion dollar trade deficit. We want people around
the world to buy more from US. In fact, in
the New Zealand economy, the tariff rates are low. There

(03:06):
are no restrictions as to what you can sell to
New Zealand from the US or many other countries, and
so we don't have those barriers. What they've also said, though,
is I suppose is that there are a group of
countries where we put ten percent on that's the minimum
that anybody has. These are countries we are not as
worried about, or were worry less about. Their focus is
on Canada and the European Union, in China and many

(03:28):
other countries of the world, where it ranges from twenty
percent I think over forty percent in some cases. And
so you know, as you said earlier, the rates of
New Zealand has applied against US are better than many
although a ten percent is still going to be challenging
from some of our export us up into that market.

Speaker 1 (03:44):
Have you had just funny, have you had any update,
because I know your officials were working on trying to
let you know what the economic impact of all of
this might be. Now that we have numbers, do you
have a number?

Speaker 2 (03:54):
So they're working through that very very quickly for us,
because although they did a bit of modeling, of course
I had to waste and exactly what it'd be. So
what we see is ten percent across our nine billion
dollars exports is nine hundred million dollars. But interestingly, a
lot of this is going to be passed on to
their consumers. You take the wine that we sell there,
it'll be ten percent more expensive, European wine thirty four

(04:17):
percent more expensive. They may consumer less or they may
end up just paying more. And so you know what
we do now is tiff rates are inflation, can be inflation. Really,
they do put up costs for consumers. It's one of
the reasons that we've been very clear today we're not
going to retaliate because that would just put up costs
on New Zealand exporters and drive inflation.

Speaker 1 (04:36):
We mon't be doing that. We can't. I mean, we're
a small trading notion that could We can't exactly start
and waking people with terrorists can we well to, But
I appreciate your time trading For more from Hither Duplessy
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Speaker 2 (04:50):
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