09-07-2025
Buy now, and get a free set of knives in the back
Analysis: All for only 25 percent, plus shipping and handling. Buy now, and get a free knifing in the back.
The stream of leader-to-leader tariff letters being posted on US President Donald Trump's social media feed as I write (14 and counting) are rather reminiscent of those late-night TV infomercials of yesteryear.
But Trump isn't selling miracle balance thigh and ab trainers made in China. He's selling 'more balanced, and fair, TRADE' – and the US as a manufacturing location.
'We will charge Kazakhstan a Tariff of only 25% on any and all Kazakh products sent into the United States, separate from all Sectoral Tariffs!', 'We will charge Thailand a tariff of only 36%', 'We will charge Laos a Tariff of only 40%'.
These are form letters, with only the names and percentages changed. They all rely on the fictional and inimical trade deficits first concocted on 'Liberation Day', in April. 'This Deficit is a major threat to our Economy and, indeed, our National Security!' Trump concludes, on each. 'Thank you for your attention to this matter!'
Some of the tariffs are slightly increased on April's announcement; most are slightly reduced. The pause on implementation, for all of them, has been extended from July 9 to August 1.
Trump has also threatened new tariffs on any nation supporting the 'anti-American' policies of the Brics group of emerging economies – Brazil, Russia, India, China, South Africa and others.
New Zealand isn't directly affected; the tariff for this country is the White House's baseline 10% applied to countries that haven't specifically piqued Trump. That's painful to our exporters (and to US consumers) but is not expected to rise. Yet.
Winston Peters' office says they and officials are monitoring the announcements closely. Immediate challenges for New Zealand include:
1) The impact on our trading partners. China and the US have cooled their initial tit-for-tat trade war, but nonetheless, most East Asian nations are being hit with the new tariffs. The trade war is expected to lead to slowing growth in the US and Asia, in particular.
That means eight of New Zealand's 10 biggest export destinations are directly affected; only Singapore, Australia and perhaps the UK remain in the 10 percent 'other nations' category like New Zealand. The slowing of those economies will constrain their ability to pay the prices Kiwi exporters might hope for.
I spoke with Felicity Roxburgh, the new executive director of the NZ International Business Forum. She was watching the announcements roll through yesterday morning. 'This kind of unilateral action threatens the rules-based trading system that small, export-dependent economies like New Zealand rely on,' she told me. 'They create uncertainty which negatively impacts New Zealand.'
2) Trump has made it clear he doesn't like national drug-buying schemes like those in Australia and New Zealand. Last month he promised that US trade duties on pharmaceutical products (exempted from the initial round of tariffs) were coming 'very soon'.
As with other goods, he wants companies to manufacture their drugs in America. And he wants consumers and governments to pay the premium prices that the big US pharma companies believe are justified by the research and marketing they've put into their medicines.
This is a problem for drug-buying agencies such as Pharmac, trying to get the best prices they can within inevitably constrained budgets, to make as many good and important medicines as possible available to New Zealanders, whether or not they can afford full-cover health insurance packages. And it's a problem for New Zealand; there's a degree of political consensus over the principles behind our drug-purchasing model, a delicate balance that will be upset if Trump tilts the scales.
3) The big question is how does the New Zealand Government react? Despite Peters' claim on Liberation Day to have won New Zealand the lowest tariffs in the world, the most we can really claim is to not have aggravated Trump into imposing higher tariffs.
To that extent, a tactic of keeping our head below the parapets remains attractive – certainly, seeking direct negotiations with the White House would be dangerous. It's at such a point that Trump's advisers might alert him to the existence of Pharmac, or GST, or New Zealand's attempts to work within the OECD on a digital services taxation agreement.
But at some point, New Zealand has to stand alongside its partners in the Asia-Pacific, who face great harm from these tariffs. It's low-wage workers in Asean countries such as Laos, Cambodia, Vietnam, Thailand and Indonesia who have really been targeted by this morning's announcements.
New Zealand has been one of the world's strongest champions of free or low-tariff trade within an international rules-based framework. Frameworks like the World Trade Organisation or more recently, the CPTPP, protect New Zealanders and protect those even less able to stand up to the might of the bickering superpowers.
New Zealand must walk the fine line of protecting its own export interests, while not selling out the principles on which it has stood so strong, for so long.
