Trump lies about New Zealand

What Trump has done will not easily be undone.

That is the almost universal view among commentators about his imposition of a minimum 10 per cent tariff on all imports into the US.

In the Murdoch-owned “Australian”, Cameron Stewart, usually sympathetic to the United States, published a devastating takedown of Trump.

“It was further evidence, if any was needed, that Trump pays little or no heed to the notion of alliances, loyalty or friendship with his tariff policy – just ask Canada – or even with his approach to global security – just ask Ukraine President Volodymyr Zelensky,” Stewart wrote.

“Trust in international affairs takes years to build, and when broken like this cannot be rebuilt overnight when broken.

“So Trump’s tariff wall and his approach to global affairs will damage the so-called rules-based order well beyond the term of his presidency.”

New Zealand was ill-served yesterday by its deputy Prime Minister and foreign minister, Winston Peters, who claimed his recent visit to Washington, during which he met with Administration Cabinet members and then dined with some of the most extreme right-wing members of the Trump administration, had led to New Zealand getting a good deal.

New Zealand did not.

It was cheated and lied about by Trump.

His claim that we had a 20 per cent tariff on United States imports is not even supported by the document he held aloft at his announcement as the source for his actions.

The United States Trade Representative’s (USTR) “2025 National Trade Estimate Report on Foreign Trade Barriers” says this about New Zealand: “New Zealand’s average Most-Favoured-Nation (MFN) applied tariff rate was 1.9 per cent in 2023 (latest data available). New Zealand’s average MFN applied tariff rate was 1.4 per cent for agricultural products and 2.0 per cent for non-agricultural products in 2023 (latest data available).”

So, where did Trump get 20 per cent?

His apologists on social media in New Zealand yesterday were claiming that must be because GST had been added.

But GST cannot be protectionist since it applies to all goods sold in New Zealand regardless of origin.

According to the USTR report “the United Kingdom’s average Most-Favoured-Nation (MFN) applied tariff rate was 3.8 percent in 2023 (latest data available). The UK’s average MFN applied tariff rate was 9.2 percent for agricultural products and 2.9 percent for non-agricultural products in 2023 (latest data available).”

VAT on goods sold in Britain is 20 per cent.

So how come the UK, with a tariff rate double that of New Zealand and a value-added tax at 20 per cent (33 per cent higher than New Zealand), ends up paying the same import tariff into the US, 10 per cent?

That fact alone makes a nonsense of Peters’ boasting.

Even the Prime Minister was unable to understand how Trump had concluded that New Zealand imposed a 20 per cent tariff on American imports.

“We don’t understand how that number has been calculated and that is something that we will be discussing with the administration,” he said yesterday.

But add to all this the fact that New Zealand exports to the US already pay sales taxes in 45 states. Only five states forego statewide sales taxes: Alaska, Delaware, Montana, New Hampshire and Oregon.

Westpac economist Kelly Eckhold suggested Trump’s move would equate to a loss to New Zealand of export revenue of around $900 million per annum or 0.2% of annual GDP.

However, that will impact growth, which over the next 12 months is forecast by the Reserve Bank to be 2.3 per cent. Eckhold is talking about a 9 per cent reduction.

But Eckhold said it would not be felt across all sectors of the economy.

“New Zealand’s largest exposure is in the meat industry (especially beef), with exports to the US totalling $2.6 billion in 2024, accounting for 30% of all meat exports,” he said.

“Another key exposure is the wine industry, with exports to the US accounting for 35% of total exports. exports)”

Eckhold also forecasted that the $NZ would fall against the $US.

Reaction from the Prime Minister and his Trade Minister yesterday was muted, as was the response from Labour and the former Trade Minister, Damien O’Connor.

“It’s disappointing that the Government hasn’t been able to negotiate lower tariffs given the very low level of tariffs we impose on goods and services from the US,” he said.

“While the announcement has provided clarity on the percentage of tariffs, the impact on the US economy collectively, including the impact on prices in the US market, will take a long time to be fully realised.

“There’s going to be a $900 million hit on our exports, and there is uncertainty over who will carry the cost of that, whether it will be US consumers or New Zealand exporters.

“We also have to consider how the ripple effect of tariffs on our trading partners, such as China, will affect prices back here.

“Decisions by our competitors to shift their goods to other markets may have further ramifications for NZ exporters.”

The Prime Minister played it down yesterday, but clearly, the tariffs will impact New Zealand’s major trading partners.

Nikkei Asia reported that the 24% tariff on Japan was expected to reduce the country’s nominal and real economic growth by 0.59% in a “relatively short period of time,” according to a report published by Takahide Kiuchi, an executive economist at Nomura Research Institute.

By mid-afternoon, stock markets in Japan, Hong Kong, Vietnam, South Korea, the Philippines, Singapore, and Malaysia were all down.

These markets represent 22% of New Zealand’s top 20 export destinations.

“There are two issues here. One is the impact on our trade with the US,” said Luxon.

“I think we’re saying we know, while not ideal, but we are able to be on a level playing field with other countries exporting into the US, but the bigger worry will be the global impact and the wash-up of the tit-for-tat trade wars that may ensue.”

All eyes in our region will now be on China.

By late yesterday, some reaction had begun to appear.

A commentary in the People’s Daily said: “By turning trade into an oversimplistic tit-for-tat game, Washington is dismantling a global trade system based on efficiency, specialisation and mutual benefit and hurting both the US economy and the global economy at large.

The idea of reciprocal tariffs is particularly misguided. The principle of comparative advantage allows countries to focus on what they do best and trade for the rest. Ignoring this leads to economic inefficiencies.”

The well-informed China watcher Bill Bishop said yesterday in his Sinocism newsletter: “The PRC reaction is unlikely to be weak, and I doubt Xi and his team will just roll over and do nothing while trying to negotiate.

‘Their reactions to the two rounds of fentanyl tariffs previewed their maturing economic coercion response toolbox, so we should probably assume any response may include more controls of exports of some critical minerals, investigations into and entity listing of some US firms, along with tariffs, and perhaps a larger than expected devaluation of the RMB against the dollar.

“No matter the PRC reaction, the impact of these new tariffs will be quite damaging to the PRC economy, and so Xi has a lot of economic incentive to swallow his pride and start negotiating with Trump, and quickly.”

 Trump’s move yesterday is highly likely to spread beyond international trade and raise questions about security relationships in East Asia.

China, South Korea, and Japan have already signalled this with a commitment last weekend to continue talking about a possible trade agreement.

The Australian quoted former Prime Minister Paul Keating saying the Trump administration’s “blitzkrieg on globalisation” represented the “effective death knell of NATO” and left China as the “sole promoter of free and open international trade”. 

“Today’s tariff announcements change the world’s geo-economic settings and, with it, the world’s geo-strategic settings,” he said.

And that, as Cameron Stewart also said, is the point.

Trump has abandoned any support the United States might have had for the international rules-based order.

He has directly challenged globalisation, which, with the establishment of the World Trade Organisation, has been the engine that has driven prosperity in most countries, particularly in Asia, over the last thirty years.

The Australians are furious that he has totally ignored the free trade agreement they have with the US.

In the Sydney Morning Herald, Peter Hartcher, the Political and International Editor who has been highly critical of China in the past was taking a very different view last night.

“The lesson from that is, this is a man, now a country, that will not pay heed to any treaty agreement, commitment or obligation, and that cuts to defence relationships. It cuts to all relationships. This country on which we have long relied is no longer reliable, and we have to stand ready for it to break any agreement or treaty; no matter how solemn we might think it is, it’s nothing to him, and we need to brace for that.”

Hartcher said Trump had handed China’s Xi Jinping Trump a massive advantage on a silver platter.

The Wall Street Journal agreed and said Trump was shattering trust in America’s word as a reliable ally and trading partner.

“Mr. Trump’s new tariff onslaught is giving China another opening to use its large market to court American allies,” the Journal said.

“South Korea and Japan are the first targets, but Europe is on China’s list.

“Closer trade ties with China, amid doubts about access to the U.S. market, will make these countries less likely to join the U.S. to impose export controls on technology to China or to ban the next Huawei.”

New Zealand is in the fortunate position of having a Free Trade Agreement with China which was reviewed by officials from both countries only last week.

Plans are apparently still alive for the Prime Minister to go to China around the middle of the year.

Peters will now have a hard time convincing people that his desire to reset our foreign policy closer to the US is something we should continue to do.

The American age looks like its over.