US expected to hike tariffs on New Zealand very soon

A global trade expert says New Zealand could be slapped with a blanket 12.5 percent tariff on all exports to the United States as early as Friday night.

The tariff would replace the existing 10 percent tariff applied to New Zealand exports to the US.

Deborah Elms, head of trade policy at the Heinrich Foundation in Singapore, said the action was being taken under a US policy called Section 301 covering unfair trade practices, which would see tariffs of between 10 and 12.5 percent applied to 60 of its largest trading partners, either because they are guilty - or are likely to be found guilty - of failing to impose sufficient criteria to avoid importing forced labour-produced goods.

"New Zealand falls in the 12.5 percent bucket. Not because, let's just be clear, New Zealand is necessarily a worse offender, or that somehow it has forced labour-produced, or that it insufficiently enforces forced labour prohibitions.

"Instead, it's because New Zealand does not have yet a bilateral trade deal with the United States, so it by default goes into the 12.5 percent category."

The imposition of tariffs under section 301 were expected after the US Supreme Court ruled in March that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) exceeded executive authority and must be reversed.

Elms said the results of the US decision on 301 tariffs were expected to be announced last week, but will certainly be announced imminently.

That was because the interim 10 percent tariffs put in place following the court's decision were due to expire on 24 July.

"It could be this week. It actually could be on Friday / on Friday night, because the Trump administration likes to drop particularly bad news late on a Friday in Washington."

Elms said the tariff would apply to everything New Zealand exports to the US, though that might change.

"I assume there will be some furious negotiations. Maybe there have already been some exceptions that have been carved out, but there will be a lot of discussions about whether or not this blanket tariff level should remain a blanket tariff level, or whether there should be exceptions for products the United States doesn't make in insufficient quantities or strategically important goods or whatever it happens to be."

However, she said New Zealand may come out of this ahead of some of its major trading partners.

"There's another big case coming, which fortunately New Zealand is not in the for, but it's another 301 case against 16 trading partners for the United States, including the European Union, the Japanese, the Australians, who have high trade deficits," Elms said.

"I think, is going to be quite surprising for many and very upsetting to many US trading partners from China and the European Union, Japan, etc. They will all be hit with additional tariffs that could be beneficial to New Zealand... which means that your tariffs could be lower than many of your competitors for similarly priced goods going into the United States."