On 8 August 2025, NZUS Council Executive Director Fiona Cooper addressed the Hawke’s Bay branch of the New Zealand Institute of International Affairs, delivering a speech on “New Zealand – USA Relations and the Impact of Tariffs”.
The tariffs are very unwelcome and are having a widespread impact in New Zealand and around the world. The US remains a large and important market for New Zealand. Fiona encouraged New Zealand exporters to do what they can to keep their footing in the US market, spread their risks where possible and see how it all plays out. The bilateral relationship will endure in the longer term, as it has during past policy disagreements with the USA.
NZUS Council Executive Director Fiona Cooper speaking to the New Zealand Institute of International Affairs Hawke’s Bay branch event delegates
Her full speech is below:
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Speech to the NZIIA Hawkes Bay Branch
Friday 8th August 2025
Fiona Cooper, Executive Director, NZUS Council
“New Zealand – USA Relations and the Impact of Tariffs”
Tēnā koutou katoa,
Thank you Ian.
Good afternoon everyone.
Thank you for the invitation to speak with you today.
The last time I addressed this group was in 2019 when we talked about New Zealand’s relationship with Australia.
I’m pleased to have this opportunity to talk to you about another very important bilateral relationship – with the United States of America.
Obviously our relationship with the US has been much in the news lately due to tariffs.
In my remarks I’ll look at how New Zealand’s trade was doing last year, before tariffs, to provide some context, and then look at what has happened with tariffs this year, and what it means for our bilateral relationship with the US.
First, I should say a quick word about the NZUS Council.
We were founded in 2001. We seek to advance New Zealand’s interests in a strong bilateral relationship with the USA.
We communicate the importance of the bilateral relationship, as I hope to do for you today.
We provide platforms to advance opportunities for New Zealanders with the USA, such as our congressional internship programme and Media Fellowship programme.
And we build supportive constituencies for New Zealand in the USA including through visits to the US and hosting US guests in New Zealand.
Along with some of my Council colleagues, I was in Washington DC in mid-July. We were very well received.
As has long been the case, New Zealand is well liked and seen as a trusted friend and partner.
When it comes to tariffs, however, that would appear to be beside the point.
Trade and investment with the US has grown significantly in recent years.
By the end of 2024, the US had become our third largest trading partner by value (two way trade was valued at NZ$28.6 billion last year) and second largest export market by value (worth NZ$16.4 billion, nearly 16% of NZ’s global goods and services exports).
Our goods exports to the US were worth NZ$8.99 billion, representing close to 13% of NZ’s total goods exports to the world.
Last year the US was our largest market for services exports, worth over NZ$7 billion last year, which is more than 20% of our total services exports.
Then along came tariffs
Having established that the US is one of New Zealand’s most important trading partners, now let’s have a look at some of the key developments in US tariff policy this year.
A lot has been happening. I read somewhere recently that if you are not confused about US tariffs then you are not paying attention.
President Trump demonstrated during his first term in office that he is not a fan of the multilateral rules based trading system. That is a challenging proposition for a small trade-dependent country like New Zealand.
During his election campaign, President Trump spoke of wanting to introduce reciprocal tariffs to “even out” tariff rates with the rest of the world and reduce America’s trade deficit. He is making good on that campaign promise.
Over the last six months, America’s trading partners have been on a tariff roller coaster.
On his first day in office on 20th January, President Trump announced his “America First Trade Policy”. It focussed on defending America’s national and economic security, including by addressing perceived unfair trade practices and unbalanced trade from America’s trading partners.
A few weeks later, the USA announced tariffs on Canada, Mexico and China, aimed at curbing illegal fentanyl imports and illegal border crossings.
Then the really big tariff news arrived on 2nd April, so called “Liberation Day”. That was when the President announced an array of new “reciprocal” tariffs on imported goods from all over the world.
From our point of view, the tariffs looked more unilateral than reciprocal, given that New Zealand’s very low tariff rates on imports of US goods was not taken into account.
Nonetheless, on Liberation Day New Zealand was hit with a new baseline 10% tariff rate along with over 100 other countries, including Australia, the UK and Singapore.
New Zealand was not being singled out for attention by the US. No country got tariffs of less than 10%. We appeared to be by-catch in America’s global tariff net.
At the same time, more than 60 countries, including US friends and allies such as Japan, Korea, the Philippines and other ASEAN economies, were hit with much higher tariff rates of between 25-50%, causing a great deal of consternation around the world.
A week later on 9th April, amidst financial market turmoil, most of those higher rates were paused for 90 days, and the 10% baseline rate was applied instead. In early July, the 90 day pause was extended until August 1st, to give more time for countries to enter into bilateral negotiations.
I’ll come back to last week’s tariff announcement shortly.
The details matter – tariff stacking
It should be noted that America’s “reciprocal tariffs” are in addition to any existing tariffs that are set out in the USA’s WTO commitments (Most Favoured Nation or MFN tariffs).
The baseline tariffs and other tariffs are stacked on top of MFN tariffs. So if a hypothetical product faced an existing MFN tariff in the US of 5%, that would mean an effective tariff rate of 15% with the addition of a baseline 10% tariff.
It can get quite complex to work out the rate that applies to specific goods, and how tariff stacking affects each product and how to document this. The more complex it is, the more expensive and time consuming.
That complexity is faced by New Zealand exporters as well as US importers, and also the US Customs Service which has to apply the new tariff rules for all countries. Inevitably cross-border trade slows down.
Product Specific Tariffs
In addition to the reciprocal tariffs, President Trump has issued some product specific tariffs that are impacting on New Zealand exporters.
In March steel and aluminium tariffs were set at 25% for all countries (removing any previous exemptions), and then increased to 50% in June (except for the UK which remains at 25%).
On 1st August, the US introduced a 50% tariff on all copper imports. There are also new limits on the importation of motor vehicles from some countries.
Other product specific tariffs have been floated but not yet imposed, including for timber products, pharmaceuticals, semiconductors and micro-chips.
We expect uncertainty about US tariff rates to continue for the foreseeable future.
US tariffs on China
Tariffs on China have been on a separate track. After the US imposed a 10% tariff on China in February, China retaliated with a 15% tariff on some US goods exported to China and announced some curbs on Chinese rare earth mineral exports to the USA.
The trade dispute ratcheted up over the next couple of months. During March and April, the US put the tariff on Chinese goods up to 20%,then 54%, and soon after to 84% and then, within hours, to 125%. That brought the total US tariff on Chinese goods to 145% when stacking was taken into account. The Chinese initiated other retaliatory measures.
Following negotiations in May, the US tariff on Chinese products was reduced to 30%, then put back up to 55% a few weeks later.
Last week it was announced that the US tariff on China would come down to 30% until 12th August, pending negotiations which are currently underway.
Recent US trade negotiations
During July, the US reached trade deals with several countries, most of which had been targeted with high reciprocal tariffs on Liberation Day.
In the UK deal, the tariff on British exports to the US was confirmed at 10%.
The European Union, Japan and South Korea reached deals setting their tariff at 15%.
Indonesia and the Philippines settled at 19%, and Viet Nam settled at 20% (plus 40% on any products trans-shipped from China).
In addition, a range of other trade-related undertakings were made by those countries, such as agreements to massively increase imports of US energy, particularly Liquefied Natural Gas, and/or to massively increase investment in the USA. However the details of those commitments remain vague, without detailed legal texts to underpin them.
Some countries like India, entered into negotiations but did not reach a deal by the USA’s deadline of 1st August. Other countries facing high tariffs may have wanted to negotiate but the US lacked the bandwidth to engage in multiple negotiations all at once and so focussed on their highest value trading partners.
So it has been quite a messy picture on tariffs for several months. That brings us to last week.
Most recent tariff news
On Friday 1st August NZ time, President Trump issued an Executive Order which ended the tariff pause and set out an updated set of tariff rates for America’s trading partners[1].
Around 110 countries had their tariff rate kept at the 10% baseline rate.
Eleven countries, including – to our great disappointment – New Zealand, were hit with a tariff increase from the baseline 10% up to a new rate of 15%, effective from 7th August..
The unlucky company we found ourselves lumped in with includes Afghanistan, Bolivia, Costa Rica, Ecuador, Ghana, Iceland, Papua New Guinea, Trinidad and Tobago, Türkiye and Uganda.
In addition, 5 African countries with tariffs slightly above 10% also went up to 15%. Another 21 countries had their tariff rate decreased to 15%.
All up, around 40 countries now face a 15% tariff on goods exported to the US including as I mentioned before, Japan and South Korea, both longstanding US allies.
In addition, by my count: 7 countries face a tariff of 18 or 19%, 4 countries face a tariff of 20%, 6 countries face a tariff of 25%, 5 countries face a tariff of 30%, and 3 countries face a tariff of 35%, 4 countries face a tariff of between 39-41%.
1 country (Brazil) was hit with the highest reciprocal tariff rate at 50% (the 10% baseline tariff rate plus an additional 40% reflecting American dissatisfaction on other matters).
Just yesterday the US warned that India would join Brazil in the 50% tariff club in three weeks’ time, due to India’s continued importation of Russian oil.
This is another sign that tariff uncertainty is not over yet.
Why did the tariff on New Zealand increase?
President Trump opted for a one size fits most approach to tariffs by focussing on whether the US runs a trade deficit or trade surplus with each trading partner. Countries were slotted into tariff bands according to the size of their trade surplus with the US.
Countries that ran trade deficits with the US last year, meaning they imported more from the US than they exported to the US, got the 10% tariff.
Countries like New Zealand that had a small trade surplus with the US, meaning we exported more to the US than we imported from them, got hit with a 15% tariff.
Countries with larger trade surpluses got hit with even higher tariffs, as did some countries that got offside with the US for other reasons like Brazil.
Last year New Zealand ran a small goods trade surplus with the US of around US$500 million. That is a very modest amount in the context of the gigantic US market.
It does not take into account the fact that in other years, the US has enjoyed a trade surplus with New Zealand. That is why we say that bilateral trade is pretty well balanced overall. It is swings and roundabouts each year.
The US tariff decision also does not recognise that New Zealand has one of the most open economies in the world with very low average tariffs.
As noted by the New Zealand Trade Minister Hon Todd McClay recently, the US faces an average tariff of just 0.8% on their goods exports to New Zealand.
It is disappointing that the US has chosen to focus on just one element of America’s bilateral trade relationships at a single point in time last year. Nevertheless, we are where we are.
What does it mean for New Zealand?
The 10% baseline tariff was set to cost New Zealand nearly $900 million a year, based on the nearly $9 billion worth of goods exports to the US last year. At 15%, that cost rises to around NZ$1.35 billion based on last year’s export figures.
This is a serious blow to New Zealand exporters.
The US is our largest market for beef and wine, so those sectors will feel the effects of tariffs.
The US is also an important market for many other New Zealand products including other meat, dairy, honey, casein, fish, fruit and wood, mechanical appliances, medical instruments, electrical machinery, pharmaceuticals and aluminium and steel products.
All of these sectors will feel the pinch of tariffs one way or another, with flow on effects for the New Zealand economy.
It will be particularly challenging for small and medium sized exporters that are heavily dependent on the US market, with less scope to navigate changing market dynamics compared to some of our larger exporters.
In addition, the US has suspended the de minimis rule, under which small export packages worth less than US$800 could enter the US tariff free. From the end of this month, that no longer applies, creating more headaches for New Zealand exporters.
The other worrying angle is that some of New Zealand’s main competitors for primary product exports to the USA remain at the 10% baseline tariff rate, such as Australia, Argentina, Chile, Colombia and Uruguay.
In the case of the EU, their 15% tariff is capped and not subject to stacking. So our 15% tariff is not the same as their 15%, thus creating another element of potential competitive disadvantage for New Zealand exporters.
It is very disappointing that we are no longer on an even playing field with key competitors in the US market.
We will have to see how this plays out in terms of US demand for New Zealand products, and how demand for New Zealand products is impacted in the markets of other countries which have also been hit with tariffs – including of course China, our largest export market.
What Next?
New Zealand senior officials are in Washington DC right now, to see if there is any way to get New Zealand restored to the 10% rate. That would be the best case scenario, but it won’t be easy if indeed it is possible at all.
It will be hard to overcome the brutal arithmetic of America’s single-minded focus on the size of their trade deficits with New Zealand and other countries. We can hope for the best but must prepare for the worst which is for the 15% tariff to continue.
We don’t see President Trump being dissuaded from his tariff plan, unless any of the current legal challenge to the tariffs are successful.
A couple of months ago, the US International Court of Trade invalidated the reciprocal tariffs on the grounds that the President had exceeded his authority under the International Emergency Economic Powers Act (IEEPA). A US District also found the President did not have the broad authority to impose the reciprocal tariffs.
However the tariffs will remain in place while those court decisions are being appealed. It is expected the matter will make its way to the Supreme Court either later this year or early next.
If the reciprocal tariffs are found to be illegal, there are other ways the US might choose to erect a tariff wall around the US economy.
A lot will depend on whether it is shown that the tariffs have caused the US cost of living to rise and/or hampered US economic growth, as many economists have predicted.
We heard from US business leaders in Washington DC that US manufacturers and retail supply chains are under pressure due to the rising cost of inputs because of tariffs, as well as labour market pressures that have not yet shown up strongly in economic statistics due to lag effects.
If the more negative economic predictions are proven correct in the lead up to next year’s mid-term congressional elections, perhaps the President might reconsider some tariffs, or at least find a way to soften the impact on US businesses and consumers. But that is all speculation.
Right now, President Trump is riding high based on perceived policy successes.
The reciprocal tariffs are set to generate close to US $30 billion a month in revenue, thus helping to offset the US budget deficit.
So far the US economy has exceeded expectations in terms of the inflation rate and labour market, although there are signs that the statistics might be starting to go in the wrong direction.
The US bond market has calmed down and is holding steady at around 4.2%.
Last month the President secured the passage of his One Big Beautiful Bill Act despite some strenuous objections. That Act included an array of policies designed to make the US safer, stronger and more prosperous including tax cuts, infrastructure investment and policies to boost US business competitiveness.
So President Trump is feeling good about how his agenda is rolling out.
Is there any good news for New Zealand?
The US remains a huge and lucrative market behind the new tariff wall. The US represents 4% of the world’s population, 30% of world consumption and 40% of global GDP.
While some New Zealand companies will struggle with the 15% tariff, others will box on, keen to tap into the demand for New Zealand’s high quality, innovative products and services that meet the needs of American consumers and businesses.
New Zealand goods exporters have been working on risk mitigation strategies for many months, building up their relationships with US customers and figuring out how to manage the tariffs.
Who bears the cost of the tariff is a matter of negotiation between the exporters and importers. In some cases the tariff costs are shared. In many cases at least some of the costs will be passed on to US consumers through higher prices.
At 15% that becomes a bit more challenging and makes NZ products a bit less competitive. We will have to see how this plays out.
For any New Zealand exporters in the room, please note that MFAT and NZTE would love to hear from you about how the tariffs are impacting your individual product lines. You can reach out to MFAT on their dedicated US tariff email address which is: [email protected]
Thankfully services trade is not subject to tariffs. Our services exporters are doing excellent business in the US. There is scope for services exports to continue to rise, especially if the US economy is doing well.
It is to be hoped that the US economy will indeed flourish as promised by President Trump, in which case all boats should rise on the US economic tide.
Other aspects of the bilateral relationship are in good shape
The US remains an important partner for New Zealand in other areas. The two countries have a strong record of collaboration in a range of areas, from foreign policy, defence and security to police matters, immigration, Customs and increasingly science, innovation, technology and the fast growing space sector.
For example in June our government announced five new joint New Zealand-NASA space research projects in the field of Earth observation. The projects will tackle shared challenges such as disaster resilience and environmental management over the next three years.
It is very exciting to see New Zealand research talent being involved in NASA’s world leading scientific research and technology. This is an important and growing strand of the bilateral relationship with the USA.
New Zealand and the United States are close strategic partners and regularly collaborate on defence and security matters, building on more than a century of military cooperation going back to the First World War.
We are both members of the Five Eyes and enjoy a special intelligence and security partnership. New Zealand works closely with the US Defence Department’s Indo-Pacific Command in Hawaii and there is a lot of operational engagement between our defence forces.
The upgrade of the FBI’s office in Wellington last week is another strand in the bilateral relationship, a sign of the strength of the Five Eyes partnership. It will boost cooperation in combating international criminal groups, cyber security risks and drug smuggling.
We also have growing relationships at the State level in the USA which is another area worth time and attention. Delegations from Utah and Colorado are scheduled to visit New Zealand in the next few months.
In conclusion
It seems likely that US trade policy uncertainty and market risks will continue. In spite of that, the large and wealthy US market is one worth striving for.
We would encourage New Zealand exporters to do what they can to keep their footing in the US market, spread their risks where possible and see how it all plays out.
As for the wider bilateral relationship, New Zealand and the US share a longstanding friendship. Friends do not always agree, with reciprocal tariffs being an obvious case in point.
New Zealand has to weigh up its national interests when it comes to bilateral and global issues, and advocate according to those interests. We cooperate where our interests align and defend our interests where they diverge.
We had trade disagreements during President Trump’s first term in office. We got through it and the bilateral relationship continued to thrive.
The key will be for New Zealand to maintain good lines of communication so that each side understands where the other is coming from.
We judge that New Zealand has managed this well and out of the public gaze over the last six months, but we were gazumped in the end by the narrow focus on the US trade deficit rather than any other considerations.
In the meantime, we need to defend and promote our interests in this new world of America First. The NZUS Council is taking a business delegation to the US in October. We look forward to demonstrating how, through trade and investment and other cooperation, New Zealand contributes to making the US safer, stronger and more prosperous.
We are indeed living in challenging times, but I believe we will get through it and that New Zealand and the USA will remain far more friend than foe.
Thank you.
[1] https://www.whitehouse.gov/presidential-actions/2025/07/further-modifying-the-reciprocal-tariff-rates/