On the face of it, the US Supreme Court’s decision to strike down the “reciprocal tariffs” that were imposed last year under the International Emergency Economic Powers Act (IEEPA) is welcome news. That includes the 15% tariff that was imposed on New Zealand goods exports to the USA (later reduced to zero for beef and lamb amongst some other food items).
We expect New Zealand officials will be engaging with US counterparts to ensure we fully understand the implications of the Supreme Court decision for New Zealand exporters and what comes next, including in relation to refunds which the Supreme Court ruling did not address. This may take some time.
However we are not out of the woods yet. President Trump has said the IEEPA tariffs will be replaced by a new global 10% tariff (later revised upwards to 15%) under the auspices of Section 122 of the Trade Act of 1974. That allows the President to impose tariffs up to 15% for up to 150 days against countries that have large and serious balance of payments surpluses with the USA.
President Trump is reported to have said that during that time, the Administration will begin new tariff investigations under Section 301 of the Trade Act, which permits tariffs and quotas to be applied in response to harmful trade practices. We expect the USA will need to prioritize these investigations as it would be a huge task to complete Section 301 investigations for every exporting nation.
We will need to make the case that New Zealand’s trading relationship with the US is balanced and complementary, and that we do not engage in harmful trade practices that could justify the imposition of Section 301 tariffs
The continuing uncertainty around US tariffs is a major challenge for New Zealand exporters. Trade and Investment Minister Hon Todd McClay has highlighted that while any reduction in tariffs is welcome news, considerable uncertainty around US tariff policy is likely to persist for an extended period.
Read his press release on the Beehive website.