Trump imposes 10% tariff on NZ

President Trump has announced massive tariffs on most countries, including a 10% tariff on all NZ exports to the US.

The table he released claims that NZ imposes an average 20% tariff on US goods. This is just fantasy. The actual level of average tariffs is around 2%.

What the Trump Administration appears to have done is include any GST or VAT in a country as a tariff. This is of course moronic as a GST or VAT applies to all goods and services, not just imported ones. It doesn’t advantage local suppliers at all.

The reality is that Trump just loves tariffs. He sees them as a great way to raise money. It’s the biggest tax increase in US history.

Because he has imposed tariffs on so many countries, I suspect US prices will increase more than if he had done them on just a few countries. There will be less pressure for exporters to absorb more of the cost.

The direct cost on NZ exports looks to be around $900 million a year. However how much of that is paid for by NZ exporters and how much by US consumers remains to be seen.

The other impact likely to be seen by NZers is KiwiSaver account balances tumbling as global sharemarkets fall. We may also see weaker economic growth and a slight uptick in unemployment, plus more cuts in interest rates.