Photo: Sophie Barnes
US President Donald Trump no longer has beef with some Kiwi exports, but others are still stuck paying a high price - and an economist warns it's anyone's guess how long the relief will last
A surprise backflip on tariffs from Washington delivered a rare win for New Zealand's primary sector - but there are concerns that the removal could be reversed at any time.
New Zealand economist Brad Olsen doesn't have high hopes it will lead to the permanent end of the tariff saga.
"I really don't think this is the case," the Infometrics principal economist tells The Detail.
"I'd love it. I'd love us to go back to, you know, a position where tariffs weren't normal and expected, but in all of my conversations with those overseas, it's a pretty constant view that tariffs are here to stay, in some way, shape, or form.
"You'd hope that maybe over time they get less intense, but there is a real focus domestically in the US, as the world's largest economy, that they are still feeling the hit - or feeling a perceived hit - from challenges overseas in terms of import levels and wanting to do a lot more domestically.
"That means that any future administration will find it tough to unwind that full level of tariffs because immediately everyone is going to [pillory] them and say, 'well, you are looking after other countries and you are not looking out for number one in the US'."
The tariffs, part of Trump's "America First" agenda, were introduced in April at 10 percent, then raised to 15 percent in August.
But less than a week ago, with relatively little fanfare, Trump announced that the tariffs on products representing around 25 percent of our exports to the US and worth about $2.2 billion annually, would be removed, effective immediately.
Put simply, America needs cheaper food, and New Zealand has it.
"It seems very much a political decision based around the cost-of-living challenges that US consumers have been facing," Olsen says.
"You have a number of products that have been increasing [in cost], sometimes because of the tariffs, sometimes not, but being exacerbated often by those tariff costs."
Potential wide-ranging benefits
The tariff removal is a win for New Zealand, but Trump's famously changeable policies have meant the celebrations have been muted.
"Everyone is really chuffed by it," Kate Acland, the chairperson of Beef and Lamb New Zealand and the New Zealand Meat Board, tells The Detail.
"It has come out of the blue, and like the tariffs came on out of the blue - well, overnight - this is something that has happened very suddenly as well. So, a bit of uncertainty about all these swings backwards and forth. But everyone is really happy. We are taking it. It's a really positive time in the red meat sector."
She says the tariffs haven't been a cheap exercise for the red meat industry, which is a crucial source of our country's economic growth, supporting rural communities and boosting our export performance.
"Since the tariffs came on in April, there's been an additional tariff cost of $122 million, and at the 15 percent rate, we were forecasting it would be around a $300 million cost, so that's really significant, given that previously we were on a tariff of 0.3 percent."
The benefits of the tariff removal could extend well beyond farmland, orchard gates, and woolsheds. Rural communities that rely on the meat and horticulture sectors could see new investment, job stability, and a boost in confidence, and all before Christmas.
"This is great news for farmers and for the whole red meat industry," says Acland.
While the unexpected tariff removal has injected fresh energy into the sector, there are some "losers" in both New Zealand and America.
"In general, US consumers are still going to get hit by tariffs because they haven't all gone away," Olsen says.
"The likes of the president maybe lose out, ever so slightly, because he's had to change his view a little bit more but realistically probably not a lot of people are focussing too much attention on that because that focus on the cost of living is so intense.
"Here in New Zealand, it really is an overall win ... but the losers in a sense are those who didn't get the relief, they haven't seen those changes in tariffs, and they are still having to protest their case."
He says we are starting to see "parallels here in New Zealand where those pressures on some important goods are in focus".
"The last couple of months, we have spent a lot of time in New Zealand talking about butter. Mince has now become the new butter. We are talking a lot more about that as a commodity now [that it's 23 dollars for a kilo].
"That's not a tariff-direct impact, but the president has, of course, been able to say 'look, I'm making a difference there and taking off some pressure'. Of course, he added it in the first place.
"But from a consumer point of view, you are getting a bit of relief. From an exporter point of view here in New Zealand, you've got some more opportunity and room to manoeuvre and a better competitive environment with other exporters."
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