Todd McClay: Trade Minister on the new round of tariffs proposed by Donald Trump
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What new tariffs has the Trump administration proposed?
The Trump administration is threatening new tariffs on more than 50 countries, and that includes New Zealand. The levy's proposed at 12.5%, which is higher than the 10% we are currently paying. It's being justified on the grounds that we are not doing enough to stop forced labour. Todd McClay is the Trade Minister and is with us. Morning, Todd.
Hey, Heather. Good morning.
Did you see this coming?
Well, yes, we did, actually. I mean, you will have seen that we started at 10% on Liberation Day, then it went up to 15%.
Why is the US justifying these tariffs based on forced labor?
The US courts found that they hadn't used the right legal base for the tariffs they put on all countries of the world, which meant that they were illegal. They put just 10% in for 150 days and started a number of investigations, and so we expected this. I'm currently in Paris at the OECD, and so some of those other countries that we're in the same club with The UK, Switzerland, Australia, Chile are of the same view that I am. Irrespective of what anybody has done, America is putting the tariff regime back in place and looking for a new legal base. At 12.5%, that's actually probably lower than I thought it was going to be. I thought they just put the straight 15% back in. But a country like Australia that was at 10% all the way through may well be going higher.
Okay, so is this a case of we get rid of one tariff, we fight it off, and another one will just pop up with some other reason for it?
Exactly right. So of the 60 countries that are covered by, you know, it's an interim announcement they haven't put in place yet, but it is going to roll out. The other countries that are not part of this investigation have a separate one, which is around excess supply or additional supply, i.e. you produce more than you need in your own country and therefore you sell it overseas and that in some way could be harmful to the US. And so ultimately the Supreme Court found that The legal base that the president had used to put the tariff rate on New Zealand and every other country was not correct. It was illegal. That's why a lot of companies, including New Zealanders, are trying to get those tariffs back that they paid, of course, because the court said that they could apply to get them back.
And they're just finding other legal means to put the tariffs in place again.
Can we fight this one off? Is it even worth us fighting it off, Todd, if they're just going to come up with some other thing?
Well, so we will certainly make the case that it's unreasonable, it's unfair, it shouldn't happen. New Zealand and other countries continue to do that because if we don't, then ultimately you've got to stand up for trade and trade rules. Here at the OECD, there are about 30 countries. In fact, I've just walked out of a mini ministerial meeting for the WGO where we're talking about the importance of trade rules. And there isn't anybody saying that what's happening out of the US is a good thing. In fact, they're saying that it's creating great uncertainty, it's harder for everybody's exporters, and ultimately that uncertainty leads to costs and so on. What is also happening, though, is that many of the countries are finding ways to work together away from the US, getting barriers down and creating the certainty.
So whether it is worthwhile or not, we will always make the case to the US that these Our tariffs are wrong. They shouldn't be imposing them upon New Zealand. We are not harming their trade at all. I will be having officials going up to make that case.
How are international counterparts reacting to the proposed tariffs?
But here the president is going to do what the president's going to do.
It does feel that way. Todd, thank you very much for talking to us and enjoy Paris.
It's Todd McClay, Trade Minister.
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