New Zealand and US Tariffs: How a 15% Rate Hit Exporters and Then Unravelled

The US tariffs of 2025 and 2026 cost New Zealand exporters less than first feared, but they ended the assumption that the country’s second-largest market offers stable, rules-based access. This article explains the sequence of rates, which products were hit and which escaped, how exporters and the government responded, what the current regime costs and what finance teams should do about it. It is part of the New Zealand Company Stories hub.

How did New Zealand end up facing US tariffs?

New Zealand was swept into the across-the-board “reciprocal” tariffs announced by President Donald Trump on 2 April 2025. It had no free trade agreement with the United States to protect it and no specific dispute to resolve.

The first step was a 10% baseline duty on almost all imports from 5 April 2025, imposed under the International Emergency Economic Powers Act (IEEPA). New Zealand received the minimum rate. Officials pointed out that the country’s own average tariff on American goods was about 0.3%, so there was little to reciprocate.

The second step was less kind. On 31 July 2025 the White House published revised rates. Countries with which the United States ran a goods deficit above a set threshold were moved to 15%, and New Zealand, whose surplus had been inflated by record beef prices, was among them. The higher rate took effect on 7 August 2025. Australia, Britain and Chile stayed at 10%. Trade minister Todd McClay called the decision unwarranted, and the chief trade negotiator, Vangelis Vitalis, was sent to Washington. On 29 August the US also suspended its de minimis rule, which had let parcels worth under US$800 enter duty-free.

What does New Zealand sell to the United States?

New Zealand sells the United States mainly beef, dairy proteins, wine, lamb, fruit, wood products, seafood and specialised manufactured goods. Goods exports were about NZ$9.3bn a year when the tariffs were imposed, 13% of all goods exports.

Meat is the largest item. Chilled and frozen beef was worth about NZ$1.8bn to NZ$2bn a year, most of it lean manufacturing beef blended into American hamburger patties. Dairy, chiefly casein, whey proteins and butter, was worth about NZ$883m. Wine, overwhelmingly Marlborough sauvignon blanc, earned about NZ$702m, making the US the industry’s largest market. Lamb, kiwifruit, apples, timber, fish and honey follow.

Manufacturers are exposed too. Fisher & Paykel Healthcare earns a large share of its revenue in the United States and supplies it from plants in both New Zealand and Mexico. Logistics groups such as Mainfreight felt the effect indirectly through shifting freight volumes. The US had overtaken Australia to become the second-largest goods market, which is why it had looked like the natural hedge against the concentration described in the article on the New Zealand-China free trade agreement.

Who decides the tariffs and under what law?

US tariffs are set by the president and the US Trade Representative under powers delegated by Congress, and are reviewable by the courts. New Zealand’s rates have rested on three different statutes in sixteen months, which is the main source of uncertainty.

On 20 February 2026 the Supreme Court ruled by six votes to three, in Learning Resources v. Trump, that IEEPA does not authorise the president to impose duties. The reciprocal tariffs fell at once. The administration replaced them the same day with a global surcharge under Section 122, a balance-of-payments power limited to 150 days unless Congress extends it. Sector tariffs on steel, aluminium and timber under Section 232 were unaffected.

When Section 122 expired on 24 July 2026, the US Trade Representative imposed duties under Section 301 on about 60 economies covering 99% of US imports, citing forced labour in supply chains. New Zealand, Australia and more than thirty others were assigned 12.5%; seventeen economies with forced-labour import bans or reciprocal trade agreements with the US were assigned 10%.

What were the turning points for exporters?

Three moments mattered most: the rise to 15% in August 2025, which put New Zealand at a disadvantage to Australia; the November 2025 exemption for beef and kiwifruit; and the Supreme Court ruling of February 2026.

The August increase hurt because it was relative. A 10% tariff that every supplier pays is largely passed on to American buyers. A five-point gap against Australian beef, lamb and wine is not. New Zealand Winegrowers estimated the duty on a 750ml bottle would rise from under ten cents to about NZ$1.10, and the industry put the annual cost at roughly NZ$112m.

In mid-November 2025, facing high grocery prices, the president signed an order removing the reciprocal tariff from a list of foods the US does not produce in sufficient quantity. For New Zealand it covered beef, prepared meats, offal, kiwifruit, berries, avocados and other fresh fruit: about NZ$2.21bn of trade, a quarter of exports to the US, and an estimated NZ$330m a year in duty avoided. Beef returned to its in-quota rate of roughly 1% within a country-specific quota of 213,402 tonnes. Lamb was left out.

The court ruling then removed the legal foundation of the whole structure and opened the question of refunds for ten months of duties already paid.

What do exporters pay now, and what do the latest numbers show?

Since 24 July 2026 most New Zealand goods pay a 12.5% additional duty on entry to the United States, on top of the ordinary most-favoured-nation tariff. Beef, kiwifruit and all product lines previously excluded remain exempt.

New Zealand’s foreign ministry reports that the Section 301 order carried over the earlier exclusions and added several hundred tariff lines, worth about NZ$100m of New Zealand exports. Roughly 80% of that sits in two categories: animal products used as feed and vegetable seeds for sowing. One exclusion was narrowed, so that certain chemicals are exempt only when used in pharmaceutical applications. The Section 301 duty does not stack on goods already subject to Section 232 tariffs.

The rate is now the same as Australia’s. That removes the relative disadvantage that made the 15% rate so damaging for lamb and wine, though both countries are worse off than the seventeen economies at 10%. Sheepmeat, which paid 15% from August 2025 and 10% from February 2026, now pays 12.5%.

The trade figures have been resilient. Westpac economists noted in December 2025 that strong demand and high commodity prices were shielding most primary exporters. American cattle numbers are at multi-decade lows, so importers needed lean beef whatever the duty. Total New Zealand goods exports were NZ$8.1bn in June 2026, up 25% on a year earlier, driven by dairy and meat prices.

How did exporters and the government respond?

The government chose quiet diplomacy over retaliation, and exporters used pricing, product mix and market diversion. Neither sought a confrontation that a country supplying 13% of its exports to the US could not win.

Wellington ruled out counter-tariffs from the start, on the ground that they would raise costs for New Zealand consumers and achieve nothing. Ministers argued the case for exemption on consumer-price grounds, an argument that carried weight once American beef prices reached records. They also accelerated other negotiations, including agreements with the Gulf states and India.

Companies responded according to their bargaining power. Beef exporters passed most of the cost to importers who had no alternative supply. Zespri, with a branded, differentiated product, held its prices and was exempted within three months. Wineries, selling into a crowded category against Californian producers who pay no duty, split the cost with distributors and absorbed margin. Red-meat co-operatives redirected some lamb to Europe and Britain, where recent trade agreements had improved access, a shift discussed in the article on Silver Fern Farms and Alliance Group.

How does New Zealand’s position compare with its competitors?

New Zealand is now level with Australia and Brazil at 12.5%, behind the group of economies at 10%, and ahead of countries facing higher sector-specific duties. In beef and kiwifruit it competes without any additional tariff at all.

The comparison that matters varies by product. In beef the rivals are Australia, Brazil and Uruguay; all benefit from the food exemption, so competition is on price and quota. In lamb the only significant rival is Australia, now on equal terms. In wine the competitors are domestic producers and European exporters, and the tariff is a pure cost disadvantage against California. In dairy proteins, European suppliers are the benchmark.

The deeper comparison is between markets. China offers tariff-free access under a treaty but carries political and demand risk. The US offers high prices but access that can change by proclamation. Māori exporters of meat, wine, seafood and fruit, described in the overview of the Māori economy and iwi corporations, face both exposures at once.

What are the risks from here?

The main risks are a further change of legal basis or rate, the withdrawal of the food exemptions if US politics shift, a fall in American beef prices as herds rebuild, and the cost of permanent uncertainty in contracts and investment.

There is a commodity-cycle risk hiding behind the tariff story. High prices, not policy, protected exporters in 2025 and 2026. When the American herd recovers and demand for imported lean beef eases, the same tariff structure will bite harder on whatever remains dutiable. Wine is already there: global oversupply and falling consumption leave little room to pass on costs.

Small direct-to-consumer brands face a separate problem. The end of the US$800 de minimis exemption means every parcel now attracts duty and paperwork, which changes the economics of shipping from New Zealand. The longer history of local consumer brands in the American market is covered in the article on Allbirds and Icebreaker.

What can founders and CFOs learn from the US tariff episode?

The practical lesson is that trade policy has become a financial variable to be modelled and hedged like a currency, and that the firms which coped best had pricing power, flexible contracts and more than one market.

• Model tariffs as scenarios, not forecasts. Four rates in sixteen months means budgets need a range, with triggers for repricing.
• Fix the Incoterms. Decide deliberately who is importer of record and who bears duty changes; write tariff-adjustment clauses into supply agreements.
• Know your substitutes. Beef exporters passed on the cost because American buyers had no alternative. Wine exporters could not. Pricing power is a function of the buyer’s options.
• Check classification and origin. Exemptions are written by tariff line. A correct HS code decided whether a product paid nothing or 15%.
• Keep customs records. Refund claims and exclusion requests depend on entry-level data that many exporters leave with their brokers.
• Diversify on purpose. A second and third market are insurance; the premium is lower margin in good years.

What happens next for New Zealand and US tariffs?

The next phase will be decided in American courts and politics: litigation over refunds and over the Section 301 action, possible congressional intervention, and bilateral negotiations in which New Zealand seeks to move into the 10% group or secure wider exclusions.

Wellington’s stated aim is to restore the access that existed before April 2025. A realistic interim goal is a reduction to 10%, which would require either a reciprocal trade arrangement or recognition of New Zealand’s own rules on goods made with forced labour. Further product exclusions for lamb and wine are a second objective, though neither fits the “not produced in the US” logic that freed beef and kiwifruit.

For exporters the planning assumption has changed for good. The US remains a large, high-value market that pays well for grass-fed protein and premium wine. It is no longer one where access can be assumed, and its place in a diversified export portfolio is being recalculated accordingly.

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