The United States has hit New Zealand exporters with a higher 12.5 percent tariff and justified it with a claim the Government flatly rejects, that goods made with forced labour are reaching American shores from this country.
The new rate took effect from just after 4.01pm New Zealand time on Friday, part of a fresh regime that lands tariffs of between 10 and 12.5 percent on 60 economies. New Zealand and Australia both sit at the top rate of 12.5 percent, alongside major trading partners including China, the European Union, Japan and South Korea. The move replaces a temporary 10 percent tariff that was due to expire on the same day.
The path to this point runs through the American courts. In February the US Supreme Court ruled that President Donald Trump’s so-called Liberation Day tariffs were illegal. Trump moved to reimpose a temporary 10 percent tariff under a different legal power, known as Section 122, but that measure was always time limited and was set to lapse on 24 July. The new tariffs are the administration’s attempt to rebuild the wall it had been ordered to take down.
What is new this time is the reason given. US Trade Representative Jamieson Greer said the tariffs were designed to combat imports made with forced labour, and cast countries with weaker laws as laggards. “The United States has had a forced labour import ban for nearly a century, and rigorously enforces it,” he said in a statement. “It’s well past time for our trading partners to do the same.” Countries the administration said had committed to a forced labour import prohibition were rewarded with the lower 10 percent rate, a list that included Argentina, Bangladesh, Canada, Indonesia, Malaysia, Mexico, Pakistan and the United Kingdom.
New Zealand did not make that list, and the Government is not accepting the premise behind it. Trade Minister Todd McClay told RNZ the country strongly rejects the forced labour justification. “It’s another day and another tariff story from the US,” he said. “Ultimately, we reject strongly any suggestion that we’re involved in the things that they’ve said we are.”
McClay argued the stated reason was a cover for a policy the President had campaigned on and was determined to keep in place. “Ultimately, they are just looking for any means that they can to put tariffs back on,” he said. “But I strongly reject that there is any support at all in the New Zealand system for forced labour. We’re not involved in it. It doesn’t happen through our trade. It doesn’t exist in New Zealand. But they’re looking for any way to put a tariff rate back on.”
He also pointed to the shaky legal ground the tariffs stand on. “Let’s see whether the US courts finally think that the latest move in the US is legal or not,” he said, predicting further litigation. “The US is a very litigious country, so I reckon the lawyers are already getting ready over there, and we know that the tariff rates themselves are probably harming US consumers. It takes away choice and it’s pushing costs up for them.”
The playbook is one New Zealand has run before. After a surprise tariff hike in August 2025, McClay flew to Washington to put the country’s case to Greer in person, and New Zealand’s top trade diplomat Vangelis Vitalis was also dispatched to the American capital. This time a repeat trip looks unlikely. McClay said he had spoken to Greer recently and made the same points, with little to show for it. “I very clearly explained to him there isn’t forced labour in New Zealand, that we have robust rules and laws in place,” he said. “But ultimately there was a bit of a shrug of the shoulders. The president of America is going to do what the president is going to do.”
For exporters, the practical question is how long the pain lasts and how much of the trade it actually touches. Trade policy consultant Charles Finny told RNZ the decision was no shock. “This is exactly as we were anticipating,” he said, adding that businesses should brace for the rate to stick around. “I think exporters should be planning on these 12 or 12.5 percent tariffs applying for many months.”
There is some cushioning built in. Around a third of New Zealand’s exports to the US were carved out from the previous round of tariffs, including beef and kiwifruit, and that exemption is set to remain. Finny noted that roughly 80 percent of the country’s exports overall are covered by free trade agreements, which gives some sellers room to redirect. “For some exporters, it will be even tougher now with a 12.5 percent tariff, and they will be looking for new markets,” he said.
The United States is one of New Zealand’s largest export destinations, so a rate that runs above the 10 percent floor applied to some competitors matters at the margin, particularly for wine, red meat and manufactured goods that fall outside the carve-outs. The wider worry for the Government is less any single shipment and more the message that a long-standing partner is willing to tag New Zealand with a forced labour label to justify a levy, and that no amount of face-to-face diplomacy has shifted it.
How the Government handles trade friction with the United States is shaping up as one of the questions voters will weigh at this year’s general election. You can compare where the parties stand on trade and the wider economy with our voting tool.
What do you make of the United States tariff hike and the forced labour claim behind it? Have your say in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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