Trade Minister says potential higher US tariffs are 'no surprise'

Trade Minister Todd McClay says he is not surprised that US Government tariffs put on New Zealand goods could rise.

New Zealand exports to America are currently the subject of a 10% tariff rate.

But there is speculation that could very soon rise to 12.5%.

Talking to media after the Future of Investment and Trade (FIT) Partnership ministerial meeting wrapped up in Auckland this week, McClay said a larger tariff wasn’t unexpected.

“There will be no surprise that actually the US tariff rate may be about to change,” he said.

McClay said the Government has indicated they expect a new mechanism will be put in place to reinforce the tariff rate that US President Donald Trump had campaigned on.

The FIT partnership meeting has been one of the biggest trade gatherings held in New Zealand for two decades wraps up.

Ten trade ministers and about 100 delegates representing 21 countries jetted into Auckland for the meeting.

Earlier in the week, McClay told the Herald of its importance.

“This is a global gathering, hosted by New Zealand, at a time when the world trading system is under real pressure. Ministers are coming to Auckland to focus on reducing barriers and boosting trade,” McClay said.

The 16 FIT Partnership countries (Brunei, Chile, Costa Rica, Iceland, Liechtenstein, Malaysia, Morocco, New Zealand, Norway, Panama, Paraguay, Rwanda, Singapore, Switzerland, the United Arab Emirates and Uruguay) are small and medium-sized economies that rely on trade.

The Herald reported earlier today how Switzerland looks set to be the next cab off the rank in new free trade negotiations with New Zealand.

The landlocked country, known for its luxury goods, financial services and dramatic alpine views, took part in the FIT Partnership meeting.

McClay met Switzerland’s State Secretary, Helene Budliger Artieda, on the sidelines yesterday.

“She and I know each other very well now,” McClay told the Herald after the meeting.

“We are two of the four founding countries of the Future Investment Trade Partnership. We are like-minded countries.

“We like to respect the rules, and I would hope that we can get to a point of she and I working out the next steps forward that could lead to a trade negotiation with Switzerland.”

A deal with Switzerland is part of National’s pledge to kick off trade deals with seven new countries across five continents if re-elected.

The first tranche identifies Brazil, Switzerland, Argentina, Bangladesh, Nigeria, Uruguay and the European Free Trade Association (Iceland, Liechtenstein and Norway) as “priority markets” that collectively represent 700 million people with a combined gross domestic product (GDP) of more than US$5 trillion ($8.76t).

Switzerland is ranked 20 out of 243 trading partners in terms of total trade value.

“Switzerland, as an example, has a population larger than ours, but they are exponentially wealthier consumers,” McClay said.

“One of the wealthiest countries in the world and, for New Zealand, countries to actually be able to get companies to get access through some of the work that FIT partners are doing this week or through a free trade agreement, not only will it give them a head start, they’ll do exceptionally well there.”

Rolex is among the luxury Swiss-made watch brands.

Switzerland is not part of the European Union and has a high cost of doing business, meaning New Zealand companies usually target high-margin, premium or niche sectors.

“It’s not a huge market for us, but it can be,” McClay said.

“The challenge in Switzerland will be some of the rules and regulations, some of the standards.

“We have very high standards in New Zealand, but if you have to comply with theirs and they’re just done differently than here, there’s a cost to that. And so what a trade agreement does is give certainty.

“It means you have rights and obligations in a market and if you go there and invest your time and your capital, then actually those rules won’t change.”

Two-way trade between New Zealand and Switzerland was worth NZ$1.88 billion in the year ending December 2025. New Zealand exports to Switzerland were NZ$429 million, comprising NZ$100 million in goods and NZ$324 million in services. Key exports included travel services, meat and edible offal, and hides and skins.

New Zealand imports from Switzerland were NZ$1.45 billion, comprising NZ$624 million in goods and NZ$825 million in services. Key imports included transportation services, pharmaceuticals, clocks and watches, insurance and pension services, and charges for the use of intellectual property.

Officials will hold their first meeting in September.

Prime Minister Christopher Luxon signed a food and fuel deal in Singapore in May.

McClay told the Herald that the Singapore deal would officially be ratified and come into force today.

“That agreement we signed just a few months ago in Singapore with the Prime Minister guarantees the two countries will not restrict the sale of essential goods.

“In the case of Singapore, they’re guaranteed to always provide us, sell us, fuel, medicines and chemicals and in return we’re guaranteed to always supply them with the high-quality food that we produce.”

It is coming into force much more quickly than is usual for deals of this size.

“The two countries have worked remarkably quickly because the Prime Minister of Singapore and Christopher Luxon told the ministers to go quickly so we can create certainty.

“There are other countries here during this meeting that have asked us about it and are indicating they might like to join it or do something bilaterally or perhaps part of FITP.”

McClay said Korea, which is in Auckland as an observer, was one of those.

“One of the things I will be advocating for as the chair of the meeting formally tomorrow is that this agreement [between] Singapore and New Zealand has more than just supply chains.”

Many of the FIT countries are smaller nations.

“These are small and medium-sized economies in the world who are trade-dependent or at least trade is important for them.

“It’s not a trade agreement, but what it does is it allows us to come together and say, let us work out ways to take on treaty-level commitments, binding commitments to make it easier to trade, to reduce barriers.

“Let’s look at things like paperless trade as an example, which doesn’t sound very interesting, but for a New Zealand company, if you have e-certification, that means that your product can go to any one of those countries without having to do more paperwork and it crosses that border almost instantly.

“You are more productive, your costs go down, and you have greater certainty.”

Katie Bradford is a Senior Correspondent at the Herald. She has been a broadcast journalist for over 20 years and was based in the press gallery for 10 years. She specialises in politics, business and Auckland issues.