Luxon has reiterated New Zealand’s unwavering commitment to free trade, speaking to media following a 90-day suspension of new U.S. tariffs that had escalated concerns about a global trade war. Despite the temporary reprieve, Luxon stressed that the underlying issues remain and that New Zealand must continue to advocate forcefully for a stable, rules-based trading system.
“It’s been good to see overnight some de-escalation of the tariffs from the U.S., albeit suspended for 90 days,” Luxon said. “But it still doesn’t change the fundamental premise which is that we want to continue to advocate very strongly on the world stage for free trade.”
The Prime Minister said he would spend the afternoon in a series of calls with international counterparts, particularly those in Europe and the Indo-Pacific, to reinforce the case for a coordinated response to mounting trade tensions.
“There’s a real opportunity for us to coordinate and to work together,” Luxon said. “If there’s opportunities where we can actually create an environment where free trade can take place, that would be [incredibly valuable].”
He noted the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which accounts for 15% of global trade, as a key framework to build upon. Discussions with European leaders were also on his agenda, though Luxon acknowledged that progress with the European Union could be slow due to the need for all 27 member states to ratify agreements.
The Prime Minister warned of the economic risks posed by uncertainty around tariffs, particularly for global investment and consumer confidence. Citing his background in business, Luxon noted that instability can lead to hesitation among CEOs and consumers alike.
“When you think about laying down investments, when you think about growing your organisations, the danger is everybody’s just sitting there in a state of stasis,” he said. “Consumers don’t want to purchase or buy because they’re not sure what’s happening next with pricing.”
Luxon dismissed the idea of retaliatory tariffs on U.S. goods, saying such a move would harm New Zealand workers by driving up costs. “We won’t be applying a reciprocal 10% tariff on U.S. products coming into New Zealand,” he confirmed. “That will only end up hurting New Zealand workers because they will pay higher prices. It’ll actually lead to higher inflation.”
He estimated that the U.S. tariffs would affect around $900 million of New Zealand exports, or roughly 0.2% of GDP. However, exporters remain optimistic about their long-term prospects in the U.S. market and are largely planning to pass the added costs on to American consumers.
Luxon warned that rising prices for U.S. consumers could dampen demand and slow economic growth, with knock-on effects for the global economy.
The Prime Minister also addressed the ongoing U.S.-China trade tensions, describing them as a major concern. “We just don’t believe that tariffs and trade wars is the way to go forward,” he said. “What we’re seeing is probably the biggest disruption over the course of the last couple of weeks to that [post-war trade] order.”
New Zealand officials have been engaged in discussions with U.S. counterparts both before and after the latest announcements, and Luxon said he was confident that New Zealand’s position was being clearly communicated.
“We have a very positive, working, constructive relationship with the U.S.,” he said. “We’ve had a series of senior ministerial engagements. Since the announcement, we’ve been making sure our officials have been in there making the case for New Zealand again and will continue to do so.”