New Zealand’s steel and aluminium exporters are facing new trade hurdles as U.S. President Donald Trump reintroduces sweeping tariffs on metal imports. The move, which imposes a 25% levy on all steel and aluminium entering the United States, eliminates exemptions for key trading partners, including Canada, Mexico, and the European Union. With no exceptions granted, New Zealand exporters are bracing for added costs and potential shifts in global trade dynamics.
Tariffs Take Effect Amid Rising Trade Tensions
Trump signed the executive order on February 10, reinstating Section 232 tariffs that were first introduced in 2018 during his first term. The tariffs will come into force on March 12 and are part of a broader effort to bolster American manufacturing.
“This is a big deal,” Trump said at the signing. “This is the beginning of making America rich again.”
The White House cited national security concerns, arguing that global overproduction – particularly from China – has weakened domestic industries. According to a fact sheet released by the administration, previous exemptions had “created loopholes” that allowed foreign producers to sidestep U.S. trade protections. The new policy aims to close those gaps by applying strict “melted and poured” requirements for steel and aluminium imports.
While the tariffs were initially met with scepticism on Wall Street, shares of major U.S. steelmakers surged following the announcement, and the price of steel and aluminium spiked in global markets.
Minimal Direct Impact on New Zealand Exports
Despite the sweeping nature of the tariffs, their direct impact on New Zealand’s economy is expected to be limited. New Zealand’s steel and aluminium exports to the U.S. total around $150 million annually, with the new tariffs adding an estimated $5 million in additional costs, according to Trade Minister Todd McClay.
“For New Zealand exporters, we will face about an extra $5 million of tariffs – plus or minus,” McClay told Newstalk ZB. “That’s on about $150 million total of exports.”
By comparison, New Zealand’s top export industries—dairy, meat, and wine—are unlikely to be affected by this policy shift. However, manufacturers using steel and aluminium as inputs may face increased costs.
Ripple Effects on Trade and Currency Markets
Beyond direct export costs, economists warn that Trump’s tariffs could trigger broader economic disruptions. Retaliatory tariffs from key U.S. trading partners, including Canada and the EU, are already being discussed. European Commission President Ursula von der Leyen vowed “firm and proportionate countermeasures,” while Canada’s Liberal Party leadership contender Mark Carney called for “dollar-for-dollar” retaliation.
The uncertainty surrounding a potential trade war has already impacted global markets. Asian stock indices fell in response to the announcement, while the New Zealand dollar weakened against the U.S. dollar.
Westpac NZ’s chief economist Kelly Eckhold told New Zealand Adviser that the most immediate effect for New Zealand could be exchange rate fluctuations.
Eckhold said the New Zealand dollar has been falling against the strong U.S. dollar and that exporters will need to navigate reduced demand from nations affected by the tariffs.
Property Market and Interest Rate Adjustments
New Zealand’s economic concerns go beyond trade, with recessionary pressures already weighing on the property market. Rising unemployment and falling house prices have added to uncertainty, and the Reserve Bank of New Zealand (RBNZ) is expected to cut the official cash rate at its next meeting.
Eckhold noted that while Trump’s tariffs could contribute to a global economic slowdown, local factors—such as interest rate policy—would have a bigger impact on New Zealand’s housing market.
The Bigger Picture: Global Trade Uncertainty
The broader concern is whether Trump’s trade policies will escalate into a full-scale trade war. Already, Mexico, Canada, and China have outlined potential retaliatory measures, and Trump has hinted at further tariffs on pharmaceuticals and computer chips.
Economist Niven Winchester’s modelling, published in The Conversation, suggests that a global trade war could lead to a 0.1% decline in New Zealand’s aggregate household income—about $322 million per year. However, his analysis also found that New Zealand would likely redirect trade flows to other markets, mitigating some of the damage.