Last week, Donald Trump slapped a 15% tariff on New Zealand exports. An annual nine billion dollars of our goods will now face higher barriers entering the US market. Our beef, wine and dairy exporters will suffer.  

Australia got only a 10% slap. Labour calls this difference a “major fail”. 

Our negotiators rushed to Washington but came back empty-handed. The EU and UK got deals. We did not. Americans will buy Australia’s exports rather than ours, unless we accept lower prices. That cuts our incomes. 

For some, the urge to hit back is strong. 

Countries with economic clout might hit back ─ in the hope that the US will change its mind.  New Zealand has no such clout.  

Happily, nobody in New Zealand seems to be calling for retaliatory tariffs. No politicians are demanding we match Trump’s tariffs. 

This restraint is good news. 

Tariffs hurt everyone. Normally, it is best to sell to whoever pays the most and to buy from whoever charges the least. Tariffs mess with this system. Trump’s tariff will hurt American consumers (who will pay more) and New Zealand exporters (who will earn less). 

Consider smartphones. American companies import chips from Asia because they are cheaper and better. With tariffs, phone makers pay more for these chips. Both imported and locally made phones in the US get more expensive.  

If New Zealand imposed a 15% tariff on incoming American goods New Zealanders’ living standards would drop even more. Our businesses would pay more for software and machinery. Our exporters, already struggling, would face higher costs for equipment. Kiwi shoppers would pay more. We would be hurting ourselves for no gain. 

Worse, hitting back could push Trump to raise his tariff on us even higher. Maybe to 25%. Maybe 40%.

This is where size matters. America can threaten other countries because everyone wants to sell to its huge market. Trump’s threats carry weight. 

New Zealand’s small market is insignificant to the US giant.  

Globally, this attack on free trade is made more damaging by the wilful nature of these decrees. When businesses do not know if tariffs will be 10%, 15% or 50% next year, they stop building factories. Growth slows, even in the US. Everyone loses. 

Our government’s response has been sensible. Express regret. Adapt to reality. 

That restraint serves New Zealand well.