In April 2025, US President Donald Trump introduced the so-called “Liberation Day tariffs,” imposing sweeping import taxes on goods from numerous countries.
The Reserve Bank of New Zealand (RBNZ) has been closely analysing how shifts in U.S. tariff policy could affect the New Zealand economy. Using the G-Cubed global trade model, the RBNZ examined scenarios based on tariff announcements as of July 31, 2025, and considered how changes in bond and exchange rate markets—driven by increased perceived risk in U.S. assets—might ripple through the economy.
In the short term, the analysis suggests that trade diversions and an appreciating New Zealand dollar create disinflationary pressures. Lower import prices reduce inflation, which in turn can lead to lower interest rates and modest support for domestic output, partially offsetting weaker export demand.
However, over the longer term, inefficiencies in global supply chains may push import costs higher, introducing inflationary pressures by around 2030. The RBNZ’s research highlights that while domestic GDP impacts are modest in the near term, sustained disruptions in global trade could have more significant effects on inflation and the broader economy.
This work builds on previous studies examining uncertainty shocks and illustrates why understanding changes in U.S. trade policy is critical for New Zealand policymakers and businesses navigating an increasingly volatile global trading environment. The analysis draws on extensive international data sources, including the IMF, World Bank, OECD, GTAP, and the University of Groningen Growth and Development Centre.
US President Trump’s “Liberation Day tariffs” were stated as being justified under emergency powers granted by the International Emergency Economic Powers Act (IEEPA), sparking concerns over the U.S. executive branch’s ability to unilaterally reshape global trade.
That approach however, was short-lived. In February 2026, the U.S. Supreme Court ruled 6–3 that the tariffs were illegal, emphasising that the Constitution grants Congress, not the President, the authority to set tariffs. The decision has significant implications for countries like New Zealand, where exporters in sectors such as dairy, meat, wine and horticulture rely on stable access to the U.S. market.
By curbing the risk of sudden, unilateral tariffs, the ruling offers greater certainty for long-term contracts and pricing. It could also improve market access, particularly for New Zealand producers competing with tariff-affected countries.
At the same time, the decision underscores that future U.S. trade policy changes will likely be slower and more negotiated, reducing the likelihood of abrupt shocks but leaving global trade volatility a continuing factor.
For New Zealand, the Supreme Court’s ruling is broadly positive, reinforcing a more predictable trading environment while highlighting the importance of monitoring U.S. policy closely in an increasingly complex global market.
Trade and Investment Minister Todd McClay says the US Supreme Court’s announcement has the potential to be important for NZ exporters however, considerable uncertainty is likely to remain.
“Our exports have been holding up well in the US market since the Administration imposed a 15% tariff on New Zealand, with evidence that in many cases cost increases are being passed on.
“Any reduction in tariffs is welcome news. New Zealand does not believe the 15% tariff imposed on many of our exporters is warranted given the average tariff rate applied to US goods into New Zealand is just 0.3%.
“Our Embassy in Washington will engage with their counterparts to get more information so we can continue to work with exporters however, uncertainty around US tariff policy is likely to remain for an extended period of time.”
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