‘Time to sound alarm’ on US tariffs
New Zealand metal producers are closely watching the United States moves to introduce new tariffs.
US President Donald Trump said last week the US would impose a 25 per cent tariff on imported steel and 10 per cent on aluminium.
New Zealand manufactures steel (at Glenbrook) and aluminium (at Tiwai Point, near Bluff).
The Tiwai aluminium smelter, owned by New Zealand Aluminium Smelter (NZAS), is a major part of the Southland economy as well as being the largest user of electricity in New Zealand.
A spokesman for Trade Minister David Parker said New Zealand’s iron and steel exports to the US were worth $39 million last year out of a global total of $433m, while aluminium exports were worth $23m out of a total of $1.1 billion.
An NZAS spokeswoman said most of its metal went to the Asia-Pacific region.
‘‘Last year NZAS sold less than 2 per cent into the United States; however, we are closely watching developments as there are obviously wider implications for the global aluminium market.’’
If the US tariffs depressed the prices on the global market, the value of NZAS products would fall too.
Massey University professor in macroeconomics Martin Berka said it was also possible that if supply reduced worldwide, prices could rise.
The smelter had been operating in tough conditions for a number of years and this would not help, he said.
‘‘There will be retaliation by other countries and it’s not clear what that may bring.’’
Stephen Jacobi, executive director of the New Zealand International Business Forum, said New Zealand producers could also face increased competition in other markets if producers shut out of the US looked elsewhere.
Jacobi said there was also a risk of retaliatory action from other trading partners. The effects on New Zealand could be more serious if they introduced their own new trade tariffs on other imports. ‘‘New Zealand could easily get caught up if they start targeting agricultural products.’’
The US action could also create ructions within the World Trade Organisation (WTO), which appraises international trade concerns, he said.
‘‘If they’re saying they need the steel and aluminium industry to provide for domestic security it’s hard for the WTO to adjudicate it successfully. I don’t think the WTO will find it easy to do its job.’’
Jacobi said the tariffs were ‘‘very unwise’’. ‘‘The time not to be alarmist is gone. We should be sounding the alarm, left, right and centre.’’
Trump has since backed away from the tariffs somewhat, saying they would come off if a fairer NAFTA agreement, between the US, Canada and Mexico, was signed.
"New Zealand could easily get caught up if they start targeting agricultural products."
Stephen Jacobi of the New Zealand International Business Forum