The 12.5 percent tariffs that the Trump administration imposed on New Zealand this month are more likely to survive legal challenges than the previous levies, according to the Washington Post’s veteran economics correspondent.
President Donald Trump, who has called tariffs the “most beautiful word in the dictionary,” imposed new taxes on 60 economies earlier this month, ostensibly for not banning products made with forced labour.
That means about 70 percent of New Zealand products exported to the United States will get more expensive for American consumers. While beef and kiwifruit are exempt, dairy products and wine are not.
These tariffs look more legally durable than previous levies, says David Lynch, international economics correspondent for the Washington Post, who has been covering the Trump administration’s trade wars since the president’s first term.
That’s because they’ve been imposed under Section 301 of the Trade Act of 1974, which allows the Office of the US Trade Representative to impose levies for unfair foreign trade practices, intellectual property violations, or forced labour concerns.
“This is legitimate, constitutionally delegated authority to the president,” Lynch says. “Under certain circumstances, where he judges that other economies have been unfair to the US or to US products in some way, he has the legal right to impose these tariffs.”
But that doesn’t mean they’re immune to challenges, he says.
The Liberty Justice Center, which was responsible for taking the case or filing the case with the courts that led to the invalidation of the emergency tariffs back in February, has filed a challenge to these Section 301 tariffs as well.
That will take some time to hear, but Lynch says this case was shaping up to be trickier than last year’s challenges.
The “Liberation Day” tariffs were imposed using an untested theory, and the Trump administration was gambling it could make them work.
In February, the US Supreme Court struck down the “Liberation Day” tariffs Trump imposed in April last year, ruling them unconstitutional and directing the US government to refund tens of billions of dollars it had collected from importers.
The administration followed up with temporary “emergency” tariffs that have since expired.
That led the administration to pursue new tariffs under Section 301. This provision had previously been used against China, but has now been extended to countries including Australia, Brazil, Norway and New Zealand.
“The acts, policies and practices of New Zealand related to the failure to impose and effectively enforce a forced labour import prohibition are unreasonable and burden or restrict US commerce,” the US Trade Representative said in a report justifying the action.
This is because New Zealand does not have a law explicitly banning imports made with forced labour. Trading partners that have “made commitments to adopt, and effectively enforce” bans on forced labour imports have been hit with a 10 percent tariff.
The New Zealand Government has argued the new tariffs are also flawed. “It’s just not credible that imports created with forced labour play any measurable role in New Zealand’s economy,” Minister for Trade and Investment Todd McClay said in a statement. “The [US] investigation just provides a legal pretext for broad tariffs rather than effectively combating forced labour.”
The latest moves underscore Trump’s enduring attachment to tariffs as a tool for economic and political gain. This year alone, he has threatened to punish Spain with new tariffs for not supporting his invasion of Iran, and this month slapped Canada with a new 50 percent levy, partly as punishment for “allowing” smoke from wildfires to cross their shared border.
“Trade is really something for decades that he has been hot under the collar about,” Lynch says, and he has an almost “kingly demeanour” in using his executive power to impose them.
“He wants to act. He wants to act right now, and tariffs allow him to do that.”
Trump is now reportedly mulling new rounds of tariffs. Lynch has reported that the Trump administration is expected to introduce another set of tariffs “within weeks” that will apply to goods from nations that subsidise excess manufacturing capacity. Those government policies result in a flood of low-cost products on global markets that U.S. companies can’t match, officials say.
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