Source: World Vision
Economy – Tariff ripples: Modelling the effects of US trade policy on the New Zealand economy
16 March 2026 – The RBNZ has published an Analytical Note exploring the implications of changes in US tariff policy for the New Zealand economy.
What this paper is about
On 2 April 2025, the US government announced its intention to significantly increase tariffs on imported goods.
In this Note, we study the potential impact of these events on the New Zealand economy. We find that in the short-run, trade diversions and the appreciation of the New Zealand exchange rate create deflationary pressures. Lower inflation induces lower interest rates which boosts domestic output. Over time, however, there may be inflationary pressure as global supply chains become less efficient. The analysis in this Note supplements our other related studies on the impact of changes in US tariff policy, such as on the impact of uncertainty shocks.
Key findings
- This Analytical Note explores the implications of changes in US tariff policy for the New Zealand economy, using the G-Cubed model to undertake scenario analysis. Our baseline scenario captures tariff announcements as of 31 July 2025.
- To capture the depreciation of the US Dollar following the tariff announcement, we further consider shifts in bond and exchange rate markets that are associated with an increased perception of risk in investing in US assets.
- The shock is disinflationary in the short run as it leads to trade diversions and appreciation of the New Zealand currency which lower import prices. The disinflationary pressure induces lower interest rates supporting the domestic economy. Overall, despite the weaker export sector, the effect on domestic real GDP is relatively modest.
- Over time however, global supply chains become more inefficient contributing towards higher import prices, creating some inflationary pressure by around 2030.
Why we did this research
The resulting disruptions to the global trade may affect the New Zealand macroeconomy through export demand, import prices, supply chains, and global financial conditions. In this Note, we study the impact of the changes to the US tariff policy through the lens of the G-cubed model. The model is a global trade model that features disaggregated country- and sectoral-level details. Alternative scenarios are examined to capture the evolving situations around the global tariff environment.
What data have we used?
The calibration and estimation of the parameters in the G-cubed model are done by the external model developers. The data used originate from various sources, such as the Global Trade Analysis Project (GTAP) model, IMF, World Bank, OECD, United Nations, the US Energy Information Administration, and the University of Groningen Growth and Development Centre.
More information:
Effects of US Trade Policy on the New Zealand Economy: https://govt.us20.list-manage.com/track/click?u=bd316aa7ee4f5679c56377819&id=5fb6033bf4&e=f3c68946f8
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Fire Safety – Total fire ban as risk escalates in parts of Nelson and Tasman Districts
Source: Fire and Emergency New Zealand
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Education – Ara celebrates milestone as 900 graduates cross the stage
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Energy – GasNZ reassures customers that “gas decline” stories are not about LPG supply
Despite the diminishing supplies of natural gas in New Zealand, there is no shortage of LPG, GasNZ says.
Chief executive Jeffrey Clarke says most of the news about declining ‘gas’ production in New Zealand is actually about ‘natural gas’, and is not relevant to ‘LPG gas’ users.
“LPG supplies are not declining like natural gas is,” he says.
There are 300,000 customers of LPG in New Zealand – including all South Island ‘gas’ consumers – who don’t have to worry about the decline in natural gas affecting them.
People sometimes ask how they can be sure whether their gas is LPG or natural gas, Clarke says.
“It’s pretty simple – if your gas comes in a cylinder or tank, then it is LPG.
“If you are a South Islander, then your gas is LPG – because there is no natural gas supply in the South Island.
“And if your gas is piped to your home or business in the North Island, then it is probably natural gas.”
Clarke says that if you are in any doubt, just check with your retailer.
And what despite the war in the Middle East – LPG suppliers in New Zealand say that they have plenty of stock, he says.
“Most of New Zealand’s LPG comes from Australia and USA, with some produced here domestically.
“None of the LPG New Zealand imports is shipped through the Middle East.”
