Key Points

Amid a "modest" trade surplus with the United States, New Zealand is facing a sharp increase in US tariffs on its exports from 10 per cent to 15 percent starting August 7, according to a New Zealand government statement on Friday.

New Zealand Trade Minister Todd McClay said the tariff hike is based on US calculations of trade surpluses, even though New Zealand's surplus is modest -- about 500 million US dollars -- and not significant in the context of the US economy.

"Over the past decade, our trade relationship with the US has seen periods where the US enjoyed a significant surplus and times, like now, when New Zealand has a modest one," McClay said, adding the bilateral trade remains "balanced and complementary."

The minister warned that the higher tariffs will seriously impact New Zealand exporters sending about 9 billion NZ dollars (5.28 billion US dollars) in goods to the United States each year, saying a 15 per cent rate will be much harder for companies to absorb or pass on than the previous 10 per cent.

McClay said he will urgently seek talks with the US trade representative, noting US exports to New Zealand face a much lower average tariff of 0.8 per cent.

"Our focus now moves to engaging directly with the US on this current announcement to seek changes to this decision," he said, reaffirming New Zealand's commitment to open, rules-based trade and strong bilateral ties.

New Zealand Finance Minister Nicola Willis told the media that New Zealand has been hit by a "very blunt formula."

"This is a disappointing development. New Zealand and the US have a deep, long-standing friendship and US exporters already facing much lower tariffs exporting to New Zealand than goods going the other way," Willis said.

- IANS