Trade Minister Todd McClay says the United States is likely to raise its tax on New Zealand goods coming into the country this week.

The tax — called a tariff — is a charge the US government puts on products arriving from other countries. Exporters sending goods to the US have been through a few changes to this tariff recently. RNZ

Here is how we got here. The Trump administration originally put a 15 percent tariff on goods from New Zealand and other countries. A US court then ruled that was illegal. The tariff was dropped to 10 percent for 150 days as a temporary measure. That 150-day period is now ending. RNZ

McClay said he expects the tariff to land at 12.5 percent this week. That is lower than the original 15 percent but higher than the temporary 10 percent. He called the 12.5 percent level "still unhelpful" for New Zealand exporters, while noting it was lower than what had been in place before.

None of these changes came from a negotiation between New Zealand and the United States. The US government set the tariff on its own, the court pushed back, and now the rate appears to be settling at a level the US administration thinks will hold up legally.

New Zealand does not have a free trade agreement with the United States. A free trade agreement is a deal between countries that lowers or removes taxes on each other's goods. Without one, New Zealand has limited ways to push for a lower tariff through direct talks with Washington.

Officials at MFAT (the Ministry of Foreign Affairs and Trade) and the Ministry for Primary Industries now face a practical challenge. A 12.5 percent tariff makes New Zealand products more expensive in the US market, which puts them at a disadvantage against goods from countries facing lower or no tariffs.

The broader context here is that McClay's choice of words — "still unhelpful" but lower than before — tells you where the government sits. It is not saying the tariff is fine, and it is not claiming it can get rid of it. The message to exporters is that the government is paying attention, without promising something it cannot deliver.

The court ruling that found the original 15 percent tariff illegal is the key legal development. It showed the authority used to set that rate did not hold up under legal scrutiny, which forced the temporary drop to 10 percent. The move back to 12.5 percent suggests the US administration has picked a rate it thinks will survive further legal challenges, rather than dropping tariffs altogether.

For New Zealand, the question is how exporters cope with a rate that is not the worst case but still adds cost. Businesses with tight margins on goods sold to the US will feel the 12.5 percent tariff more than those that can charge higher prices or sell to other markets instead.

McClay's comments suggest the government is not caught off guard. The 150-day window gave officials time to prepare. What the government has not signalled is any new plan or negotiation in response to the rate settling at this level.