Trade Minister Todd McClay says New Zealand is expecting the United States to raise tariffs on its exports to 12.5 percent this week, after a federal court ruling temporarily cut the rate.

Speaking to reporters at Parliament, McClay said a US court had found the 15 percent tariff imposed by the Trump administration on New Zealand and other countries was illegal. A 10 percent tariff was then put in place for 150 days as an interim measure. That window is now closing. RNZ

McClay said he expects the tariff to revert to 12.5 percent during the course of this week. That sits below the original 15 percent rate but above the interim 10 percent. He described the 12.5 percent level as "still unhelpful" for New Zealand exporters, while noting it was lower than what had previously been in place. RNZ

A tariff is a tax a government places on goods coming into the country. Exporters shipping goods to the US have moved from a 15 percent tariff, to a court-mandated 10 percent pause, and now face settling at a middle rate of 12.5 percent. Each shift has its own legal and political driver, and none of them reflects a negotiation between Wellington and Washington. The US executive branch set the tariff, the US judiciary checked it, and the rate is now reverting to a level the administration appears to have settled on as its baseline.

For officials across MFAT (the Ministry of Foreign Affairs and Trade) and the Ministry for Primary Industries, the practical task is straightforward but uncomfortable. A 12.5 percent tariff on goods entering the US market makes New Zealand products more expensive there, eroding competitiveness against exporters from countries facing lower or zero rates. New Zealand has no free trade agreement with the United States, meaning there is no preferential arrangement to fall back on. The government's options for reducing the rate through bilateral negotiation are limited.

McClay's framing — characterising the expected 12.5 percent as "still unhelpful" while acknowledging it is lower than 15 percent — signals the government's positioning. It is neither accepting the tariff as tolerable nor suggesting it has leverage to remove it. The language is calibrated for an audience of exporters who need to hear that the government is engaged, without being promised an outcome officials cannot deliver.

The court ruling that found the original 15 percent tariff illegal is the key legal development in this sequence. It established that the authority used to impose that rate did not hold up under judicial scrutiny, which forced the interim reduction to 10 percent. The reversion to 12.5 percent suggests the administration has adjusted its approach to what it believes will withstand further legal challenge, rather than abandoning the tariff regime altogether.

For New Zealand, the immediate question is how exporters absorb a rate that is lower than the worst-case scenario but still imposes cost. Sectors with thin margins on US-bound goods will feel a 12.5 percent tariff more acutely than those with pricing power or the ability to redirect to other markets. The government's trade strategy, including its broader CPTPP (a multilateral trade agreement New Zealand is part of) and bilateral engagement agenda, becomes more relevant as the US tariff landscape remains unsettled.

McClay's comments to reporters at Parliament indicate the government is not treating this as a surprise. The 150-day window provided a known timeframe, and the expectation of a reversion to 12.5 percent suggests officials have had time to model the impact and prepare advice. What the government has not signalled is any specific new countermeasure or negotiation track in response to the rate settling at this level.