The RBNZ says U.S. tariffs may lower inflation in New Zealand in the near term but could push prices higher later as global supply chains adjust.

Summary:

• The RBNZ says U.S. tariffs could reduce inflation in New Zealand in the near term.

• Trade diversion and a stronger NZ dollar may lower import prices.

• Long-term supply chain fragmentation could push inflation higher by around 2030.

• Weaker global demand may weigh on New Zealand exports.

• Exporters could face stronger competition in global markets.

• The overall impact on New Zealand’s GDP is expected to be modest.

• Exports to the U.S. could initially fall 13% before stabilising over time.

The Reserve Bank of New Zealand says U.S. tariff policies could have mixed effects on New Zealand’s economy, easing inflation in the near term while potentially increasing price pressures later in the decade as global supply chains adjust.

In a research note published Monday, the central bank said trade disruptions stemming from U.S. tariff measures are likely to exert disinflationary pressure on New Zealand in the short run. The RBNZ said trade diversion and a stronger New Zealand dollar could reduce import costs, helping to dampen inflation and support domestic purchasing power.

Tariffs imposed by the United States are expected to redirect some global trade flows away from the American market, which could lower prices for imported goods in other economies, including New Zealand. A firmer currency would amplify that effect by making overseas goods cheaper for domestic buyers.

However, the central bank warned that the longer-term consequences of widespread tariffs could eventually prove inflationary. Over time, a shift toward more fragmented and less efficient global supply chains may raise production costs and reduce the efficiency of international trade networks. These structural changes could push inflation higher by around 2030.

The research also highlights potential headwinds for New Zealand’s export sector. Weaker U.S. demand for global goods could weigh on economic growth among New Zealand’s key trading partners, reducing demand for its exports.

At the same time, exporters may face tougher competition in international markets as other countries redirect goods originally intended for the U.S. toward alternative destinations.

Despite these challenges, the RBNZ said the overall impact on New Zealand’s real economic growth is expected to remain relatively modest.

Under the bank’s baseline scenario, exports from New Zealand to the United States fall by around 13% in the first year following tariff increases. As global trade patterns gradually adjust, the decline narrows to roughly 6% by 2040.

The analysis incorporates tariff measures announced up to July 31, 2025. Last month, U.S. President Donald Trump reinstated a temporary 10% global import duty after earlier tariffs were struck down by the Supreme Court, while launching new investigations that could allow further tariffs to be imposed.

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Next RBNZ decision due April 8: