Photo: AFP
United States President Donald Trump started making tariff threats even before he returned to office on 20 January and he's now announced sweeping new tariffs.
From a universal duty on imports to targeted tariffs on specific sectors or countries, it's hard to keep up.
Meanwhile, retaliatory moves aimed at hurting US exporters have been symbolic, if not impactful.
The on-and-off-again levies have caused confusion and uncertainty, and economists are worried about a trade war.
But from aluminium to Tennessee whiskey, how do governments choose what to target?
First, what are tariffs?
Tariffs are taxes or duties levied on goods imported from other countries.
To be clear, companies that import the goods pay the tax to the government. (Some or all of the cost can be passed on to consumers.) Typically, the tax is a percentage of a product's value.
The main purpose of a tariff is usually to shift demand away from imported goods and towards domestically produced ones. This can be in response to industry lobbying. For example, the US meat industry has previously called for increased tariffs on New Zealand lamb, in a bid to help struggling local producers.
Tariffs can also be used to coerce other nations to implement certain policies. US technology giants have encouraged the Trump administration to target Australia, over its rules governing social media and streaming services.
Tariffs were once big money-makers for governments in the US, New Zealand, and other countries. But in recent decades they have played much less of a role.
What tariffs has Trump announced?
Trump has promised to overhaul the global trading system, matching the levies and other policies countries impose on American exports. He has argued his moves will end years of the US being "ripped off".
On what he deemed ' Liberation Day', he announced sweeping reciprocal tariffs on imports into the United States.
A base tariff of 10 percent will be imposed on all foreign imports - including from New Zealand - with rates between 20 and 50 percent for countries judged to have major tariffs on US goods. Cambodia, for example, was deemed to have a 97 percent tariff on US goods, and faces a 49 percent tariff in return.
Trump produced a list of around 20 countries which he said imposed the biggest tariffs on US goods and which will be subject to larger reciprocal duties.
Top of the list is China which will face 34 percent tariffs, followed by the European Union which will be charged 20 percent.
Foreign nations will now have to pay for the privilege of trading with the United States, Trump said, and he was "finally putting America first".
How does all this affect New Zealand?
As a small nation, New Zealand is heavily trade-dependent.
From the 1840s, the government relied on border tariffs on imported goods for revenue. Income tax was introduced in 1891, but tariffs remained the biggest source of tax revenue until the First World War.
By the 2000s, as the country pursued free trade agreements, most of New Zealand's tariffs were gone.
In 2024, the US overtook Australia to become the second-largest export destination for New Zealand goods, with a total value of $9 billion, according to Stats NZ. China remained New Zealand's largest export destination, with a total value of nearly $18b.
New Zealand exporters now face hundreds of millions of dollars of tariffs on goods sent to the US.
New Zealand exports were worth about $9 billion last year, meaning theoretically New Zealand exporters will be penalised about $900 million.
Was suprising, Westpac chief economist Kelly Eckhold said, was that New Zealand has been listed as imposing a 20 percent tariff on the US.
"My best speculation here is that is probably a combination of the GST rate plus we do have some tariffs against the US in some products set at a minimum WTO agreed level.
"What I'm confused about is why they say Australia is 10 percent. They also have a GST, and similarly the United Kingdom is assessed at 10 as well and they have a value-added tax."
It was not good news for New Zealand, Eckhold said.
Whisky, motorcycles, and jeans: retaliatory tariffs
In general, there are three options for countries on the receiving end of policies like these, said Dr Matthew Castle, an international relations senior lecturer at Victoria University of Wellington - Te Herenga Waka: "You can retaliate, accommodate, or you can figure out a workaround."
When it comes to retaliation, while the items taxed can seem random - there's been a lot of talk about whisky, motorcycles, and jeans, for example - in fact, they're strategically selected.
"Countries are careful with which products they choose to raise retaliatory barriers on.
"They choose those products not to impose economic pain, but the maximum amount of political pain to the recipient country."
Products with high symbolic value, for example, such as Levi jeans and Harley Davidson motorbikes. Or products from where prominent politicians have their home base.
"What you're trying to do with retaliatory tariffs is force your partner back to the table. You're trying to create the biggest political lever with the smallest amount of cost to your own consumers. Because we know imposing tariffs hurts your own people."
Winners and losers
Tariffs can be disruptive in two ways, Castle explained.
First, there is the immediate impact of fewer sales, because products become more expensive in a foreign market.
"But [tariffs are] also disruptive because everybody faces the challenge of figuring out what to do with stuff they'd usually be sending to the US, so they'll be looking to other markets."
Plus, trade relationships can't be "turned on and off", he said. "It's not straightforward to suddenly change where you export things."
This is where New Zealand's other trade agreements could put the country in an advantageous position: "One way they help us is if our trade agreements make our imports more competitive than imports from elsewhere."
It's not always obvious who, at the end of the day, is making money versus who's paying.
Typically, governments benefit from the tariffs they impose, Castle said. "But from a political economy perspective, the main beneficiaries are import-competing industries. Producers in a country who are less competitive than their overseas counterparts, who would otherwise be competing against them."
Trump has argued tariffs will protect home-grown manufacturers.
But, "tariffs are going to make everything more expensive for us consumers", Castle added.
"And because global markets are so integrated - you import materials you transform in some way before exporting them - producers will also be paying more for stuff."
Professor of economics at Auckland University of Technology Niven Winchester agreed, saying modelling confirmed the "well-known" result that trade wars decrease global economic activity and routinely make all nations worse off.
"The US is playing a dangerous game," said Winchester, also a senior fellow at independent public policy research institute Motu. "Mexico and Canada will get hit hard, with up to 80 percent of their exports going to the US.
"But if the US takes on a number of big players, and they retaliate, the US is going to come off second best. If it's the US against the world, the US will lose."