New Zealand's central bank warns on supply chain impacts from US tariffs

By Lucy Craymer, Renju Jose

WELLINGTON, May 8 (Reuters) - New Zealand's central bank said on Thursday the impact from U.S. tariffs on global supply chains could affect the country's economy, and it has identified industries that could be exposed more to the new trade rules.

"We know from our experience, from the COVID experience, that supply side impacts are significant, and that are long-lasting and can create real challenges," Reserve Bank of New Zealand Governor Christian Hawkesby told a parliamentary committee.

"There's still a lot of uncertainty about how the structural framework of the global economy sort of realigns itself now," he said.

Hawkesby was speaking following the release of the central bank's twice-yearly financial stability report. The report said that risks to the financial system have increased over the past six months due to a more volatile global economic environment.

New Zealand, which faces a 10% tariff on exports to the U.S., is expected to fare relatively well as a soft New Zealand dollar offsets some of the impact but will be hit by the weak economies of its trading partners, economists have said.

Hawkesby told the committee that the central bank would be revising down projections for global growth as "higher tariffs sort of unambiguously reduce growth globally."

He added that the tariff situation remains a key focus because it can still play out in many different ways and there is a lot of uncertainty.

"The level of tariffs is still high - we know that. That will have an impact globally," he said.