Prime Minister Christopher Luxon has delivered a strong defence of free trade and the rules-based international order, warning that New Zealand must not retreat from global engagement despite mounting geopolitical and economic challenges.

Speaking to the Wellington Chamber of Commerce on Wednesday morning, Luxon said rising protectionism, retaliatory tariffs, and global unrest are creating one of the most difficult environments for trade in recent decades.

“The events of recent days are the most significant challenge to the rules-based trading system since the General Agreement on Tariffs and Trade (GATT) was formed in 1947,” Luxon said.

He confirmed that Treasury estimates put the direct impact of recent US tariffs on New Zealand at $900 million, or 0.2% of GDP, but said the broader consequences could be more damaging.

“The second-order consequences of a region and a world retreating from trade and increasingly uncertain about its economic future will be more significant, despite the welcome news of de-escalation this morning.”

Luxon described free trade as a cornerstone of New Zealand’s prosperity and said it had led to higher living standards across the board—from more affordable goods to greater international access for local exporters.

“Our clothing is more affordable, our cars are more reliable, our diets are more diverse… Free trade works. It lifts incomes. It creates jobs. It builds partnerships. And it secures peace,” he said.

Luxon rejected past policies that aimed to isolate New Zealand from global trade, citing the economic failures of the late 1970s.

“Older generations will remember… ‘carless days’, import controls, and government efforts to prop up uncompetitive industries. Those policies didn’t work then, and they wouldn’t work now.”

Luxon said his Government is taking proactive steps to protect and advance New Zealand’s interests abroad, including free trade negotiations with India, recent agreements with the UAE and GCC, and closer alignment with partners through forums like the CPTPP.

“My vision is that CPTPP members and the European Union work together to champion rules-based trade and make specific commitments on how that support plays out in practice,” Luxon said.

He announced he would travel to the United Kingdom later this month to meet with Prime Minister Sir Keir Starmer, and would continue conversations with world leaders about trade, security, and the economic outlook.

“We can’t make the case for New Zealand sitting at home,” he said. “We have to position ourselves as advocates both for our own economic interests and the institutions that underpin them.”

Back at home, Luxon tied New Zealand’s trade outlook to his Government’s wider economic reform agenda, including the “Going for Growth” plan, changes to the Resource Management Act, and a rewrite of the Overseas Investment Act.

“Growth has now returned, and the economy has turned the corner,” he said. “But our reform agenda will need to continue at pace for us to out-run the challenges to growth facing us from offshore.”

Luxon ended his speech with a clear message: New Zealand must not lose faith in free trade or the institutions that support it.

“I’m not ready to call time on the rules-based trading system. And I’m not ready for New Zealand to give up on our efforts to advocate for it on the world stage. I think that’s worth fighting for — and I’m up for that fight.”