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WELLINGTON, March 2 (Xinhua) -- Protectionism under the new United States administration of President Donald Trump poses the greatest potential risk to the New Zealand economy, the head of the Reserve Bank of New Zealand (RBNZ) said Thursday.

Before the U.S. election, Trump had suggested tariffs of 45 percent should be imposed on Chinese imports, while House Republicans were pushing hard for border tax adjustments that would disallow deduction of import costs and exempt export revenues.

"Such calls for protectionism are contrary to the global trend in trade liberalization over recent decades," RBNZ governor Graeme Wheeler told a gathering of investors in Auckland.

"They also come at a time when the growth in merchandise trade volumes over the past five years is the weakest since the early 1980s and new trade-restrictive measures by G20 countries are at their highest level since the GFC (Global financial Crisis)," he said in a published speech.

"There is much uncertainty around the objectives of trade policy under the new U.S. administration, and the specific policy instruments that will be used in pursuit of these goals."

Trump's administration had withdrawn from the 12-nation Trans-Pacific Partnership, negotiations around the Transatlantic Trade and Investment Partnership between the European Union and the United States were in jeopardy, and the administration had signaled it wanted to renegotiate the North American Free Trade Agreement.

"Higher tariffs would raise prices for U.S. consumers, could require a more accelerated tightening in monetary policy by the Federal Reserve, and could be expected to put upward pressure on the U.S. dollar exchange rate," said Wheeler.

"Furthermore, U.S. tariffs would invite retaliatory actions by other countries. This would raise prices to consumers, and distort global supply chains as producers in the U.S. and elsewhere change sources of supply and product destination," he said.

"Increased protectionist measures would represent a negative global supply shock."

Even if New Zealand exports of goods and services to the U.S. - currently exceeding 8 billion NZ dollars (5.71 billion U.S. dollars) - were not directly subject to higher tariffs, it would be hard hit by a downturn in the global economy, including among its main trading partners, in response to the direct and indirect impact of protectionist measures.

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