The NZUS Council business delegation visited Los Angeles, Washington DC and Chicago over the last week. Our delegation included some of NZ’s key exports – meat, dairy, kiwifruit, wine as well as education and air services, ExportNZ and AmCham NZ.
US business groups and think tanks emphasised to us the deep uncertainty in the policy environment here which makes business planning difficult and has a chilling effect on investment decisions. We agreed!
The booming AI and computer chip sector is driving the US stock market to great heights. The US economy looks reasonably strong on the face of it but signs of economic fragility are starting to emerge. The full effects of tariffs are expected to show up in US economic statistics next year.
We heard a range of views on whether the US Supreme Court will deem the US “reciprocal” tariffs to be illegal. On balance its 50/50. The court will start hearing oral arguments this week.
Whatever the Supreme Court decides, tariffs are here to stay. The US has other trade policy mechanisms it can use to maintain its tariff wall.
NZ should wait to hear the Supreme Court decision before determining next steps. Its worth noting that the recent bilateral FTAs entered into by some of the USA’s other trading partners look onerous for the partner country.
There are some potential risks on the horizon for New Zealand:
- More of our key export sectors could be hit with Section 232 tariffs;
- Other countries could cut a deal with the US and obtain an Annex 3 tariff exception for certain products, putting any NZ producers at a competitive disadvantage.
However, there is some good news.
- The US remains a huge and lucrative market for NZ and an important source of capital and innovation.
- Many (not all) NZ companies are doing well in the US despite tariffs. Prices are good and demand is strong for many NZ goods and services.
We were impressed with the proposed NZ hospitality precinct in Culver City for the LA28 Olympics. It would be good to see more NZ companies getting involved to support the NZ Olympic experience and showcase NZ to the world.
The NZ-US bilateral relationship is long and enduring. The NZ business community needs to keep playing its part to build and maintain strong relationships at a range of levels. We also need to take a long term view of US market opportunities despite the policy turbulence.
Our thanks to our delegation members for their active participation and to the NZ diplomatic missions in Washington DC and LA for their excellent support. And well done to the All Blacks for ensuring our visit to Chicago ended on a high note!
