After much fanfare and public speculation about the outcome, the US election delivered a comprehensive win to President-Elect Donald Trump. He is now preparing for his second term in office following his swearing in on 20th January 2025.
New Zealand has an excellent relationship with the USA, and we worked well with President Trump during his first term. We are not starting from scratch. Our Foreign Minister Rt. Hon. Winston Peters had strong relationships with his counterparts in the first Trump Administration. The New Zealand Ambassador to the USA, HE Rosemary Banks, also worked with the first Trump Administration. Moves are already underway to establish contacts with the incoming Administration and build engagement with them.
As with any new US Administration there are potential risks and opportunities for New Zealand. During his campaign, President Trump floated the idea of imposing a 10-20% tariff on all imports of goods into the USA, and 60% on imports from China. In principle the prospect of higher tariffs is worrying for New Zealand exporters as well as the USA’s other trading partners.
We have enjoyed a dynamic and growing trade relationship with the USA. The USA is now New Zealand’s second largest market for goods and services exports (surpassing Australia during the last year), worth around $16.2 billion in the year to June 2024. Our goods exports to the US were worth nearly NZ$8.8 billion in that period.
We export a diverse array of products from primary products to manufactured goods. It is our largest market for beef and wine, and an important market for other meat, dairy, honey, casein, fish, fruit and wood products to name a few. It is also an important market for mechanical appliances, medical instruments, electrical machinery, pharmaceuticals, plastics, aluminium and steel, amongst others. The US is also a very large services market, worth $7.41 billion, a valuable trade to which tariffs do not apply.
While it is important that New Zealand companies are alert to potential risks, it is difficult to speculate about President Trump’s tariff ideas until they are fully formed. During election campaigns, there is often very little detail about how high level ideas might be applied in practice and that is the case with the tariff proposals.
Our immediate priority is to find out the detail of the incoming Administration’s trade and economic policies and position New Zealand accordingly. The cost of tariffs are often passed onto domestic consumers in the importing country. The relative impacts depend a lot on who is subject to any tariff as well as the product lines covered. Those are the kinds of detail we need to see in order to properly assess the impacts. Once we know what we’re dealing with, we’ll be supporting the government’s advocacy efforts to the new Trump Administration.
There are around ten weeks until President Trump again takes office. He has not yet named his cabinet. Those appointments will be key and may give us some clues as to how his policy ideas will be developed. We will be watching closely who the President selects for key roles such as Secretary of Commerce and Secretary of the Treasury. The US Trade Representative (USTR) is also very important as the counterpart to our Ministry of Foreign Affairs and Trade on trade policy.
In the meantime, New Zealand businesses will be thinking about a range of global economic factors, of which possible US tariffs are one. They will also be thinking about potential growth prospects in the US economy and whether that could lead to some new opportunities. It remains to be seen whether the impact of evolving US economic policies on domestic US and global growth may be larger for New Zealand businesses than the cost of a tariff.
New Zealand exporters of primary products, technology and specialised manufacturing have a strong reputation in the US for high quality, innovative products and services that meet the needs of US consumers and businesses. We have a great story to tell, and we look forward to sharing that with the incoming Administration.