Kiwi exporters strive to understand Trump’s new tariffs

New Zealand exporters are striving to prepare for the introduction of new rates on products sent to the United States.
Photo: AFP / 123RF

Some of New Zealand’s largest exporters to the US are trying to understand what exactly the new Trump government fares will mean to them.

New Zealand goods will have a 10 % tariff applied when sent to the US.

Last year, the US surpassed Australia to become New Zealand’s second largest export destination, with trade almost doubling in the last decade to $ 9 billion.

Meette Industry Association CEO Sirma Karapeeva said the new fare was not a surprise, she said it was a pity.

“It’s disappointing that we are involved in this tariff … Since we are longtime trading partners in the United States and our products are very complementary to their needs and an ingredient in the manufacture of hamburgers that Americans love to eat.”

New Zealand’s meat export value to the US was estimated at $ 2.7 billion in 2024, and the association projected that new tariffs could increase costs 17 times compared to what was currently being paid.

Karapeeva said New Zealand was still relatively competitive compared to countries that were facing even higher rates, and the biggest issue was the effect that comprehensive tariffs could have in competition in other global markets.

“I’m sure employees and ministers are doing everything they can to argue against the imposition of these tariffs and mitigate or minimize their negative impact as much as possible,” she told Morning report on Friday. “It’s disappointing, as I said, that we are caught for it, and particularly because I don’t believe New Zealand was the target of these actions. We just swept with the rest of the world.

“And then we should make more noise? I think we are making so much noise as a small nation that has a good business relationship with the US can, in the interest of maintaining this relationship and keeping it open for us.”

Finally, those who would pay extra costs would depend on exporters contracts with importers or if companies could absorb costs or be forced to transmit it, Karapeeva said.

“Some may choose to absorb it internally, others may choose to transmit it to the importer, and the importer himself may decide to absorb it or transmit it to consumers. Therefore, it is really difficult to give you a unique response.”

The CEO of the Dairy Companies Association, Kimberly Crewther, said the announcement was disappointing, mainly because the US already had much higher rates in imported dairy products compared to New Zealand’s tariffs.

The CEO of the Dairy Companies Association, Kimberly Crewther, said the announcement was disappointing.
Photo: RNZ/CAROL STILES

She said that while awaiting the most delicate details of how the new tariffs will be implemented, she understood that the 10 % rate will reach the top of existing tariffs – and it was hard to say what the impacts would be.

“There is still water to flow under this bridge. What we know is that we have a very long story to navigate a very challenging commercial environment globally for dairy.”

New Zealand Winegrowers CEO Philip Gregan took the issue in his step.

“It could have been worse, but you know, 10 % is still 10 % and we will have to live with the consequences.”

Gregan said New Zealand exported $ 750 million in wine each year to the US, which potentially meant $ 75 million in tariffs. He was confident that New Zealand’s product appeal would support the challenge, suggesting that the costs would be transmitted to consumers.

“Our wine in the United States has not been cheap … Our wine does not sell because it is cheap. It is sold because it is high quality, distinct, sustainable. So, [the] The fundamentals did not change. “

The biggest problem was that tariffs would depress the entire industry.

“You can’t get around the fact that a 10 % border rate, which you need to imagine that the margins of importers, distributors, retailers, they put on it, so you will have an impact, in one way or another. This will depress the US wine market, which is already fighting and may have an impact.

Gregan said the way the US calculated which fares put in each country was failure. President Donald Trump’s list falsely claimed New Zealand charged a 20 % tariff of US assets entering the country.

“See, clearly to begin with, the so -called 20 % imposition on US imports in New Zealand’s absolute trash,” Gregan said. “New Zealand’s tariff is nothing like that and New Zealandes know this. I think the second thing is for 30 years, 40 years, in fact, in World War II, the world has been growing, trade has grown, prosperity has increased and one of the drivers have constantly reducing barriers to international trade.

“So you know, while in our industry we could say that we are just facing a 10 % tariff in the US, the real point, the much bigger point here is that what the US did yesterday is to create massive uncertainty.”

‘Everyone is a little less well

Economist and teacher at Professor Niven Winchester said New Zealand was hit by relatively low rates compared to EU and China, and this can give us advantages in certain areas. He predicted that there would be no great direct impact on New Zealand’s industries, but the indirect effects on the global economy would be felt.

“The big concern for New Zealand is a global trade war, where everyone is a little less well and buying less than anywhere, but the tariffs in themselves – because we have a relatively low rate – there are advantages and less, and I think it will be close to going out as a wash for New Zealand as a whole.”

Prime Minister Christopher Luxon believed that New Zealand was well positioned to face tariffs and would not respond in kind.

A lawyer with a particular specialization in the area said companies with fine margins of profit can be poorly affected.

Sarah Salmond, partner of MinterellisonRuddwatts, said Morning report It can be good for companies with high profit margins continue sending goods to the United States. But for others, it may not make sense to continue negotiating.

“It is essentially a 10 % tax on the value of the goods you declare for customs customs and US border protection. Exporters will have some homework to do and some strategic decisions to be made.

“For some companies that export to the US, they really have good profit margins and, if they need it, can afford to absorb these additional tariff costs. For others, especially when you are selling certain types of basal goods, the margin is really very thin – and therefore, if tariff responsibility will sit with your business, it may not be possible to absorb the additional tariff.”

She said that with tariffs coming into force this weekend, exporters needed to act quickly.

“You must first determine what the impact of the fare will be on your business – so look at all the products you export to the US. Every product has an eight to 10 digit code and you will have to find out which tariff will be applied to your product. Therefore, it is very easy.

“But after finding out what is the full responsibility of the taxpayer, you should critically think of those who need to pay it. The standard position is for the US importer to pay. But often when you have a supply contract between a New Zealand exporter and a US importer, this tariff responsibility is reuterained and can be re -exposed when exposing the New Zealand.

“In addition, sometimes New Zealand exporters actually create an American company that becomes the US importer. Therefore, for many companies, they will find that the final tariff responsibility will sit with them, with the exporter of New Zealand. So you decide, can I pass it?

“There are several alternative routes for markets to try to avoid tariffs. Therefore, encouraging anyone who really feels a little stuck here, can you transfer your goods to one of the US free trade zones, where you can potentially delay and maybe avoid payment of tariffs?

“Or perhaps over time, as we see some of New Zealand’s business partners, they negotiate lower rates of tariffs in the US, we may have some final processing in some of these countries to try to avoid tariffs.

“But the main thing is that you really need to look at it now and be very careful, I think, and considered in your negotiations with us, because what we are seeing is that they are telling the exporters of New Zealand: ‘In these circumstances, we need to renegotiate.’ But the supply contract may not say that.

Gregan said the government did well to keep New Zealand at the lower end of the tariff scale.

“I think we need to keep doing what we have always done, which has been a small country that is a strong voice for logical trade, free and fair trade between partners. We have no other approach that will work.”

NOTES ON THE FLOOR IN THE USA

The New Zealand Skelleru Company had already moved a large amount of its inventory to the US, where its greatest salesman was isolated rubber gumboots for technical use.

“Before the election was when we started doing some preparations, especially for products we manufacture at our factory in China for the US market,” the executive -Chief Graham Leaming told Morning report.

“So we have made the decision to mitigate the risk of investing a little more to maintain large amounts of inventory in the US market. Of course it is not a long -term solution, but it gives us more time to implement long -term solutions.”

Leaming said there was no “magic response” to combat the new tariffs.

“Obviously, we can analyze the price on the market you charge for your product. We are always looking to make improvements in our cost base and the way we manufacture things … You can also look at the source of some of the materials used in your products, because that influences, you know the country of origin that is determined.”

Skelleup had factories in China, New Zealand and Vietnam. Leaming said the costs were “substantially lower” in Asia, but another advantage of bringing production closer to their large markets was a less complex supply chain – a lesson learned during Covid -19.

Most company competitors would face similar problems, Leaming said.

“Obviously, we prefer that this does not happen and it would be false to say that it does not have some challenges. But, you know, we have an international manufacturing model, so we have some options.”