President-elect Donald Trump plans to impose a 25% tariff on Mexican and Canadian imports and a 10% tariff on Chinese goods. While New Zealand’s exports are currently exempt, the indirect effects could be both advantageous and damaging.
According to economic modelling by Niven Winchester, New Zealand may see a boost in exports to the US as American consumers turn to alternative suppliers.
Annual merchandise exports to the US could rise by NZ$1.2b, primarily in agricultural goods like meat and manufactured items such as machinery. However, reduced demand resulting from US tariffs on countries like China, which accounts for 25% of New Zealand’s export market, is projected to slash NZ exports by NZ$965m, mostly in dairy.
New Zealand will potentially face higher prices for US goods, reducing imports from the US by $353 million. Imports from targeted nations such as China and Mexico are expected to rise as they redirect trade away from the US. The net effect is potentially a modest economy-wide impact for New Zealand, with gains in US trade largely offset by losses in other markets.
According to Winchester, the bigger risk lies in retaliatory tariffs from China. Trump’s proposed 20% tariffs on all imports would cut New Zealand’s exports to the US by two-thirds, leading to a big dent in GDP and national income.
Centrist Ltd. 2024