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Elevate Magazine
February 3, 2025

NZ Identifies Critical Sectors Under U.S.-Led Trade Pact as Trump Threatens Framework

new zealand sheep farm

New Zealand has formally identified key sectors and goods essential to its economy under a US-led supply chain agreement—just as the pact’s future becomes uncertain with Donald Trump’s return to the White House.

A Bid for Supply Chain Resilience

The Indo-Pacific Economic Framework for Prosperity (IPEF) was launched under former US President Joe Biden to strengthen economic ties among 14 Indo-Pacific nations, including New Zealand, and reduce reliance on China. As part of the framework’s supply chain resilience agreement, member countries are required to identify critical sectors and goods at risk of disruption.

New Zealand’s deadline to submit its list is February 9, 2025. A Cabinet committee paper released late last year outlined the sectors and goods that officials deem essential for national security, economic stability, and public health. These include food production inputs, fuel supplies, and pharmaceuticals—areas where New Zealand remains heavily dependent on imports.

Former Economic Development Minister Melissa Lee, who oversaw the process before leaving the role, said that “continued and diversified access to goods such as fertilisers, food inputs … pharmaceuticals and fuel” was vital for the country’s economic security.

NZ’s Critical Sectors and Key Goods

New Zealand’s list of critical sectors includes:

  • Pastoral farming
  • Hospitals and healthcare services
  • Construction services
  • Heavy and civil engineering construction
  • Surface transport

The key goods identified for notification to IPEF partners are:

  • Bulk animal feed
  • Fertiliser
  • Pharmaceuticals
  • Cereals and sugars for food production
  • Food packaging
  • Critical minerals and chemicals
  • Machinery for food production
  • Medical devices
  • Engine and liquid fuels
  • Steel alloy bars and rods
  • Oils for food production

The selections were based on an analysis of import concentration risks, business feedback, and government priorities. New Zealand has also committed to participating in international action plans focused on critical minerals, critical chemicals, and healthcare supply chains.

Trump’s Trade Policies Cast Doubt Over IPEF’s Future

Despite New Zealand’s commitment to the agreement, the broader IPEF framework now faces an uncertain future under Trump’s leadership. While the former president did not immediately dismantle IPEF upon taking office in January 2025, he has previously vowed to “knock out” the agreement, likening it to the Trans-Pacific Partnership (TPP), which he withdrew the US from in 2017.

Trump’s protectionist trade policies, including proposed 20% tariffs on all imports and higher levies on Chinese goods, could have serious implications for New Zealand’s economy. If enacted, such measures could increase the cost of key imports while making New Zealand’s exports less competitive in global markets.

Trade experts warn that retaliatory moves from China could also impact New Zealand’s trade with its largest export market. A slowdown in China’s economy would further compound risks, potentially reducing demand for New Zealand’s agricultural and dairy exports.

A Balancing Act for New Zealand

As geopolitical tensions continue to reshape global trade, New Zealand faces the challenge of maintaining strong economic ties with both the US and China while ensuring supply chain stability.

The Ministry of Foreign Affairs and Trade (MFAT) has highlighted the benefits of New Zealand’s participation in IPEF, particularly the establishment of a crisis response network that would enable member countries to coordinate during supply chain disruptions.

“This alone represents a strong reason … to become party to the supply chain agreement,” MFAT stated in a national interest analysis.