Image source: Wikimedia Commons
The first presidential debate between Donald Trump and Kamala Harris will happen today at 1:00pm NZ time. For New Zealand, the implications of what each candidate has to say on international trade will be of particular importance. The United States is our third-largest trading partner, and the policies adopted by the future administration will likely have far-reaching consequences, particularly for our agricultural sector. With Trump and Harris offering quite different approaches to trade, New Zealand’s government and primary industries are closely monitoring developments to prepare for either scenario.
New Zealand has enjoyed a stable and productive trading relationship with the U.S. for decades. In 2022, bilateral trade between the two nations totalled $13.4 billion, with an almost balanced split between exports and imports. New Zealand’s primary exports to the U.S. include agricultural goods such as meat, dairy, and wine, while the U.S. exports machinery, vehicles, and services to New Zealand. A shift in U.S. trade policy under a new president could directly impact this dynamic.
Donald Trump’s first term, from 2017 to 2021, put strong emphasis on reducing trade deficits and protecting U.S. industries through tariffs and trade barriers. His administration levied tariffs on steel, aluminium, and Chinese goods, which disrupted global trade and sent ripple effects through markets worldwide. In his second run for office, Trump has signalled a return to these protectionist measures, aiming to protect American jobs and industries by reducing foreign competition. This could spell trouble for nations heavily reliant on the U.S. market for their exports, including New Zealand.
One of Trump’s central proposals is the imposition of a blanket 10% to 20% tariff on all imports into the U.S. For New Zealand’s agricultural exports—particularly meat, dairy, and wine—these tariffs could make products significantly less competitive in the American market. New Zealand’s Trade Minister Todd McClay has expressed concern that tariffs of this magnitude could harm both countries, noting that many New Zealand products are integral to U.S. industries, including pharmaceuticals and infant formula.
Fonterra, New Zealand’s largest dairy cooperative, has warned that high tariffs on dairy products would be inflationary in the U.S. and reduce demand for New Zealand exports, which are used in various American food manufacturing sectors. Fonterra’s James McVitty warns that these tariffs could lead to a reduction in U.S. food manufacturing jobs and higher prices for American consumers.
Perhaps more disruptive would be Trump’s proposed 60% tariff on all Chinese imports, part of his strategy to address the U.S.-China trade imbalance. While this tariff is aimed at China, its effects would be felt globally, particularly in nations like New Zealand that have integrated supply chains involving both the U.S. and China.
New Zealand’s trade with China is substantial, with them being our largest trading partner. A significant tariff on Chinese goods entering the U.S. could create supply chain disruptions and raise costs for New Zealand companies that rely on Chinese imports for their products or manufacturing processes. These disruptions could force New Zealand to reconfigure its supply chains, a costly and complex endeavour. The indirect effects of a U.S.-China trade war would also reverberate across global markets, destabilising the trade environment that New Zealand’s industries depend upon.
Trump’s trade policies favour bilateral agreements, often driven by his transactional approach to foreign relations. While New Zealand has long enjoyed a relatively balanced trade relationship with the U.S., negotiating favourable terms under Trump could prove challenging. U.S. industry groups, such as domestic sheep farmers, have previously lobbied against New Zealand’s agricultural exports. A return to Trump’s policies could see renewed pressure from these groups, making it harder for New Zealand to secure exemptions from tariffs.
During Trump’s first term, retaliatory tariffs were a common occurrence, with countries around the world imposing duties on U.S. exports in response to American tariffs. New Zealand could find itself caught in a similar situation if Trump’s tariff-heavy strategy leads to a new wave of global trade disruptions. These barriers would be particularly damaging for New Zealand’s meat and dairy sectors, both of which rely heavily on export markets.
To mitigate the potential risks, New Zealand will likely employ a combination of diplomatic and legal strategies. Trade Minister McClay has indicated that the government would make a strong case for exemptions from any tariffs, emphasising the economic damage that such measures would cause to both the U.S. and New Zealand. However, the precedent set by the 2018 steel tariffs, which remained in place despite our efforts, suggests that securing such exemptions could be difficult.
If diplomatic efforts fail, legal action could be an option. New Zealand may join other affected nations in challenging U.S. tariffs at the World Trade Organization (WTO). However, given the unpredictability of Trump’s policies, New Zealand may also need to focus on diversifying its trade partnerships, particularly with nations in the Asia-Pacific region and the European Union, to reduce its reliance on the U.S. market.
In contrast to Trump, Kamala Harris offers a more stable and multilateral approach to trade. As part of the Biden administration, Harris has supported policies aimed at strengthening alliances and creating resilient supply chains, particularly in response to the growing influence of China. A Harris administration would likely continue many of these policies, offering a more predictable environment for global trade partners like New Zealand.
Harris’s trade policies would likely prioritise market stability and predictability, key factors for nations like New Zealand that depend on consistent access to international markets. Harris has not advocated for sweeping tariffs like Trump, instead favouring a more measured approach that balances protectionism with free trade. While Harris may continue some targeted tariffs to protect specific U.S. industries, such as technology, she is expected to offer preferential market access to geopolitical allies, potentially benefiting New Zealand.
Under a Harris administration, New Zealand’s agricultural exports could see new opportunities, particularly in areas like sustainable agriculture and green technology. Harris has emphasised environmental and labour standards in trade agreements, aligning with New Zealand’s own environmental policies. This focus could open up new markets for New Zealand’s sustainable agricultural products, providing a boost to sectors such as organic dairy and meat production.
Harris’s trade policies would likely continue the Biden administration’s focus on multilateral agreements, such as the Indo-Pacific Economic Framework (IPEF). This framework, designed to strengthen trade ties between the U.S. and its allies in the Asia-Pacific region, could offer New Zealand new opportunities for collaboration and growth.
Regardless of who wins the 2024 election, New Zealand must be poised to adapt to shifts in U.S. trade policy. Diversifying trade partnerships will be crucial to mitigating the risks posed by potential tariffs under Trump. Strengthening ties with other major partners, such as the European Union and Asia-Pacific nations, could help New Zealand reduce its reliance on the U.S. market and protect its key industries from disruption.
We will have a clearer idea of where each candidate sits on international trade following today’s presidential debate.
