Trump will take office in January: NZ meat, wine, and dairy exports could face a new wave of trade barriers.
Donald Trump will regain the U.S. presidency in January, and New Zealand exporters are bracing for a wave of challenges that could impact some of the country’s most profitable exports. Trump’s proposed policies include hefty tariffs on imported goods—up to 20%—and a marked shift towards protectionism.
For key New Zealand export sectors, namely meat, wine, and dairy, these policies could result in significant market disruption. Consequently, there is growing domestic concern over the possible impacts on New Zealand’s export market and the broader economic implications if Trump’s expected trade policies are implemented.
New Zealand’s Exports to the U.S. Under Threat
The United States is a critical trade partner for New Zealand, taking in about 12.8% of New Zealand’s total goods exports, totalling approximately NZD 8.8 billion, according to BNZ.
The U.S. market holds particular importance for New Zealand’s meat, wine, and dairy exports. Over the past year, the U.S. imported an estimated NZD $800 million in New Zealand wine alone, while beef exports have surged due to high demand amid a domestic shortage. Casein, a dairy derivative used extensively in U.S. food processing, has also been a strong performer.
The tariff barriers that Trump has proposed could disrupt this flow. Trump’s platform has emphasised a commitment to U.S. industry and domestic production, with new tariffs meant to support American jobs and manufacturing. While New Zealand’s trade representatives and exporters are seeking clarity, they are also preparing for possible tariff impositions on NZ products.
Beef and Meat Exports
For New Zealand’s meat industry, the U.S. has been a lucrative market, especially in recent months. Beef, in particular, has seen substantial growth in demand. According to August figures, the U.S. became the single largest buyer of New Zealand red meat, with beef prices reaching NZD 10.67 per kilogram—up 25% from the previous year, Farmers Weekly reported. Low cattle numbers due to U.S. droughts have spurred this demand, and New Zealand beef exporters have been filling the gap.
Despite this strong demand, a tariff of 20% on New Zealand beef could drastically affect market dynamics. Exporters worry that tariffs may lead to negotiations over who bears the costs: the U.S. importers, who could attempt to pass them down the supply chain, or New Zealand exporters themselves, who may have to absorb the tariff if U.S. customers push back on price increases.
Rick Walker, general manager of sales at ANZCO Foods, seemed confident that beef exports would hold up, at least in the short term. “They are going to be so short of beef they are not going to care what price it is,” he was reported saying by Farmers Weekly. However, in the long term, there is considerable worry that a prolonged tariff period could push U.S. buyers to seek more cost-effective domestic options if supply conditions improve.
Lamb, a smaller but significant export to the U.S., could face more immediate price sensitivity. Unlike beef, where demand tends to be more resilient, lamb’s higher price points make it vulnerable to even small price increases. Any tariffs could put New Zealand lamb at a disadvantage, especially if buyers can source alternatives from other countries or shift to more affordable meats.
The Wine Sector
New Zealand’s wine industry counts the U.S. as its single largest market, valued at NZD 800 million annually. If tariffs are introduced, this market could quickly become less profitable.
Currently, New Zealand wine is positioned as a mid-range product in the U.S., with average retail prices between USD $15 and USD $20 per bottle. New Zealand Winegrowers’ CEO Philip Gregan voiced concerns that U.S. retailers would be reluctant to absorb price hikes. For a bottle of wine, a 20% tariff could add several dollars, potentially pushing it out of the price range preferred by American consumers. “A lot of retailers would be very reluctant to have an increase on a bottle of the sort that we are talking about,” Gregan said.
This could not only curb demand but also open the door for competitors from countries that are exempt from tariffs or that have lower production costs. There is also the risk that European wine producers, potentially facing their own disruptions in the U.S. market, could redirect their supplies to Asia-Pacific regions, increasing competition for New Zealand in secondary markets.
Casein and Dairy
Casein, a milk protein crucial in food processing, pharmaceuticals, and health products, is another key export to the U.S. market that has historically enjoyed robust demand. New Zealand dairy companies rely on the U.S. for a sizable portion of their casein exports, and any new tariffs could reduce the competitiveness of this product. Industry experts worry that casein’s sensitivity to price increases, especially in a high-demand market like the U.S., could lead to diminished profit margins if tariffs are introduced.
Fonterra executive James McVitty raised alarms about the broader impact of such tariffs on U.S. industry itself. He noted that higher import costs could be passed on to consumers and businesses, making essential dairy-based ingredients significantly more expensive. This could inflate costs for American manufacturers who rely on New Zealand casein and may ultimately lead to increased prices in these sectors.
New Zealand’s dairy sector may look to strengthen its reach in Asian markets and other trade-friendly regions, with industry representatives suggesting that diversifying export markets could be crucial for maintaining growth in the face of U.S. protectionist policies.
Broader Economic Fallout
A potential Trump trade policy shift carries implications beyond individual sectors, with economists warning of broader economic effects. Stephen Jacobi, executive director of the New Zealand International Business Forum, expressed concern that a 20% tariff on exports would likely “kill off quite a lot of trade” if New Zealand products become too expensive for U.S. buyers.
Former government trade negotiator Charles Finny echoed this sentiment, describing the outlook as “grim” and doubting New Zealand would receive exemptions, especially given the U.S. track record with tariffs on other key trading partners. Past experiences with Trump-era tariffs on steel and aluminium have left New Zealand officials sceptical about relying solely on diplomacy.
Conversely, New Zealand’s Trade Minister Todd McClay hopes that strong historical trade ties between the two nations may help New Zealand make its case for tariff exemptions. He said that the New Zealand government will press for exemptions that protect the interests of both nations.
But despite this, there is lingering doubt. If exemptions cannot be secured, Jacobi indicated that New Zealand might consider joining other affected countries to challenge the tariffs at the World Trade Organization (WTO).
In the macroeconomic picture, Trump’s policies could indirectly affect inflation and interest rates. BNZ’s head of research, Stephen Toplis, noted that Trump’s mix of fiscal stimulus and protectionism could increase inflation, which would, in turn, place upward pressure on interest rates.
Higher U.S. inflation and interest rates would likely affect the New Zealand dollar, weakening it relative to the U.S. dollar—a potential benefit for exporters but a risk to the economy as import costs rise and inflationary pressures increase domestically.
Geopolitical Ramifications and Trade Diversification
Trump’s focus on protectionism could also strain the global rules-based trading system, which small countries like New Zealand depend on to maintain stable trade relationships. Finny cautioned that Trump’s return to the presidency could resemble “1930s protectionism,” a period marked by tariff wars and economic isolationism. For New Zealand, this shift could challenge the international trade norms that have allowed us to thrive as an export-driven economy.
Still, there may be a silver lining in markets like China. If Trump raises tariffs significantly on Chinese imports, as he has proposed, it could lead China to look toward other suppliers, including New Zealand, for agricultural and dairy imports. While this could mitigate some losses from the U.S. market, experts advise caution, noting that over-reliance on any single trading partner could expose New Zealand to future risks, especially amid escalating geopolitical tensions.
New Zealand’s Response
New Zealand’s trade representatives and export industries are ramping up efforts to negotiate potential tariff exemptions. As Foreign Affairs Minister Winston Peters has indicated, New Zealand’s longstanding diplomatic relationship with the U.S. may be leveraged to seek concessions. However, with Trump’s increased control over both the U.S. Senate and House, exemptions may be hard to secure, as Trump has emphasised his commitment to prioritising American industry above all.
To adapt, New Zealand exporters may need to explore alternative markets and deepen trade relationships across Asia and Europe. Leveraging New Zealand’s free trade agreements, especially with emerging markets in the Asia-Pacific region, could provide some insulation from potential U.S. tariffs. The wine and dairy industries, in particular, may find opportunities in the growing demand for premium wine in countries like China and, until recently, South Korea, but such shifts will require significant investment and market adaptation.
The Economic Outlook for New Zealand’s Export Sector
It remains uncertain how far Trump will actually go with his protectionist policies, but it’s clear that New Zealand’s export industry faces an undeniable period of transition. The Reserve Bank of New Zealand (RBNZ) has already indicated it expects inflationary pressure from a weakened New Zealand dollar. Meanwhile, BNZ has noted that rising interest rates may follow if global inflation accelerates, creating a less favourable economic environment for New Zealand’s trade-reliant economy.
In summary, a Trump presidency signals substantial challenges ahead for New Zealand’s meat, wine, and dairy sectors, as well as the broader economy. Diplomatic efforts, diversification, and adaptation strategies will strive to soften the blow, but New Zealand’s exporters will likely face thinner profit margins and increased competition when Trump takes office next year.