While the 10% headline rate imposed on Kiwi exports may appear modest compared to the 145% levy slapped on Chinese goods, the breadth of its application — covering nearly all New Zealand products — makes it one of the most consequential tariff actions in decades. The U.S. is New Zealand’s second-largest goods export market, accounting for almost 13% of all exports last year.
Now, our key export sectors — meat, dairy, and wine — are confronting a new economic reality.
Beef Industry Feels the Squeeze
New Zealand’s meat exports to the U.S. reached $2.5 billion in 2024, with beef alone making up around $1.8 billion. The lean cuts shipped from New Zealand are vital to America’s hamburger industry, often blended with fattier domestic beef to meet taste and texture standards.
“It’s actually not that easy for Americans to not buy our beef because they don’t have the same product,” said Westpac chief economist Kelly Eckhold, pointing to the difficulty of replacing New Zealand’s lean beef. However, despite demand stability, exporters are now staring down a 17-fold increase in tariff costs compared to pre-April levels.
With U.S. beef cattle numbers at a 70-year low, market dynamics may insulate demand, but margins are another story. Exporters will need to decide whether to absorb the added costs, pass them on to importers, or restructure operations for cost efficiencies.
Dairy Caught Between Two Giants
The dairy sector, which exported $982.9 million to the U.S. in 2024, faces both risk and potential opportunity. Much will depend on the U.S.-China trade relationship, which has turned hostile with the introduction of a 145% tariff on Chinese imports. Analysts suggest this disruption could redirect dairy demand from China to alternative suppliers, potentially benefiting New Zealand.
Wine Grapples with a Slump
Wine exports to the U.S. reached $742.7 million last year, but the industry is already under strain from a prolonged dip in global demand and falling prices. New tariffs may deepen the slide.
“Higher prices for foreign wine in the US could easily see consumers switch from drinking a Hawke’s Bay syrah to a Californian zinfandel, further hitting demand for our product,” said Gareth Kiernan, chief forecaster at Infometrics. “It’s much easier for them to switch to American-produced wine given the sort of current supply and demand dynamics and the broader market.” Unlike commodities with embedded supply chains, wine is a fully value-added product in New Zealand, meaning the full brunt of the tariff hits the final price tag.
Retailers may resist price increases, pressuring New Zealand producers to offer steep discounts or risk losing shelf space.
Broader Export Economy Also Hit
Beyond the high-profile sectors, other categories like machinery ($683.7 million), medical equipment ($390 million), and processed goods are also vulnerable. While these exports attract less media attention, the tariff introduces hidden costs — from contract renegotiations and delayed shipments to sudden shifts in buyer preferences.
Even companies in exempt sectors like pharmaceuticals and semiconductors remain cautious. Eckhold told RNZ, “There was still a lack of clarity about how the regime was going to work in aggregate.” “He said the U.S. worked with a system of quotas that applied to countries and different sorts of products. Exporters he had spoken to were not clear how those quotas would work in conjunction with tariffs.”
Stock Market Slide and Economic Fallout
The broader economic ripples have been severe. The NZX dropped 3.5% following the tariff announcement — its worst single-day performance since the onset of the Covid-19 pandemic. Similar tremors rattled markets in Australia, Japan, and the U.S., as traders priced in the risk of a global recession.
The NZ dollar also weakened, falling to 56 US cents, and investor sentiment has soured. Companies with U.S. exposure — from Fisher & Paykel Healthcare to Mainfreight — are now reassessing earnings guidance and supply chain strategies.
Strategic and Political Responses
Domestically, the Luxon government has ruled out retaliatory tariffs, favouring behind-the-scenes diplomacy and potential appeals through the World Trade Organization. Trade Minister Todd McClay emphasised that “our relatively lower tariffs may actually create opportunities,” though that sentiment remains theoretical for now.
Long-term, the government is redoubling efforts to deepen ties with partners in the CPTPP and accelerate negotiations with India and South American blocs. Some exporters are exploring whether moving production or final processing to third countries could mitigate tariff costs.