New Zealand’s food and agriculture sector has so far avoided being caught in the latest US tariff measures, thanks to the country’s relatively minor trade deficit with the United States. However, the risk of trade penalties remains, according to a newly released Rabobank report.
The report, The Impact of US Tariffs on Global Food and Agribusiness, examines the new wave of trade policies from the re-elected Trump administration and their potential effects on global agriculture. It outlines nine waves of economic and geopolitical measures that have either been introduced or are likely to be imposed in the coming months.
Rabobank’s RaboResearch General Manager for Australia & New Zealand, Stefan Vogel, warns that while New Zealand has avoided the worst so far, it is not immune to future tariffs.
“The US trade deficit with New Zealand was just over USD 1 billion for the period from January to November 2024,” Vogel says.
“The value of New Zealand’s exports to the US was roughly 25 percent higher than the value of US imports to New Zealand. The US’s immediate focus has been on countries with much larger trade deficits, but that doesn’t mean New Zealand is out of the woods given the new US administration’s stated desire to balance trade deficits.”
Vogel also pointed out that New Zealand’s relatively low defence spending is another factor the US considers when implementing trade tariffs.
Stefan Vogel.
The ‘wheel of misfortune’
According to the report, countries with significant trade surpluses with the US – such as China, Mexico, and Canada – are at the highest risk of facing further tariffs, which could lead to increased costs and global trade disruptions.
“President Trump has stated many times that he is especially targeting countries with whom the US holds a heavy trade deficit,” Vogel says.
“China and Mexico are top on that list, but Canada, the EU, and various Asian economies are also major targets.”
Among New Zealand’s most at-risk food and agriculture exports are animal proteins, with the US overtaking China in 2024 as the largest market for New Zealand meat. Approximately 40 percent of New Zealand’s beef exports last year went to the US, compared to 30 percent that went to China.
“In value terms, the US is the second-largest destination for New Zealand sheepmeat after China,” Vogel adds.
He also noted that New Zealand dairy and wine exports to the US are significant, with the US accounting for six percent of total New Zealand dairy exports and being the top destination for New Zealand wine, taking in nearly a third of total exports.
The nine waves of US trade measures
The report highlights nine waves of trade actions that are impacting global agriculture and supply chains:
- Colombia – Major effects on US imports of cut flowers and coffee.
- Mexico and Canada – 25 perecent tariffs on most goods and 10 percent tariffs on Canadian energy imports.
- China – 10 percent tariffs imposed, with Chinese retaliatory measures affecting trade flows.
- Ukraine – A pending deal granting the US access to Ukraine’s lithium reserves.
- Houthis (Red Sea/Suez Canal) – Recent ceasefire agreements may reduce disruptions to global trade routes.
- Panama Canal – President Trump’s interest in regaining control over the canal could impact global maritime trade.
- Europe – Potential US tariffs on machinery, pharmaceuticals, spirits, wine, and agricultural goods.
- US Agency for International Development (USAID) – Cuts to funding affecting US-grown agricultural aid exports.
- Steel and Aluminium Tariffs – Higher tariffs increasing costs for food and beverage packaging.
With the potential for further tariffs on the horizon, New Zealand exporters remain vigilant, knowing that their position on the ‘wheel of misfortune’ could shift at any time.
