Trade balance with the US a saving grace

According to Rabobank's general manager for Australia and NZ, Stefan Vogel, this is partly because the US has a relatively small trade deficit with us.

Vogel says this has helped NZ food and agricultural exports off the US trade tariff 'wheel of misfortune' but he adds the tariff threat remains.

A new Rabobank report on US tariffs and global food and agribusiness identifies nine waves of economic and geopolitical measures that have been imposed, are underway or likely to be introduced by the new US administration. These include tariffs on Colombian coffee and steel imports from other countries into the US, including China.

Stefan Vogel says these measures are starting to have a flow on effect in other countries.

"Their potential impacts on global food and agribusiness range from minor ripple effects to heavy disruptions. It has been a stormy start to the year with many waves and more to be expected later in 2025," he says.

But Vogel says the fact that NZ uses a relatively low share of its GDP on defence may become a factor later on as the trade storm grows in intensity.

The report notes the importance of the US market to NZ's primary exports - in 2024, it overtook China as the largest export destination for our meat. Beef exports to the US are also now ahead of China.

Finally, the report says current US policy is using tools of "statecraft", such as tariffs, to achieve wider political goals and in doing so, creating waves that are hitting shores abroad.

It says food and agribusiness sectors will see wide-ranging impacts across the globe and along the entire supply chain.

China/NZ Trade Ties

An international trade specialist and former diplomat, Stephen Jacobi says he senses that New Zealand's relationship with China may be faltering.

Jacobi says the recent dispute between New Zealand and the Cook Islands, which indirectly involves China and the presence of Chinese warships in the Tasman Sea, would suggest China is not as well disposed to New Zealand as it was.

This comes when world trade is in one of the most disruptive periods seen for a long time.

Jacobi says that with the Trump administration being imposed on the likes of Canada, Mexico and China, other countries such as New Zealand could get caught in the fallout.

Like Stefan Vogel, Jacobi believes New Zealand is lucky that it doesn't have a large trade imbalance with the United States and so far has stayed below Trump's radar, but adds that might not last forever.

"Things are not good because they give rise to significant instability, uncertainty and potentially trade diversion. The whole geopolitical situation is one of uncertainty and no one quite knows what policies Trump is going to implement next. And at the same time, NZ cannot afford to antagonise China," he says.

The present situation is a nightmare for government ministers and their officials who are engaging in what amounts to 'tip-toe diplomacy' - keeping on side with all parties while at the same time trying to drive an independent foreign and trade agenda.