New Zealand Businesses Tackle Trade Challenges with the U.S.

New Zealand businesses are adapting to a changing landscape in international trade as American protectionism re-emerges, prioritizing deals over rules. This shift was a central theme at the annual United States Business Summit held in Auckland, where speakers outlined both the challenges and opportunities for New Zealand companies looking to expand in the U.S. market.

The summit came after months of uncertainty caused by President Donald Trump imposing significant tariffs on multiple countries, including New Zealand, which faced an unexpected 15% tariff. Recently, however, Trump reversed some of these tariffs on specific food imports, such as New Zealand beef and kiwifruit, offering a glimmer of hope for exporters.

Key Insights from the Summit

Speakers emphasized that New Zealand should not wait for the U.S. to adjust its trade policies but should actively strengthen bilateral and multilateral relations globally. Professor Dan Schnur, a political analyst, noted that Trump embodies broader public attitudes towards trade, reflecting a historical tendency for the U.S. to adopt protectionist measures following military conflicts and economic downturns.

“Trump may be in considerable political trouble… so he might be more open to a wider range of inputs next November than he is today,” Schnur suggested.

In light of these dynamics, Vangelis Vitalis, New Zealand’s chief trade negotiator, outlined three potential scenarios for the future of global trade under Trump’s administration: disintegration of existing systems, fragmentation and regionalization, or a new form of plurilateralism.

Vitalis stressed the importance of embracing the current trading environment: “Nostalgia and hope can’t be our strategies… We have agency here, and we’re not alone.” He highlighted the necessity for New Zealand to engage in orthodox trade agreements while maximizing benefits from existing ones.

Building Relationships for Success

Throughout the summit, the significance of robust relationships in navigating the U.S. market was a recurring theme. Prime Minister Christopher Luxon reiterated the government’s commitment to fostering connections with the U.S. administration, emphasizing the importance of advocating for lower tariffs on New Zealand products.

“We will continue to be aggressive in creating global opportunities for all of our exporters,” Luxon stated, while also acknowledging the reality that tariffs will likely remain a feature of future trade policy.

Ambassador Rosemary Banks, who recently returned from Washington, D.C., emphasized that strong diplomatic ties are crucial and that business relationships also play a significant role in navigating trade challenges.

Trade strategist Stephanie Honey posed a critical question regarding whether companies should diversify beyond the U.S. or focus on strengthening existing relationships to capitalize on niche markets. This discussion highlighted the value of maintaining flexible strategies in an unpredictable environment.

Leaders from the Fonterra Group and the Meat Industry Association echoed the need for optionality in trade arrangements, emphasizing that established trade agreements allow exporters to mitigate disruptions and explore various markets.

As New Zealand’s third-largest export market, the U.S. continues to present significant opportunities. Prime Minister Luxon noted that exports to the U.S. increased by more than 8% in the year leading up to September 2023. However, to fully leverage this potential, businesses must invest in establishing a presence in the U.S. market.

Nathan Flowerday, chair of Zespri, stated that clarity of vision and strategy is essential for New Zealand businesses aiming to succeed in the U.S. market. Ray Smith, chief executive of the Ministry for Primary Industries, emphasized the need to continually “tell our story” of innovation and quality, reinforcing the reputation of New Zealand products.

Despite the complexities of the current trade environment, the summit served as a reminder that with strategic relationships and a proactive approach, New Zealand can navigate the challenges and seize the opportunities presented by the U.S. market.