Fonterra Cooperative Group, the world’s biggest dairy exporter, is concerned that the tariffs planned by President-elect Donald Trump could hurt demand for its products both in the US and globally.
“The buying power of the domestic consumer in North America is going to be impacted,” Chief Executive Officer Miles Hurrell said in an interview with Radio New Zealand on Wednesday. “What will that do to the North American economy given the powerhouse that they are globally, and what does that do to international market sentiment?”
Trump has threatened across-the-board tariffs on both US friends and foes, specifically targeting China but including 10% duties on the rest of the world. The US is New Zealand’s second-biggest export market and purchased NZ$950 million ($545 million) of its dairy products in the year through September.
Hurrell said Trump’s talk of tariffs puts the world in “an uncertain phase” after several decades of countries wanting to work together.
“Now we’re in a situation where everyone’s turning their backs on each other,” he said. “That’s probably the bigger concern for us.”
Fonterra this month forecast a record milk payment for its New Zealand farmers, citing strong global prices. Hurrell said a key part of that is the end of a period when slower economic growth curbed demand at the same time as China’s dairy herds were expanding.
“Now you’ve seen animals start to be culled because there’s simply not a return,” he said. “So supply and demand is getting back into a more balanced situation in China and therefore they’re back in the market.”
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