The article highlights the difficult position of New Zealand compared to its allies. Despite the tariff rate being only five percentage points higher than expected, it may be harder for local exporters to absorb. The situation is compounded by the fact that Australia, a strong defense ally with a free trade agreement and a trade deficit with the US, still faces a 10% tariff. ASB economists note that New Zealand’s trade surplus with the US makes a better outcome “a tough ask,” underscoring the complexities of international trade and dairy economics.

The new tariffs create a slight competitive disadvantage for New Zealand exporters. BNZ Bank senior economist Doug Steel notes that New Zealand goods will now be less competitive in the US market, especially against Australian exports in key categories like frozen beef and lamb. While this doesn’t necessarily mean export prices will fall, it indicates they are likely to be lower than they would have been without the tariff. This is a critical factor for New Zealand’s largest export category to the US.

The tariffs also place New Zealand at a disadvantage relative to other export nations. While New Zealand remains on a level playing field with European wine exporters, it faces a slight disadvantage against competitors like Chile and Argentina, both of whom export similar food and wine products with a lower 10% tariff. Although these relative differences may not seem large individually, economists believe they “could matter at the margin over time,” impacting the long-term competitiveness of New Zealand’s agribusiness exports.