New Zealand’s dairy exporters are bracing for the impact of sweeping new US import tariffs, with the sector now facing combined duties of up to 30% on shipments to the United States—potentially jeopardizing a significant portion of the country’s $1.2 billion dairy trade with its second-largest export market.
US President Donald Trump has announced a blanket 10% tariff on imports from New Zealand, effective this weekend. This is in addition to existing US tariffs on dairy, which already average nearly 20%, according to a 2023 report by Sense Partners.
Countries like Australia, the UK, Argentina, and Brazil are also subject to the same 10% tariff, while the EU faces an even steeper 20%.
“Not Targeted, But Still Hit”: Sector Leaders React
Trade Minister Todd McClay described the move as “disruptive but not catastrophic,” noting that while NZ is not worse off than many others, the development comes at a time when global supply chains remain fragile. “We’re in line with other key partners, but still less competitive today than we were yesterday,” he said.
The Dairy Companies Association of New Zealand (DCANZ) is actively working with the government to understand the broader implications for dairy producers. “How other US trading partners respond will significantly influence the global dairy market,” the association stated.
DCANZ has flagged a potential drop in competitiveness, particularly for value-added products like cheese, butter, and casein, which already face tighter margins due to shipping and shelf-life constraints.
Exporters Weigh Tariff Fallout
Despite the setback, exporters remain cautiously optimistic. “US demand for dairy remains strong, especially for specialty and grass-fed products,” said Rabobank economist Ben Picton. “But with these tariffs, the playing field is tilted.”
Meanwhile, the Meat Industry Association’s Sirma Karapeeva warned of possible global trade distortions, as exporters may reroute products to other markets where NZ competes—potentially increasing price pressure across the board.
Compounding the uncertainty, President Trump claimed NZ imposes a 20% barrier on US imports—a figure that Trade Minister McClay disputed. “Our average tariff on US goods is just 1.8%. The 20% number appears to be a misinterpretation of the US trade deficit with NZ,” he clarified.
NZ Dairy Still Sees Opportunities in US Market
NZ exporters still view the US as a vital and growing market, with dairy exports there growing 16% in 2023. The wine and meat industries also maintain strong positions, but wine producers like Babich Wines say the new tariff makes NZ bottles less competitive compared to US domestic brands.
“This isn’t ideal,” said CEO David Babich, “but it’s not as devastating as a 25% or 40% duty. We’ll adapt.”
Global Ripple Effects Loom Larger Than Direct Tariff Hit
Economists say the most concerning fallout could stem from indirect effects, as retaliatory tariffs and slowed global growth dampen trade momentum. China, for instance, faces a 34% US tariff, and its reduced output could create ripple effects across export-dependent economies like NZ.
“It’s not just the tariff impact—it’s the signal,” said Infometrics economist Brad Olsen. “It points to a more fractured global trade environment, where everyone pulls back. That’s bad news for a trading nation like ours.”
