US President Donald Trump's tariffs were suspended on beef and fruit in November. (File photo) Photo: AFP / RNZ Composite
New Zealand exporters appear to have coped with the first six months of the US government's tariffs, according to a new report.
Westpac and the International Business Forum have looked at the impact of the tariffs on the country's annual $9.3 billion export trade to the US, New Zealand's second biggest market, and found they have been manageable.
Westpac senior economist Darren Gibbs said the tariffs were clearly unhelpful but the impact had been manageable.
"Strong demand - and high commodity prices - are shielding most primary goods exporters from the negative impact of reciprocal tariffs where applicable."
About 70 percent of New Zealand exports to the US had been affected by the 15 percent reciprocal tariffs, which were imposed on top of any other existing quotas and tariffs.
Different impact on different sectors
The report assessed the impact on the main goods, beef, dairy, fruit, wine, wood, and mechanical machinery.
"The good news, for the most part, has been the continuation of high export prices, we have seen decline in the dairy field as a result of some very good supply conditions rather than any drop off in demand, and we're still seeing very good prices beef and lamb, and likewise for kiwifruit and apples," Gibbs said.
He said the US decision to suspend the tariffs on beef and fruit in November had further helped those commodities, and for some products the US was less important to them while for others the US was more significant.
"The most notable decline is in exports of mechanical machinery. Exports of beverages are also tracking slightly below year earlier levels, while some other categories - such as meat and electrical machinery - are seeing slowing rates of growth."
Gibbs said many exporters had also been successful in getting the US importer to bear the tariff cost.
"Those that have been most successful are those selling commodity products currently in high demand with few near-term substitutes and those selling high-tech and somewhat unique manufactured goods with no substitutes."
But exporters were also being advised to look at finding other markets, strengthening their supply chains and US links, and innovate products to make them more desirable and special for US consumers.
World trade disrupted not destroyed
Gibbs said initial fears that the global trade system would be derailed by the tariffs had not come to pass.
"We're progressively seeing consensus forecasts of global growth being revised higher over the second half of the year, back in April the fear was that the tariffs might be the trigger for a broader trade war... if that had happened the growth impacts would undoubtedly been much larger than we have seen to date, tariffs have definitely dropped down the list of global worries."
However, the tariffs had seen changes in trade policies and behaviour by China, the world's second largest economy.
Gibbs said tariffs would remain an area of uncertainty, and if US growth slowed and consumer spending fell that would have consequences for trade, as might the case currently before the US Supreme Court about the legality of the tariffs.
"It is possible the current set of tariffs is ruled illegal and if that is the case there would be a renewed period of uncertainty because it's not clear what the White House would do in response to that."
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