New Zealand can absorb 15% tariff shock – ANZ group chief economist

ANZ Group chief economist Richard Yetsenga. Photo / Michael Craig

New Zealand’s economy can absorb the shock of higher 15% tariffs imposed on exports at the weekend, visiting ANZ group chief economist Richard Yetsenga says.

“Everyone should be worried about the tariffs,” Sydney-based Yetsenga said.

“It doesn’t strike me New Zealand should be especially worried.”

While the tariffs would be a significant burden for those exporters directly affected, it was important to step back and look at the potential costs in a broader economic context, he said.

“Obviously there’s a difference between 15% and 10%, but New Zealand exports about $8 billion a year to the US on a $400 billion economy. To do a quick bit of math, that’s 2%.”

Ultimately, that meant at worst a hit of 15% on 2% of New Zealand’s total GDP, he said.

“It doesn’t strike me as a macroeconomically relevant number.”

The US was New Zealand’s largest market for red meat in the year to June, and industry representatives said the increased tariff would put farmers and exporters at a clear competitive disadvantage.

It is also Fonterra’s second largest single export market (by value) – primarily taking specialist dairy protein ingredients that are used in the manufacture of nutritional products for US and global consumers.

America is a key export destination for respiratory products maker Fisher & Paykel Healthcare, which has extensive manufacturing assets in New Zealand and Mexico.

It is also a significant market for New Zealand wine.

In all, the US represents about 11% of total exports.

“For the firms and sectors which export, it’s a challenge and it’s another challenge on top of higher technology costs, difficulty accessing the right labour at the right price in certain segments,” Yetsenga said.

It might mean more competition, and it added to medium-term concerns about the structural Chinese economic slowdown.

But Yetsenga remained upbeat about New Zealand’s economic recovery.

“Look, lower interest rates are a powerful tonic,” he said.

“New Zealand’s economy had a pretty difficult year in 2024, but 2025 is stronger so far and and our view is we’ll continue to improve into 2026.”

New Zealand’s challenges were a slower burn and more structural in nature, he said.

The fact that we’re in a world of more geostrategic competition, was one of the challenges.

“Tariffs are a byproduct of that, with different economies seeking to build domestic advantage [and] also impose costs on third economies like New Zealand.

“The global economy last year did about 3.3%. This year we anticipate about 3%, so certainly a slowdown that you can see in the data, but still just a modest slowdown.

“To put 3% for the global economy in context, global population growth is about 1%. A global recession is global GDP growth below population growth.

“We’re a long way from global recession. Even though it has become a more challenging environment and tariffs are contributing to that global slowdown.”

Liam Dann is Business Editor at Large for the New Zealand Herald. He is a senior writer and columnist, as well as presenting and producing videos and podcasts. He joined the Herald in 2003.