Kiwi businesses say US President Donald Trump’s tariffs will have a more severe global impact than Covid-19 and the Global Financial Crisis, according to ASB’s latest Business Survey.
The months since Trump’s “Liberation Day” announcement have seen sustained market volatility, tit-for-tat trade wars and fears of a resurgence in inflation.
Economists widely expect the Reserve Bank will have to cut the Official Cash Rate below 3%, with the central bank lowering its rate track forecast last week from 3.1% to 2.85% by the end of the year.
ASB’s Business Survey, which canvassed more than 300 business leaders, found 67% of businesses are concerned about the impact of proposed US tariffs in the next 12 months.
This was even greater among exporters, with nearly 80% expressing concern.
Meat, dairy and wine were seen as the most vulnerable within the food and fibre sector, according to respondents.
Just over half of businesses (51%) are optimistic that the economy will recover quickly, while 38% predict a prolonged economic downturn.
Rebecca James, ASB’s executive general manager business banking, said Trump’s tariffs had created a heightened sense of uncertainty for businesses.
“It’s clear businesses view any proposed US tariffs as troubling, but it’s pleasing that nearly a quarter of respondents see opportunity in tariffs too,” James said.
“The current market volatility and geopolitical tension may be our ‘new normal’, but… the research shows Kiwi businesses are already thinking about actions they can take to make their business more resilient and generate returns.”
The survey showed more Kiwi exporters are shifting their focus closer to home.
Some of the most explored markets by businesses are China (51%), Australia (37%), European Union (28%) and Southeast Asia (25%).
It comes as more than three-quarters of exporters expect the cost of doing business with the US to increase by 10% or more in the next year.
Concern is higher among exporters (78%) and increases with business size, with worry growing to 88% among 100+ staff businesses.
“The research shows a pendulum swing when it comes to trading partners, with businesses redirecting their attention to our close neighbours. Location seems to be king, with our customers prioritising relationships much closer to home,” James said.
“We’re also seeing exporters maintaining high standards and doubling down on premium products to give us an edge on the global stage, even where it costs more for consumers.”
The OECD today slashed its annual global growth forecast, warning Trump’s tariffs blitz would stifle the world economy.
After 3.3% growth last year, the world economy is now expected to expand by a “modest” 2.9% in 2025 and 2026, the organisation said.
In April, Trump hit most countries, including New Zealand, with baseline tariffs of 10% on imported goods to the US.
Additional proposed tariffs higher than the 10% baseline were paused for a 90-day period and will be reviewed in July.
But the US and China remain at odds over tariffs. A trade truce last month helped ease some of the pain with the US lowering tariffs on goods from China from 145% to 30%, while China dropped retaliatory tariffs from 125% to 10%.
Cameron Smith is an Auckland-based journalist with the Herald business team. He joined the Herald in 2015 and has covered business and sports. He reports on topics such as retail, small business, the workplace and macroeconomics.