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China, US Tariff War Will Be Felt By New Zealand Exporters, New Zealand China Council Says
New Zealand China Council's executive director believes the trade war between China and US will continue until the two countries have "their hands on each other's throats".
With the two countries being New Zealand's largest export markets, it could mean tough times for Kiwi businesses.
On Wednesday (NZT), dozens of US President Donald Trump's tariffs on imports came into force, including 104 percent tariff on goods from China.
Trump had given China 24 hours to roll back its decision to place "reciprocal duties" on US goods.
Instead, China returned the fire calling Trump's ultimatum "blackmail" and vowed to "fight to the end".
The trade war escalation would likely impact New Zealand, one expert said.
China is New Zealand's largest market for export goods and some Kiwi business manufacture there.
New Zealand exported almost NZ$18 billion worth of goods to China (year to December 2024), in comparison with $9 billion to our next biggest market - the US.
New Zealand China Council executive director Alistair Crozier told Checkpoint there is going to be some tough times.
"It's a very grim situation globally and China is the largest export market, not just for us, but for about 120 other countries so every one is looking at this with a lot of concern," Crozier said.
He said consumer confidence since China emerged from Covid-19 had been deflated and that impacted New Zealand's exports to China. However, it had just started to return to positive levels.
"You felt that [they were] just turning the corner a little bit up there, but now I think you are likely to see Chinese families sitting on their savings... I think it will be quite a deflated environment."
A slow down on spending in China would be felt by New Zealand exporters very quickly, Crozier said.
He said the tariffs were expected, but maybe not on the scale we've seen, as the two countries have been engaging in a "tit for tat" raising of tariffs and other trade measures since 2018.
However, Crozier said China had been preparing for the incoming tariffs by decreasing its exports to US, re-locating some of its manufacturing to other countries and diversifying imports,
"China is not on its knees, and I don't think we are heading for calamity, or a total economic failure, but I think at some point, the pressure on both economies will be such that cool heads will start to prevail," he said.
Crozier believes China and US will eventually have to engage in negotiations.
"This kind of ratcheting up, which is now at a surreal level, I think, will continue until both sides have their hands on each other's throats to such an extent some kind of discussion or negotiation is inevitable," he said.
"I think we will see that in the longer term, but the short term pain could still be quite severe."
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