New Zealand will be worse off than its competitors under new US 15% tariff regime, international business group warns
'All along, the idea has been to run faster than the guy next to us, who in this case is Australia, Uruguay, Argentina, if you're in beef, or Chile if you're in wine.'
Importers typically pay tariffs through customs agents when they pick up goods.
'But basically, people have contracts and that tariff is sometimes shared, sometimes passed back to the exporter, and sometimes the importer will absorb it and pass it on to the consumer.
'So it's a little bit case-by-case, but that doesn't take away from the fact that it makes our goods globally less competitive,' Roxburgh said.
'We do sell very high-quality goods into a wealthy market, so only time will tell whether that's going to hold up and whether we'll be able to pass that price on to the consumer and whether the consumer will be willing to pay more.'
Roxburgh said the US move would help reinforce New Zealand's trade ties with other countries.
'The important point here is we have a good network of free trade agreements and tariff-free access to a diverse range of countries, and that's an opportunity for us.
'But by the same token, you don't invent or temporarily pivot to new markets overnight.
'Exporters spend a lot of time in finding the right partners, finding the right supply chains, distributors and on marketing infrastructure.
'The idea of diversification has been around for a long time and exporters are well aware of that, but the US is a premium market for our goods.'
Some New Zealand exporters already pay a MFN (most favoured nation) tariff, sometimes of about 2% or 3%.
'If you're now taking 15%, some are getting up close to 20%, which is real commercial pain, so the 15% is additional to what some were already paying.'
The NZIBF represents some of New Zealand's biggest exporters, with a combined turnover of $30b.
Fonterra, the country's biggest exporter, said the higher tariff was disappointing.
'However, global demand for dairy remains strong and Fonterra's size, scale and broad product portfolio and market mix means we are well positioned to navigate changes in market dynamics,' Simon Tucker, the co-op's group director global external affairs, said.
The US is among Fonterra's top five export destinations.
For Fisher and Paykel Healthcare (FPH), which counts the US as a key export market, the revised tariff regime is expected to have a small impact on its bottom line.
The company makes about 45% of its volume in Mexico and 55% in New Zealand, with about 43% of its revenue coming from the US.
About 60% of US volumes are supplied from the company's Mexico manufacturing facilities.
In March, the US enacted a 25% tariff on products imported from Mexico that are not compliant with the US-Mexico-Canada Agreement (USMCA).
Almost all FPH products imported into the US from Mexico are USMCA-compliant.
Forsyth Barr senior analyst Matt Montgomerie said the market had been modelling its forecasts for FPH on a 10% tariff on US-bound hospital products out of New Zealand only.
Montgomerie said a 15% tariff equated to a 1% to 1.5% hit to the broker's earnings forecasts over the next few years.
'It obviously is an additional cost, but I don't think it would result in any dramatic changes in how they operate the business or the supply chain and the earnings impact, versus the 10%, is relatively small.'
ASB economists said New Zealand would be put at a 'slight' disadvantage to Australia.
'But, as Canada's position shows, it could have been worse: punching back at the US only seems to work if you have some rare metals tucked in your boxing gloves.
'New Zealand will have to adjust to upwards of $1.4b of potential trade costs, which is the tariff bill US importers will need to pick up on the current value of NZ's goods exports,' the bank said.
'Whether it is lost sales or thinner margins, a proportion of that bill will impact New Zealand exporters, unless US consumers prove to have unwavering appetites for New Zealand products,' the bank said.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
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