New Zealand kiwifruit and apple exporters have adjusted to the first six months of tariffs imposed by the United States, according to a report by Westpac and the International Business Forum. The report reviewed the impact on New Zealand's annual US$9.3 billion export trade to the U.S., the country's second-largest export market, and found that the effects on horticultural exports have so far been manageable.
Around 70 percent of New Zealand exports to the U.S. were subject to a 15 per cent reciprocal tariff, applied in addition to existing quotas and duties. Westpac senior economist Darren Gibbs said the tariffs have added pressure but have not resulted in a sharp slowdown for fruit exporters. "Strong demand, and high commodity prices are shielding most primary goods exporters from the negative impact of reciprocal tariffs where applicable."
Within the horticultural sector, kiwifruit and apples continue to benefit from demand conditions in the U.S. market. "The good news, for the most part, has been the continuation of high export prices," Gibbs said, adding that exporters are "still seeing very good prices for kiwifruit and apples." According to the report, pricing dynamics have played a larger role in performance than any direct reduction in demand linked to tariffs.
The U.S. decision to suspend tariffs on fruit in November further supported shipments of kiwifruit and apples. Gibbs noted that the importance of the U.S. market varies by product, with some exporters more exposed to tariff changes than others, depending on market diversification and sales channels.
The report also found that some exporters have been able to pass tariff costs on to U.S. importers. "Those that have been most successful are those selling commodity products currently in high demand with few near-term substitutes," Gibbs said. Kiwifruit and apples were identified among the categories benefiting from limited short-term alternatives in the U.S. market.
At a broader level, concerns that tariffs would derail global trade have eased. "We're progressively seeing consensus forecasts of global growth being revised higher over the second half of the year," Gibbs said. However, he cautioned that tariffs remain a source of uncertainty, particularly if U.S. economic growth slows or consumer spending weakens.
Another potential risk is a case currently before the U.S. Supreme Court concerning the legality of the tariffs. "The current set of tariffs may be 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."
Source: FarmersWeekly
