New Zealand exporters are pivoting to alternative markets, including India, as a new 12.5% United States import tax takes effect on most Kiwi goods. According to EMA Head of Advocacy and Strategy Alan McDonald, business confidence remains brittle as the tariff hike lands on a tough market.
US Import Tariffs Hit Kiwi Wine and Manufactured Goods
The United States administration has levied a 12.5% import tax against 60 countries, up from 10%, claiming those nations failed to properly stop the import of goods made using forced labour. Excluded from the tax are beef and kiwifruit. Trade Minister Todd McClay labelled the forced labour argument “absolute rubbish,” while NZ International Business Forum executive director Felicity Roxburgh stated that the US administration has been determined to use tariffs for economic or political leverage.
The wine sector faces severe pressure under the new levy. Loveblock wine founder Erica Crawford noted that the tariff will have “quite an impact” on the industry, adding that “you don’t know what’s going to happen tomorrow, let alone next week or next month.” The US remains New Zealand’s biggest wine market. Data from New Zealand Winegrowers shows Kiwi wine exporters sold more than $720 million worth of product to the US in the year to June, well ahead of the UK market at $437 million. However, wine exports to the US shrunk by 5%, contrasting with a 4% growth in the UK over the same period.
Did you know? While wine exports to the US shrank by 5% over the past year, New Zealand wine exports to India grew by 49%, though from a smaller base of $438,000, as producers seek to spread their financial risk.
Exporters Pivot Toward India Amid Shifting Trade Dynamics
To offset tightening margins in North America, local business leaders are actively exploring alternative destinations. Alan McDonald noted that “crisis has almost become business as usual” and that “people aren’t waiting for things to change or turn.” Both McDonald and Erica Crawford pointed to India as a primary growth target.
“We’re really looking at India at the moment. The Free Trade Agreement will help,” Crawford said, noting the importance of spreading financial risk. This market shift coincides with the New Zealand-India Free Trade Agreement, which is working its way toward entering into force. The Government reports the deal will eventually reduce or eliminate tariffs on 95% of New Zealand exports to India, with over half becoming tariff-free immediately.
Bilateral ties deepened further when Prime Minister Christopher Luxon and Indian Prime Minister Narendra Modi agreed to a Roadmap to 2030 during Modi’s visit to Auckland, targeting a double of two-way trade to $7 billion. Trade Minister Todd McClay highlighted an early “halo effect” from the pact, citing a 63% jump in apple export volumes to India since negotiations began, lifting the country from New Zealand’s seventh-largest apple market to its fourth.
Frequently Asked Questions
What is the new US tariff rate on New Zealand exports?
The import tax has been hiked to 12.5% and applies to most Kiwi exports, excluding beef and kiwifruit.
Why did the United States impose the 12.5% tariff?
The US administration levied the tax against 60 countries it claims have failed to properly stop the import of goods made using forced labour, a justification Trade Minister Todd McClay termed “absolute rubbish.”
How is the New Zealand wine industry responding to the US tax?
With the US market shrinking by 5% and freight costs climbing, producers like Loveblock wine founder Erica Crawford are exploring alternative markets such as India to spread risk.
What is the status of trade between New Zealand and India?
New Zealand and India have signed a Free Trade Agreement and agreed to a Roadmap to 2030 targeting $7 billion in two-way trade, which is already driving a halo effect in sectors like apple exports.
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