ASB Business Survey: The Impact Of Trump's Tariffs, According To Kiwi Businesses

Research released today by ASB, supported by Talbot Mills Research, shows Kiwi businesses see US tariffs as more impactful than Covid-19 or the Global Financial Crisis. More than 300 business leaders, including CEOs and founders, contributed to the study, giving their insights on President Trump’s recently announced trade policies.

• Two-thirds (67%) of businesses are concerned about the impact of proposed US tariffs in the next 12 months, with nearly 80% of exporters concerned
• Kiwi business leaders believe Trump’s tariffs will have a more severe global impact than Covid-19 and the GFC
• Meat, dairy and wine are seen as the most vulnerable within Food and Fibre sector, while businesses predict wool and seafood would fare better
• Nearly one-quarter (24%) of Kiwi businesses see at least some opportunity in the tariffs
• More than one-third (39%) of respondents listed support of banks as critical to navigating the current environment

Tariffs: a threat and an opportunity for Kiwi businesses

ASB’s Executive General Manager Business Banking Rebecca James says: “We’re seeing sustained market volatility with the ever-changing political decisions around tariffs, which naturally creates 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. New Zealand has a reputation on the world stage for ingenuity and a can-do attitude, and we want businesses to know there are things they can do to future-proof and manage risks in turbulent times.”

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President Trump first announced tariffs in April as part of the 'America First' trade policy, aimed at protecting US industries and addressing the trade deficit. The tariffs are set at 10% for most countries, including New Zealand, with China a notable outlier where a larger tariff has been applied to Chinese origin goods. Additional proposed tariffs higher than the 10% baseline were paused for a 90-day period and will be reviewed in July. Businesses are split on how long potential disruption could last. A slight majority (51%) of Kiwi businesses are optimistic that the economy will recover quickly, while 38% predict a prolonged economic downturn for the country and the remainder were unsure.

Taking action key to growth

14% of those surveyed view US tariffs purely as an opportunity, while 10% see them as both a potential risk and an opportunity. Ten percent of businesses and 14% of exporters have already taken action to reduce the negative impacts of tariffs including raising prices, shifting markets or cutting costs. Just under one-third (30%) believe they can make up losses through new customers or cost savings; 25% from operational efficiencies, and 22% from other revenue streams. 22% are unsure, with uncertainty highest among small businesses.

“The current market volatility and geopolitical tension may be our ‘new normal’, but we’ve been in positions of global uncertainty before and the research shows Kiwi businesses are already thinking about actions they can take to make their business more resilient and generate returns.”

Ms James encourages businesses to stay connected to industry partners, trade advocacy groups and their banks to share knowledge and ideas when it comes to growth and scale.

“Business customers are relying on us more than ever to navigate the current environment, and we’re seeing this through an increase in trade finance and a rise in currency hedging enquiries. Our advice is to start exploring options now. We’re seeing customers adapting their business strategy in all sorts of ways, so solutions for your business might look like assessing AI to improve workflow, adjusting your supply chain, selling down stock before new inventory orders, building new trade relationships or exploring untapped markets.”

Businesses shifting their focus to closer to home

More than three-quarters of Kiwi 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 potential impacts of tariffs which were of the most concern to businesses include slowing economic growth (39%), increased operating costs (32%) and supply chain disruptions (28%). Nearly one-quarter of businesses are worried about consumer backlash due to price inflation (24%), along with 23% who see a China-US Trade war as unsettling for business. Some of the most explored markets by businesses are China (51%), Australia (37%), European Union (28%) and Southeast Asia (25%).

“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,” says Ms James.

“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 role of banks as a critical support function

Businesses see Government lobbying as the most critical tool in helping to reduce the impact of tariffs, with banks the next most important. More than one-third (39%) of respondents listed support of banks as critical, specifically working capital support (31%), risk advice (26%) and trade finance (24%).

“ASB has provided $4.6 billion dollars to Kiwi businesses over the past five years including considerable support to companies looking to expand and navigate opportunities abroad. We have seen increased use of trade finance products, aided by trade credit insurance, enabling businesses to sustainably leverage balance sheets while derisking payment default. We encourage companies doing business overseas to speak with their banker and engage with a trade specialist to ensure your business is in the strongest position," says Ms James.

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