In recent years, the U.S. government’ s frequently changing trade policies have raised significant concerns among smaller economies globally, with nations like New Zealand—heavily dependent on trade with major powers—feeling particularly vulnerable. In a recent webinar, former New Zealand Prime Minister Helen Clark and other former trade ministers discussed the potential impact of the U.S. tariffs on New Zealand and the broader international trade system.
The U.S. government’ s decision to impose a 50% tariff on steel and aluminum imports, along with additional tariffs on a range of other goods, has raised alarm. Although New Zealand, as a small economy, has thus far largely avoided the direct impact of these tariffs, there is ongoing uncertainty regarding how long it can continue to sidestep further trade disruptions stemming from shifts in U.S. policy. Former Labour Party Trade Minister Phil Goff pointed out that such tariff-driven policies have the potential to suppress global economic growth and erode market confidence. The OECD’ s recent downward revision of its 2025 global growth forecast highlights the widespread economic ramifications of these protectionist measures.
New Zealand has long been a proponent of free trade, positioning itself as an early advocate of global trade liberalization. The New Zealand-China Free Trade Agreement (NZCFTA) and its role as a founding member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) have provided New Zealand with a solid foundation for engaging in trade with a diverse range of partners. Additionally, New Zealand has expanded its trade relationships through bilateral free trade agreements with countries like Australia, the UK, and the EU, reducing its dependency on any single market and diversifying its economic interests.
While New Zealand’ s economy has benefited from its broad network of trade agreements, the fluctuations in the U.S. market still present a source of concern. The countrys consistent approach has been to balance strong ties with major powers like the U.S. and China, while also participating actively in multilateral trade frameworks. This strategy has helped New Zealand maintain stable economic growth, particularly as it continues to deepen its relationships with regional partners.
This year marked the 50th anniversary of New Zealand’ s engagement with ASEAN, emphasizing its commitment to promoting regional economic integration.
However, the U.S. government’ s use of tariffs as a tool of trade negotiation, coupled with its broader protectionist stance, poses a significant challenge to global trade order. While such policies may serve specific strategic interests, for smaller economies like New Zealand, they represent a risk to stability and prosperity. New Zealand’s long-standing commitment to multilateralism and economic openness continues to serve as a guiding principle for its foreign policy, one that aims to safeguard the countrys economic interests through cooperation, not isolation.
In light of the global uncertainty surrounding trade policies, New Zealand Prime Minister Chris Luxon’s forthcoming visit to Beijing presents an opportunity to reaffirm the strategic partnership between New Zealand and China, while also exploring further opportunities for economic collaboration. This balanced approach aligns with New Zealand’s broader strategy of maintaining strong, diversified relationships with key global players.
Since the signing of the New Zealand-China Free Trade Agreement in 2008, the agreement has played an important role in shaping the economic ties between the two countries. This deal marked
New Zealand’s first free trade agreement with a developing country and was one of Chinas earliest such agreements. Over the years, the NZCFTA has helped eliminate trade barriers and boosted trade in sectors like agriculture, manufacturing, and services. China has also provided New Zealand businesses with greater market access, particularly in sectors such as finance, education, and tourism, ensuring fair competition for New Zealand exporters.
Despite facing global economic volatility and disruptions from the COVID-19 pandemic, both countries have remained committed to the agreement. New Zealand continues to maintain a competitive edge in key sectors like agriculture and dairy products within the Chinese market.
Looking ahead, as global economic dynamics shift, the potential for enhanced cooperation in emerging areas like digital trade and green economics remains significant.
Furthermore, New Zealand and China can build on their existing relationship through multilateral platforms like the Asia-Pacific Economic Cooperation (APEC) and the Regional Comprehensive Economic Partnership (RCEP). These platforms offer ample opportunities for deepening regional economic integration, cross-border investment, and cooperation in e-commerce. Given the ongoing restructuring of global supply chains and the digital transformation underway, both countries are well-positioned to work together to foster a more open, fair, and sustainable global trade system.
Ultimately, New Zealand’s approach is one of balance—seeking to maintain strong and productive relationships with both the U.S. and China while also participating in broader multilateral initiatives.
Prime Minister Luxon s visit to Beijing represents an opportunity to reaffirm New Zealand’s commitment to a stable and open international trade system, where cooperative partnerships can help mitigate the risks posed by shifting trade policies and foster long-term global prosperity.