New Zealand Business Confidence Slumps Amid Global Tariff Uncertainty

The April 2025 business sentiment survey results from New Zealand’s major institutions paint a sobering picture: a sharp decline in confidence driven by escalating tariff disputes, particularly with the United States. According to ANZ Bank’s Business Outlook survey, headline confidence fell by 9 points month-on-month, with net 49.3% of businesses expecting economic improvement—a significant drop from 57.5% in March. Meanwhile, sector-specific data reveals deepening fissures across industries reliant on global trade.

The Tariff Tsunami

The immediate trigger is the U.S. administration’s April 2025 tariff announcements, which imposed a 10% baseline tax on New Zealand exports, escalating to 20–50% for nations deemed uncooperative. For key sectors like meat, dairy, and wine—New Zealand’s economic lifelines—the financial toll is staggering. The meat industry alone faces projected tariff costs surging from $15.9 million in 2024 to $277.1 million under the new regime, while wine exporters brace for an additional $75 million annually on $750 million in U.S. exports.

Sectoral Divide: Winners and Losers

The crisis is not uniform. Export-heavy sectors are reeling:
- Meat and dairy: Already grappling with existing U.S. tariffs, these industries now face compounding costs. The Meat Industry Association warns of knock-on effects as global trade wars redirect exports into New Zealand’s traditional markets.
- Wine: While tariffs add financial strain, industry leaders like New Zealand Winegrowers’ CEO Philip Gregan emphasize resilience, citing the appeal of high-quality, sustainable products.

In contrast, tech and renewable energy sectors show relative strength, buoyed by global demand for innovation and green solutions. The Infometrics report notes that tech-driven industries have avoided the confidence slump, with hiring and investment plans remaining robust.

Expert Analysis: Navigating the Storm

ANZ Chief Economist Sharon Zollner attributes the confidence drop to “marked negative impacts on forward-looking indicators,” particularly investment plans. She highlights a stark divide between early-April optimism and late-April volatility, as businesses grappled with incomplete tariff details and geopolitical uncertainty.

AUT Professor Niven Winchester cautions against broader global ripple effects, including reduced demand for New Zealand goods if trade wars intensify. Meanwhile, Stephen Jacobi of the New Zealand International Business Forum advocates for market diversification and diplomatic efforts to counter U.S. protectionism.

Consumer Confidence: A Silver Lining?

While businesses falter, consumer confidence edged upward in April, rising to 98.3 from 93.2 in March. Improved present and future financial assessments—likely tied to domestic job market stability—contrast with businesses’ caution. However, inflation expectations hit a two-year high of 4.7%, signaling underlying economic tension.

Investment Implications

The data underscores a critical crossroads for New Zealand’s economy:
1. Short-Term Risks: Tariffs threaten profit margins for export-dependent firms. Investors should monitor stock performance (e.g., Fonterra, Beef & Lamb NZ) and the NZX 50 Index for market sentiment.
2. Long-Term Resilience: Sectors like tech and renewables offer growth opportunities. Companies with diversified markets or trade-independent revenue streams may outperform.
3. Policy Leverage: The government’s non-retaliatory stance and focus on trade diplomacy could mitigate fallout.

Conclusion

New Zealand’s business confidence slump in April 2025 is a stark reminder of global trade’s fragility. With tariffs set to drain $353 million annually from key sectors by 2025 (meat + wine alone), the immediate outlook is bleak. Yet, resilience exists in high-value exports and innovation-driven industries. Investors must balance caution with a focus on sectors that can pivot to new markets.

As Philip Gregan noted, quality and sustainability remain New Zealand’s greatest assets. The path forward hinges on leveraging these strengths while urging policymakers to navigate a turbulent trade landscape. For now, the numbers speak clearly: uncertainty reigns, and businesses are holding their breath.