Latest / Best of Business / Henry Russell: ANZ economist on the US overtaking Australia as New Zealand's second-biggest export market

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Henry Russell: ANZ economist on the US overtaking Australia as New Zealand's second-biggest export market · Best of Business

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  Speaker 2: First up, though demand for burger meat has fueled our
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  Speaker 2: exports to the United States, The US became New Zealand's
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  Speaker 2: second largest export market last year. This is according to
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  Speaker 2: stats and Z data that came out today. It means
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  Speaker 2: that Australia has taken a slide from second to third.
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  Speaker 2: A Z economist Henry Russell is would mean tonight, Henry,
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  Speaker 2: good evening.
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  Speaker 3: Good evening.
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  Speaker 2: Why is the US so keen on our burger meat?
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  Speaker 3: Well, it's very much a tight supply story over there.
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  Speaker 3: So the US beef inventory has been in steady declined
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  Speaker 3: for the past few years and has actually at the
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  Speaker 3: lowest level in over seventy years currently, and so that's
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  Speaker 3: been a particularly good news story for our exporters, and
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  Speaker 3: particularly given it's come at a time where demand from
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  Speaker 3: China has been very subdured. So the US market has
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  Speaker 3: actually overtaken China for meat exports in the past year.
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  Speaker 3: So that's a very positive story in the sense that
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  Speaker 3: we've been able to pivot away from a market which
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  Speaker 3: in the past we've been heavily concentrated, and so it
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  Speaker 3: adds to our resilience moving forward.
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  Speaker 2: What's hampering domestic production for them in the.
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  Speaker 3: US, it's several reasons. It's kind of a throwback to
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  Speaker 3: what we saw through it during the COVID pandemic and
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  Speaker 3: the war in Ukraine. Muzeons u Zeon's pasture based system
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  Speaker 3: has been relatively more resilient then other produced particularly those
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  Speaker 3: in the north Northern hemisphere where it's predominantly grain fed beef.
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  Speaker 3: And then there was obviously some other supply side disruptions
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  Speaker 3: with respect to energy prices, surges and gas gas prices
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  Speaker 3: and the like. So we've peared fairly well out of
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  Speaker 3: that relative topilet producers.
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  Speaker 2: Obviously, Trump is in. We don't know what he's going
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  Speaker 2: to do with the tariffs yet. We're all waiting and
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  Speaker 2: watching and seeing. But given our increased exposure to the US,
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  Speaker 2: does that worry you at all?
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  Speaker 3: It's as you say, yet it's still uncertain as to
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  Speaker 3: what these tariff measures look like. One of the benefits
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  Speaker 3: and it's going to the impacts is certainly going to
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  Speaker 3: vary across different industries, but with respect to beef, the
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  Speaker 3: impacts are likely to be fairly minimal. If you think
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  Speaker 3: about the incidents of the impacts of tariffs, they can
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  Speaker 3: neither fall on the export im Zealand producers or on
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  Speaker 3: the importer US producers and consumers. And given that supply
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  Speaker 3: it's very tight in the US at the moment and
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  Speaker 3: we are filling that whole, it's likely that, you know,
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  Speaker 3: without the US able to scale up its own production
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  Speaker 3: very quickly, the part of the cost of those tariffs
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  Speaker 3: will be passed on to US consumers and they'll be
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  Speaker 3: paying a little bit more for their hamburgers, which they
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  Speaker 3: probably won't be very happy about. And you know, that
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  Speaker 3: leaves us in a good position. And it is also
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  Speaker 3: important to kind of consider what the focus of these
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  Speaker 3: tariff policies have been lately, and it's Trump's rhetoric has
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  Speaker 3: been they are targeting countries with very large trade deficits
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  Speaker 3: with our trade surplaces with the US rather and New
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  Speaker 3: Zealand's trades has a trade surplace with the US, but
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  Speaker 3: it is very small relative to others, so we're not
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  Speaker 3: likely to be impacted to the same extent. And if
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  Speaker 3: he does pursue a policy of universal tariffs, then we're
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  Speaker 3: not going to fear any worse than any other countries,
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  Speaker 3: and that we're all be facing the same tariffs at
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  Speaker 3: the border.
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  Speaker 2: Right because, as you say, Americans are still going to
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  Speaker 2: want to eat beef paddies and hamburgers, and they're still
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  Speaker 2: going to need to get the beef because they won't
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  Speaker 2: be able to turn their production around very quickly. I
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  Speaker 2: guess the only caveat is if some country are the
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  Speaker 2: Australians or I don't know, the Argentinians or something, we're
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  Speaker 2: able to get an exemption and we were happy with
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  Speaker 2: the tariff. That's when things would be skewed.
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  Speaker 3: Yeah, that is a risk. I wouldn't say it's a
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  Speaker 3: significant risk for New Zealand, but certainly we don't have
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  Speaker 3: the full details yet, so it's something to look out for.
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  Speaker 3: But I think a really important message to make on
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  Speaker 3: tariff related policies is why do we trade in the
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  Speaker 3: first place. It's because countries have a comparative advantage. They
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  Speaker 3: can produce goods and services cheaper than others. So the
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  Speaker 3: ultimate cost of these tariff policies is the consumer, and
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  Speaker 3: US consumers are likely to face higher prices in the
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  Speaker 3: long run.
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  Speaker 2: Hey, you've had your latest while we've got your ams
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  Speaker 2: in business confidence survey out today, what's the mood?
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  Speaker 3: So we did see a pullback in business confidence, but
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  Speaker 3: I wouldn't say something to be particularly concerned about. As
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  Speaker 3: you know, we saw through the second half of last
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  Speaker 3: you know, the last quarter of last year, business confidence
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  Speaker 3: was at a near decade high. And so what we're
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  Speaker 3: seeing to start the new year is probably a little
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  Speaker 3: bit of a reality check of firms and that you know,
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  Speaker 3: these levels are still very elevated, but firms are likely
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  Speaker 3: reassessing how quickly it's going to take for the economy
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  Speaker 3: to get back to the new normal. It's the survey
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  Speaker 3: today certainly isn't suggesting that the recovery has stalled. In fact,
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  Speaker 3: it's consistent with a continued gradual recovery. So there are
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  Speaker 3: positive stories in the survey despite the pullback.
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  Speaker 2: We saw it all right, Henry, Thank you very much
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  Speaker 2: for that. Henry Russell ains at Economists with.
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