The Trump administration’s tariffs initially against China, Canada and Mexico, followed by countermeasures to US export goods, have unnerved investors and wiped off value from global stock markets.
His attempt to reignite domestic manufacturing has widened with 25% tariffs placed on all steel and aluminum imported into the US which applies to all countries.
On top of that, his 30-day ceasefire proposal for the Russian invasion of Ukraine has yet to gain Kremlin traction, while there remains fears of a ceasefire collapse for the Israel and Hamas conflict.
Escalating trade tensions were raised in the latest quarterly survey by Business Canterbury, formerly Canterbury Employers’ Chamber of Commerce.
The complex economic landscape became a top six concern among local business owners and executives watching international trade and geopolitical risks play out.
Yet businesses also believe they are more confident in managing disruption.
‘‘They are trying to understand what the impact might be if they are trading with the US, but also what the impact might be to other countries from that flow-on impact. So there is more awareness and it’s not just the US as there are geo-political risks around the world so businesses are more aware this is something they need to have on their radar for some of the issues as they start planning and preparing for the future.’’
Upsides and downsides could come out of the tariff response for Canterbury exporters and businesses such as manufacturers importing components, she said.
‘‘We have got good relationships with a number of different countries and we don’t become too reliant on one particular market and what we are seeing is the government doing a lot of work on building relationships in new and emerging markets as well as continuing to retain and cement and build on the existing relationships we have on key markets.’’
More than 25% of the chamber’s 2700 members are exporters and many manufacturers and other businesses relied on imported goods.
Ms Watson said international trade and geopolitical risks had shot up to the sixth spot among local business concerns after never being major concerns in previous surveys.
She said the positive side was the business community had faced events such as the Covid-19 lockdowns and Christchurch quake and those experiences had built up an ability to work through economic uncertainty.
In the survey 80% of businesses reported feeling confident about managing disruption - the largest increase since this was tracked in mid- 2022.
‘‘Businesses are still navigating change, but doing it with a mindset that has moved from reacting to anticipating."
Earning expectations for the next year remained stable with 58% feeling optimistic about their financial position.
Ms Watson said there were still pressure points with consumer confidence and demand persisting as major obstacles.
She said more than half of businesses - up 17% since the last survey - identified them as key concerns.
"Although the recent 50-basis-point OCR cut is a welcome move that could help ease these pressures, its full impact will take time to filter through. In the meantime, productivity and growth constraints, followed by inflationary pressures and interest rates, remain among the top three biggest concerns for businesses.’’
The long-standing challenges needed the economy to be back in growth mode, which was taking much longer than expected, she said.
Business Canterbury was in regular contact with ministers and officials to receive updates on international trade developments and non-tariff barriers.
Tariff challenges were expected to be raised during a roadshow by government agencies early next month and at exporter breakfasts, hosted by the chamber.
