US Tariffs and the NZ Property Market: What Investors Need to Know

Navigating the ripple effects of US tariffs on New Zealand real estate.

In mid-2025, the US government introduced new tariffs on many countries around the world, encompassing a range of imports, including some goods from New Zealand. Rates on some products were around 10% and certain categories were later adjusted toward 15%.

The move is part of a broader protectionist agenda aimed at boosting domestic manufacturing and reshaping global trade relationships.

While the headlines focus on geopolitical manoeuvring, the real-world consequences are already trickling down to New Zealand, especially for exporters, manufacturers, and property investors.

How Are They Affecting the NZ Economy?

The impact isn’t catastrophic, but it’s noticeable. According to Infometrics, NZ’s exports to the US grew just 7.4% over the past year, slower than the 13% overall export growth.

Some sectors, such as wine and machinery, have been affected. In the ‘beverage, spirits and vinegar’ export group, year-on-year exports fell ~45% in July, though that reflects volatility and includes more than just wine. Machinery exports registered a 46% year-on-year fall in August in one equipment export category.

But the bigger issue isn’t just trade volumes, it’s confidence. The June quarter saw a 0.9% drop in GDP. The 0.9% contraction was driven by multiple factors, weaker exports in some sectors and a pullback in business investment, to which tariff-related uncertainty likely contributed. Companies paused spending on equipment and construction, spooked by global uncertainty.

This hesitation has knock-on effects:

• Construction could slow
  

• Manufacturing might contract
  

• If the NZD weakens amid macro uncertainty, imported inputs may become costlier

What History Tells Us About Tariffs

To understand what might happen next, it helps to look back:

The Smoot-Hawley Tariff Act (1930)

One of the most infamous examples, this US law raised tariffs on over 20,000 imported goods. Intended to protect American farmers during the Great Depression, it triggered retaliatory tariffs from other countries and deepened the global economic downturn.

Trump’s 2018 Tariffs

During his first term, President Trump imposed tariffs on steel, aluminium, and Chinese goods. The result? US manufacturing costs rose, global supply chains were disrupted, and some sectors (like agriculture) suffered from retaliatory tariffs. NZ exporters saw modest impacts, but the broader lesson was clear: tariffs rarely operate in isolation.

NZ’s Own Tariff History

New Zealand progressively dismantled most of its tariffs in the 1980s and 1990s, embracing free trade. This opened the door to cheaper imports and global investment, but also made the economy more vulnerable to external shocks.

Why Tariffs Matter More in 2025

Today’s global economy is more interconnected than ever. A tariff in Washington can affect a builder in Wellington. Here’s why:

• Supply chains are global: NZ imports machinery, electronics, and building materials from countries affected by US tariffs. If those suppliers redirect goods to other markets or raise prices, NZ would pay more
  

• Capital flows are reactive: Investors seek stability. Tariffs create uncertainty, which can lead to currency volatility and higher funding costs
  

• Confidence is fragile: Businesses delay investment when the rules of trade feel unpredictable. That hesitation slows growth and affects everything from hiring to housing

What Does This Mean for Property Investors?

Here’s where property investors need to stay informed:

Construction Costs Might Rise

Imported materials - steel, machinery, electrical components - could be more expensive. Developers may face tighter margins, and fewer new builds go ahead unless prices rise.

Mortgage Rates Stay Sticky

Even if the Reserve Bank lowers the OCR, offshore funding costs may stay high. That means banks may not pass on the full benefit to borrowers, keeping mortgage rates elevated.

Supply Tightens, Prices Hold

With fewer homes being built and borrowing still expensive, buyer activity would likely slow. But in high-demand areas, limited supply props up prices, reinforcing the value of well-located assets.

Thrive’s Take

US tariffs may feel distant, but they’re already shaping the economic landscape here. For property investors, this is a time to focus on fundamentals: location, build quality, and long-term demand.

In times of uncertainty, resilient assets become even more valuable.

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