Calm seas don’t make good sailors

The twists and turns of US trade policy remain predictably unpredictable. 

We are now in a brief pause, but the next swell is already forming. On 9 July, the temporary halt on additional US tariffs – announced and then quickly reversed by President Donald Trump – will lift. While a 10% baseline tariff remains, the next wave of economic nationalism could hit without warning.

Few countries have successfully negotiated their way out of these new tariffs, and even those that have haven’t been able to lower them below the 10% baseline. For New Zealand’s export sector, this is not just an offshore issue – it’s a governance issue.

From rules to relationships

Vangelis Vitalis, MFAT Chief Negotiator, nailed it back in 2018 when he warned us the golden weather for global trade had ended.

For directors, the old global trade playbook is out the window. The assumption that there’s a set of trading rules that everyone adheres to is no longer valid. 

What we have now is an international trading environment that’s more relationship-based and transactional. 

This shift didn’t happen overnight; it has been simmering away since President Trump’s election in 2016, his immediate pull-out from the Trans-Pacific Partnership Agreement (TPP) negotiations, moves to renegotiate the North American Free Trade Agreement (NAFTA) and his decision to not appoint appellate body judges to the World Trade Organization (WTO).  

The advice from ExportNZ remains consistent:

• • Keep planning for a range of scenarios and outcomes 
  • Stay closely informed through reliable channels such as New Zealand Trade and Enterprise (NZTE) and the Ministry of Foreign Affairs and Trade (MFAT)
  • Maintain regular dialogue with your in-market buyers and distributors
  • Work with your freight forwarders and supply chain partners to anticipate any possible disruptions over the coming months 

Resilience is the new advantage

Today, there is no waiting for clarity or for conditions to go back to the way they were before.  

Directors and boards need to be proactive and steer their companies to plan for various situations, and companies engaged in business offshore need to be flexible and adaptable to sudden changes. 

That means stress-testing supply chains, ensuring pricing models can absorb sudden costs, and ensuring that communication lines to suppliers, buyers and others connected to your operations cannot break down. 

You don’t build a boat for calm waters; you build it to weather the storm.

Geopolitical instability: The single greatest wild card 

Ignoring geopolitical risk in new markets is like sailing uncharted waters without a map – progress may be swift, but danger may be hidden just below the surface. Geopolitical risk and exposure to risk in different markets need to be front-of-mind considerations. 

A useful tool for boards is a combined PESTEL and SWOT analysis. It forces directors to consider not just economic or legal risks, but political, technological and environmental ones, too. Regardless of the size of the business, external forces will always have the potential to influence business outcomes, so directors need to be up to date with what is happening to their companies. 

Take the recent US targeting of Iranian nuclear facilities. Political risk aside, boards should ask what this means for energy prices, airspace restrictions or cyber retaliation. These are business risks – and governance risks.  

Diversification: Essential, but not easy

Done right, market diversification can help balance overexposure in any one market.  

Done wrong, it can leave business operations too thinly spread, making it harder to invest and scale up when in-market opportunities arise.  

Exploring new markets is essential for any export business. It can spread risk, open new revenue streams and grow the company’s reputation.  

New Zealand is in a strong position: three-quarters of our exports are covered by free trade agreements, and our reputation as a reliable, rules-based nation is a comparative advantage. Directors need to balance out the need to search out the next big market with the understanding that exporting is usually neither easy nor cheap.  

Executing good market entry requires patience, extensive research and often years of relationship-building before returns are realised. Rushing into markets without proper due diligence can become an expensive distraction leading to lost opportunities, sunk costs and reputational damage.

Opportunity often arrives disguised

Global uncertainty and disruption are not reasons for exporters to stand still. Exporters should stay active, curious and prepared for new opportunities.

The shifts in trade relationships caused by President Trump’s trade policy and tariffs will lead to markets looking for reliable trade partners. China is certainly trying to strengthen ties, while the European Union, United Kingdom, Canada, Japan, South Korea and Southeast Asia haven’t escaped the aggressive tariff policies. 

New Zealand companies are good at what they do, whether it’s exporting premium beef and lamb, developing niche manufacturing equipment and components or exporting productivity-enhancing software as a service. Our export sector has never been short of good ideas.   

But good leadership is key. Exporting companies need directors who are agile and alert to the changes in the global environment, with the resilience and competency to deal with those changes and lead through disruption.

---

Josh Tan is also a Leadership Network Advisory Board Member for the Asia New Zealand Foundation and Member of the Executive Committee of the NZUS Council.