The headlines are hard to ignore: trade wars, tariff battles, and economic uncertainty dominating global news cycles. If you’re watching your KiwiSaver balance or investment portfolio with growing concern, you’re not alone. With US tariffs reaching levels not seen since the Great Depression and trade relationships shifting daily, many New Zealanders are wondering how these distant economic storms might wash up on our shores.
The good news? While we can’t control global politics, we can understand the risks and take practical steps to protect our financial futures. New Zealand’s unique position in the global economy offers both challenges and opportunities that savvy investors can navigate successfully.
New Zealand’s economy is deeply intertwined with international trade, making us particularly sensitive to global tensions. Our exports reached $105 billion in the year to March 2025, representing a significant portion of our economic activity, with our largest trading partners being China (accounting for over 30% of two-way trade), Australia, the United States (our third-largest partner), the European Union, and Japan. This means that when major economies start slapping tariffs on each other, the ripple effects inevitably reach our markets.
The current trade environment is unprecedented in modern times. Following President Trump’s return to office in 2025, sweeping new tariffs have been implemented, including universal 10% tariffs announced on “Liberation Day” in April 2025, with much higher rates on specific countries. Some estimates suggest average US tariff rates have reached around 27%—the highest levels since the early 1900s. Meanwhile, retaliatory measures from trading partners have created a complex web of trade restrictions that can shift supply chains and alter commodity prices overnight.
For New Zealand investors, this translates into several key areas of concern: currency fluctuations, commodity price volatility, and changing demand patterns for our key exports like dairy, meat, and forestry products.
Your New Zealand and international share holdings face different pressures during trade disputes. Export-heavy companies like Fonterra, Fletcher Building, or tourism operators can see their profits squeezed when trade barriers make their products less competitive overseas. Conversely, companies focused on the domestic market may benefit from reduced international competition.
International shares in your portfolio face their own challenges. Companies operating across multiple countries must navigate shifting trade rules, while those heavily dependent on specific supply chains may see costs rise unexpectedly.
Real estate investments, including REITs in New Zealand and Australia, often provide some insulation from trade tensions. However, they’re not immune to broader economic effects. Reduced business confidence can slow commercial property demand, while residential markets may soften if employment uncertainty grows.
The silver lining? Property has historically served as a hedge against inflation, which often accompanies currency devaluations during trade disputes.
The New Zealand dollar typically weakens during global uncertainty as investors flee to “safe haven” currencies like the US dollar. While this hurts the value of international investments when converted back to NZ dollars, it can boost the competitiveness of our exports and support companies with overseas earnings.
Government bonds usually benefit during uncertain times as investors seek stability, though returns may not keep pace with inflation if the currency weakens significantly.
The old investing adage “don’t put all your eggs in one basket” becomes even more critical during uncertain times. A well-diversified portfolio across different asset classes, geographical regions, and sectors can help smooth out the bumps when trade tensions spike.
Consider spreading your investments across:
During uncertain times, companies with strong balance sheets, consistent cash flows, and adaptable business models tend to weather storms better. Look for businesses with:
Some international investment funds offer currency hedging, which can reduce the impact of exchange rate movements on your returns. While this might cost slightly more in fees, it can provide peace of mind during volatile periods.
Your KiwiSaver fund choice becomes particularly important during uncertain times. Growth funds may see more volatility, while conservative funds offer stability at the cost of potentially lower long-term returns. Many investors benefit from gradually shifting towards more conservative options as they approach retirement age.
Despite global uncertainties, New Zealand possesses several structural advantages that can help protect investors:
Our robust regulatory environment, stable political system, and strong rule of law continue to attract international investment. The Reserve Bank of New Zealand maintains credible monetary policy, while our financial markets operate with transparency and integrity.
Unlike countries heavily dependent on single trading partners, New Zealand has cultivated relationships across multiple regions. This diversification helps cushion the blow when any single trade relationship faces difficulties.
Our primary exports—food and fibre—represent necessities rather than luxuries. While prices may fluctuate, global demand for quality protein and dairy products continues to grow, particularly in developing countries.
Leading New Zealand fund managers are taking a cautiously optimistic approach to the current environment. Many emphasise that while short-term volatility is inevitable, long-term fundamentals remain sound for patient investors.
The consensus among local financial advisers is that trying to time markets based on trade news is often counterproductive. Instead, they recommend maintaining a long-term perspective while making tactical adjustments to portfolio composition based on changing risk levels.
Trade tensions often create both opportunities and risks simultaneously. Market volatility can present buying opportunities for long-term investors, while also highlighting the importance of having adequate emergency funds and appropriate insurance coverage.
This uncertain environment makes business planning with your accountant more valuable than ever, particularly if you own investment properties or run a business with international exposure.
For those considering major financial decisions, such as property purchases, ensuring thorough pre-purchase home inspections becomes even more critical during uncertain economic times when making costly mistakes can be particularly damaging.
The current trade environment presents genuine challenges, but history shows that markets eventually adapt to new realities. While we can’t eliminate the risks, understanding them allows us to position our portfolios more defensively and take advantage of opportunities as they arise.
The key is maintaining perspective: trade tensions are cyclical, but the long-term growth of the global economy continues. For New Zealand investors, this means staying diversified, focusing on quality investments, and remembering that our country’s strong fundamentals provide a solid foundation for long-term wealth building.
Rather than losing sleep over daily trade headlines, focus on what you can control: your asset allocation, investment costs, and time horizon. With careful planning and patience, your portfolio can weather these uncertain times and emerge stronger on the other side.
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