US tariffs prompt NZ & Australian business strategies

The imposition of new tariffs by the United States has sparked concern and strategising among businesses in New Zealand and Australia, as they grapple with the broader implications of these economic changes. The 10% tariffs on New Zealand exporters present a challenging economic landscape for small and medium-sized businesses (SMBs) engaged in international trade, prompting them to seek out strategic solutions to mitigate costs and maintain competitiveness.

Lowry Gladwell, an Associate Director at Airwallex New Zealand, shares insights into optimising currency movements as a potential cost-saving measure for these businesses. Gladwell highlights three primary strategies to achieve up to a 5% savings amid the new tariff regime. He urges businesses to avoid forced currency conversions which can result in an additional 2% in costs on top of interbank rates. Instead, he recommends settling payments into a USD global account, allowing businesses to convert funds to New Zealand dollars at more favourable times and rates.

Another strategy is the avoidance of "The Conversion Trap," which occurs when businesses convert USD earnings into New Zealand dollars only to reconvert them to pay international expenses. Gladwell advises holding USD in multi-currency wallets to directly manage overseas payments, thereby bypassing unnecessary conversions that incur additional costs. Furthermore, he suggests using cards with no international fees to pay for services billed in foreign currencies, avoiding the expensive offshore service fees charged by some New Zealand banks.

Gladwell asserts, "This is a confusing time for many trying to understand the impact of geo-political changes, and Airwallex is trying to provide support. Smart NZ businesses that are optimising their currency movements are healthier, more competitive, and are ready to thrive in a post-free trade world."

Meanwhile, Australian retailers are equally facing intense pressures from US tariffs, particularly those who are reliant on imports from countries like China and Vietnam. According to John-David Klausner, General Manager International at Loop, the widespread increase in tariffs on non-US goods poses a dual challenge of affecting profit margins and testing customer loyalty. Klausner contends that "tariffs might be out of your control – but how you respond to them isn't."

Klausner emphasises the importance of deploying a customer experience strategy centred on "radical transparency." This approach involves being open and forthcoming with customers about the nature and reasons for changes, ensuring expectations are clearly managed through proactive communication. He notes that "Clear, consistent messaging, supported by efficient returns and exchange processes, is instrumental in building deeper trust during tumultuous periods."

Both Gladwell and Klausner underscore critical elements of financial strategy and customer relationship management as businesses navigate the complexities introduced by the current tariff landscape. By implementing these strategies, New Zealand and Australian businesses aim to cushion the financial blow of tariffs while strengthening customer bonds.