Here's the deal in a nutshell: Instead of shipping goods directly from China to the U.S., businesses can redirect shipments to New Zealand first before exporting them to the U.S. Why does this matter? New Zealand enjoys preferential trade benefits with China under the New Zealand-China Free Trade Agreement (NZCFTA). This could potentially shield your goods from the heavier tariffs slapped on direct China-to-U.S. imports.
By routing products through New Zealand, savvy traders can:
Wondering if this strategy is worth the effort? Here's what makes it a game-changer:
The U.S. imposes harsh taxes on Chinese imports—ranging from 34% to as high as 49% for certain countries in Asia. By contrast, products routed through New Zealand are only subject to a 10% tariff under current U.S. policies. This significant reduction can translate into substantial savings for your business, helping you stay competitive in pricing.
New Zealand has a long-standing free trade agreement with China (NZCFTA) and maintains strong trading relationships with the U.S. This means goods originating in China can potentially clear New Zealand customs with minimal tariffs before being re-exported to the U.S.
Products labelled as routed through New Zealand—a nation known for its strong quality standards and clean, green image—may earn additional trust from U.S. consumers. A "processed in New Zealand" stamp could give your business an edge in consumer perception.
With so many unpredictable trade policies between China and the U.S., rerouting goods through New Zealand provides a safety net. It diversifies your shipping routes, reducing dependency on a single pathway in case of sudden restrictions.
If you're ready to explore this game-changing strategy, here's how you can make it happen:
Look up the specific tariff rates for your product category under both NZCFTA and New Zealand-U.S. trade agreements. New Zealand's trade departments (like MFAT) can help you identify how much you might save.
Work with a local New Zealand supplier, distributor, or logistics provider who can help facilitate the processing of goods. Alternatively, partner with experts like Epic Sourcing to manage the complexities for you.
Some goods might need value-added processes in New Zealand to qualify for lower tariffs when entering the U.S. These could include minor assembly, repackaging, or labelling done on New Zealand soil.
Coordinate end-to-end shipments with a freight forwarder familiar with the China-New Zealand-U.S. trade triangle. This includes customs clearance, warehousing in New Zealand, and re-export paperwork for entry into the U.S.
Navigating international trade laws safely requires strict adherence to U.S. Customs and Border Protection (CBP) guidelines. Make sure you're ticking every box regarding accurate documentation, declarations, and origin certifications.
While the New Zealand route has clear benefits, there are a few things to be mindful of:
Adding New Zealand into the mix means additional shipping legs, which could increase freight costs. Always crunch the numbers to ensure the savings on tariffs outweigh these costs.
The extra leg in New Zealand may add shipping delays. Proper planning and partnerships are crucial to keep your operations on track.
Each trade agreement comes with its own set of rules. Understanding what constitutes substantial transformation to claim New Zealand origin status requires expertise—so it's best to get guidance from a trade consultant.
Still hesitant? Here are a few real-life examples of businesses that have successfully implemented this strategy:
A small New Zealand electronics distributor started routing their Chinese-made gadgets through Auckland before exporting them to the U.S. Result? They cut tariff costs by 20%, reinvested their savings in marketing, and saw a 30% sales spike within six months.
This eco-friendly brand sourced biodegradable packaging from China. By passing their shipments through New Zealand for minor repackaging, they benefited from lower U.S. tariffs and improved their products' quality perception by U.S. customers.
After struggling with the 34% tariff on apparel imports from China, KiwiWear shifted to route their goods through New Zealand. By simply re-labelling products in Auckland, they qualified for preferential rates, shaving 24% off their costs.
The U.S.-China trade war shows no signs of slowing down, leaving businesses feeling uncertain about the future. However, leveraging New Zealand as a trading hub provides a strategic opportunity to sidestep financial burdens. With New Zealand maintaining strong free trade agreements and a business-friendly environment, this strategy could be the key to shielding your profits from tariff volatility.
If you're ready to explore this innovative trade strategy, you don't have to go it alone. Contact Epic Sourcing today to craft a tailored plan that works for your business. With our Auckland-based team and experts on the ground in both China and Vietnam, we'll help you navigate the complexities of international trade and get to the fun part—watching your business grow.
