The Trade War Backdrop: Where Things Stand in 2026

The US-China trade conflict that escalated from 2018 onwards has reshaped global supply chains in ways that continue to affect importers far beyond the two countries directly involved. For NZ and Australian businesses sourcing from China, the tariff environment and the supply chain shifts it has triggered create both challenges and opportunities worth understanding clearly.

US-China Tariffs: A Brief History

Beginning in 2018, the US imposed escalating tariffs on Chinese imports across hundreds of product categories. Chinese retaliatory tariffs on US goods followed. The tariffs were structured in tranches with rates varying by product category. The Biden administration maintained the core tariff structure while conducting ongoing reviews. In 2024, further increases were announced on specific strategic categories including electric vehicles, solar panels, semiconductors, and medical equipment. As of 2026, the tariff structure remains in place across most affected categories, with rates ranging from 7.5% to 25% or higher on specific goods.

How US Tariffs Affect NZ and Australian Importers

NZ and Australian businesses do not pay US tariffs on goods they import from China. The tariffs are a tax on goods entering the United States, not a general tax on Chinese exports. So why do they matter to Kiwi and Australian importers?

The effects are indirect but real. The most significant is supply chain diversion. As US tariffs made Chinese goods more expensive in the American market, Chinese manufacturers who had historically sold heavily to the US began seeking alternative markets. This has increased Chinese manufacturing capacity available to other markets including NZ and Australia, maintaining or increasing price competitiveness for buyers outside the US.

The second effect is production shift. To avoid US tariffs, many manufacturers have established or expanded production in Vietnam, India, Mexico, and other countries. Products assembled in Vietnam from Chinese components can enter the US as Vietnamese origin, bypassing the tariff. This has built out manufacturing capacity in alternative countries that NZ and Australian buyers can also access, making Vietnamese sourcing significantly more sophisticated than five years ago.

The third effect is price ripple. US tariffs have reduced demand for Chinese goods in the US in some categories, which has modestly reduced pressure on Chinese factory capacity and contributed to competitive pricing for buyers in other markets. This varies significantly by category but is a factor worth understanding.

What NZ and Australian Importers Should Actually Be Watching

For businesses sourcing from China for the NZ or Australian market, the US-China situation matters less for direct tariff effects than for secondary supply chain implications. The questions worth tracking: are my suppliers experiencing pressure from reduced US orders, and if so how is that affecting their pricing and capacity? Are products I source being manufactured in new locations offering alternative supply options? Is Chinese industrial policy in response to US pressure affecting production or pricing of inputs I rely on?

The NZ-China FTA (upgraded in 2022) provides NZ importers with a strong framework for tariff-advantaged sourcing. Under the NZCFTA, the vast majority of Chinese goods imported to NZ attract 0% duty with the appropriate certificate of origin — a significant competitive advantage relative to many other markets.

The Risk of Over-Diversifying in Response to Trade War Noise

One response to US-China trade war coverage is to diversify away from China prematurely. This can be costly. China remains the world's most comprehensive manufacturing ecosystem, with unmatched depth in supplier networks, tooling capacity, raw material availability, and logistics infrastructure. For most product categories, sourcing from China remains the most practical and cost-effective choice for NZ and Australian importers.

Diversification into Vietnam, India, or other markets makes sense for specific situations: categories where Vietnamese manufacturing has developed strongly, supply chains where geographic concentration risk is a genuine concern, or categories where Chinese capacity is genuinely constrained. Diversifying on the basis of geopolitical anxiety rather than commercial analysis typically increases cost and complexity without corresponding benefit for businesses at NZ and Australian scale.

How Epic Sourcing Can Help

Epic Sourcing works with manufacturers in both China and Vietnam and has direct knowledge of the manufacturing landscape across both markets. We are not attached to either — we recommend what makes commercial sense for each client's specific product and situation. If you are reviewing your sourcing strategy in light of the current trade environment and want a grounded commercial perspective, get in touch with our team.