At stake is nearly $100 million in annual sales to what has been one of New Zealand’s strongest butter markets.
In 2015 the West reached a deal with Iran to relax sanctions in return for it reining in its nuclear ambitions.
But in May Trump said he remains unconvinced the deal will work and withdrew.
The first sanctions went back on last week with a ban on Iran buying American dollars and restrictions in minor areas of trade between the two countries.
However, in an attempt to isolate Iran further Trump upped the ante by tweeting a threat to its trade partners.
“Anyone doing business with Iran will NOT be doing business with the United States.”
A second wave of more significant sanctions are planned for November including a ban on Iranian oil sales.
They could also see banks outside America found to be dealing with Iranian counterparts the US believes are linked to terrorist groups facing sanctions themselves.
Dairy Companies Association executive director Kimberly Crewther said guidelines from the US Treasury in 2013 had confirmed food exports to Iran were permissible on humanitarian grounds along with medicine and medical devices.
However, the exemption was worth little if NZ exporters were to face fresh difficulties repatriating proceeds from sales via the Iranian banking system because of concerns over terrorist links.
“So while food may be exempt … food trade may be more complicated to transact.”
It would not be the first time that US banking sanctions have stood in the way of NZ’s trade with Iran.
Following the 2015 nuclear deal the then National-led government moved quickly to negotiate veterinary agreements so meat exports to Iran could resume after a 20 year hiatus.
Exporters, however, were slow to respond with Taylor Preston last May the first to dip its toe back in the market with a small shipment of 50 tonnes while its larger rivals have remained largely on the sidelines.
Former Trade Minister Todd McClay at the end of 2016 wrote to the banks imploring them to do more to back NZ exporters wanting to trade with Iran.
However, the NZ Bankers Association said members fear being cut out of the US financial system should they be found to have dealt on behalf of exporter clients with Iranian banks later found to have links to terrorist groups.
Because the NZ banks are dependent on borrowing vast amounts on American money markets to fund lending at home, it is simply not worth the risk for most.
The dairy industry is understood to have previously routed payments through offshore financial intermediaries though banking sources have said even that method could face scrutiny if the US is determined to squeeze Iran further.
Crewther said the dairy trade could face further difficulties from a collapse in the buying power of the already weakening Iranian currency as sanctions bite later this year.
Restrictions on shipping lines visiting the country are also a possibility.
Iran is the NZ dairy industry’s 26th largest export market overall.
