Trump’s latest tariff threat a big blow to Australia
US President Donald Trump announced 25% tariffs on all steel imports on Sunday as he flew to New Orleans on Air Force One. As an afterthought, when asked about aluminium, he responded, “aluminium, too.”
While there are ways to interpret the differences between what he is ‘poised to announce’ and what he says, any move that goes ahead would be bad for Australia.
If the move goes ahead, it will likely harm Australia. According to the UN’s COMTRADE database, the US imported about $638m of Australian steel and $439m of aluminium last year.
Trump also reaffirmed that he would announce “reciprocal tariffs” —”probably Tuesday or Wednesday”—meaning the US will impose import duties on products when another country levies duties on American goods. The Australian stock market opened with a slump after the announcement. President Trump said he would formally announce the fresh trade war slug on Monday and that the taxes would hit “everybody,” suggesting Australia will not be exempt from the new trade war slug.
“A tariff on Australian goods, despite us having a long-standing free trade agreement with the United States and agreements around exemptions for Australian produced goods during the previous Trump administration, would be a slap in the face for Australian industry and our mutually beneficial economic and security arrangement,” Innes Willox, Chief Executive of the Australian Industry Group, said. “This decision reminds Australia that nothing can be taken for granted in what is a rapidly changing world.”
“We worked with DFAT and trade negotiators during the previous Trump administration and have been doing the same with the new administration to seek to ensure there are zero tariffs for aluminium, steel and iron produced in Australia.”
A tariff is a tax placed on imports. If a tariff is imposed, Australian steel and aluminium exports to the US will become more expensive for buyers, likely reducing demand for them.
“Reversing these tariffs must be a national priority, and the Government must use all the leverage at its disposal to quickly turn this around,” Willox added.
However, like his moves over Mexico and Canada, Trump may backtrack on them, particularly if the stock market reacts negatively to the announcement.
The USA has a trade surplus with Australia, which may be $30bn. “We are powerful strategic partners with the USA, and we are spending billions of dollars on submarines under the AUKUS agreement,” said Australia’s Trade Minister, Don Farrell.