Trump’s trade tariffs bad news for Aussie jobs, steel producers
PRESIDENT Donald Trump’s proposed trade tariffs could result in the loss of 20,000 Australian jobs and wipe $5 billion from our national income within one year, with Rio Tinto and BlueScope Steel set to suffer.
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PRESIDENT Donald Trump’s proposed trade tariffs could result in the loss of 20,000 Australian jobs and wipe $5 billion from our national income within one year.
Australian steel and aluminium producers such as Rio Tinto and BlueScope Steel could struggle with the soon-to-be introduced taxes which have been designed to stimulate American businesses.
However economists say there are still many uncertainties around last Thursday’s announcement by President Trump who said he would impose a 25 per cent tariff on steel imports along with a 10 per cent tariff on aluminium imports.
The tariffs mean that American companies buying Australian steel would have to pay 25 per cent more for the product.
The protectionist policy has been designed to make American-produced steel and aluminium cheaper than its imported counterparts, thus creating blue collar jobs in America steel mills and stimulating the economy.
“The decision by the US to raise tariffs on aluminium and steel products is a clear step in the wrong direction that risks further escalating global trade tensions,” Australian Industry Group Chief Executive Innes Willox said on Friday.
“There will be a complex mix of winners and losers among Australian producers and their employees from the particular measures … However, the bigger issues revolve around the risk of retaliation and an escalation of protectionist policies around the globe.”
Australian politicians are now seeking clarity around the proposed tariffs to determine whether Australia as a nation or individual Australian companies will be exempt from the policy.
US director of trade and industrial policy Peter Navarro told CNN overnight that there would be “no country exemptions” to the tariffs which will be put in effect from this week, but he did say there will be some national security exemptions.
“There’s a difference between exemptions and country exclusions,” Mr Navarro told CNN.
“They’ll be an exemption procedure for particular cases where we need to have exemptions so that business can move forward, but at this point in time, there are no country exclusions.”
Modelling by Deloitte Access Economics has found that the trade tariffs could cost Australia 20,000 jobs, wipe $5 billion off the national income with a year and reduce business investment.
But other economists say it is too early to tell what impact the tariffs will have on the Australian economy and businesses.
“There are a couple of uncertainties, one is he made the announcement last week and the intention was to write it into law this week,” CommSec chief economist Craig James said.
He said economists are unsure about the actual details around the announcement, and believe it could be a political bargaining chip whereby the US says it will impose a large tariff as a scare tactic before reducing this upon negotiation with other nations.
“In the short term, you are going to see steel prices go up because US producers will not be able to meet the greater demand for steel,” Mr James said.
“It’s going to take some time for that capacity to change and for the expansion to occur, therefore to get a softening of prices down the track.”
Global stock markets were affected by the tariff announcement at the end of last week, and market analysts predict there will be muted trading on the Australian securities exchange today.
Iron ore prices also fell 2.4 per cent overnight to $US77.65 a tonne on concerns the US tariffs could weigh on global steel demand.
“While the tariffs are expected to be formalised this week or next week at the latest, we don’t expect the impact to be that disruptive to steel and iron ore markets,” Commonwealth Bank associate director of mining and energy commodities Vivek Dhar said in a research note.
“We expect US steel prices to increase as a result of the tariffs, but the rest of the world should be able to absorb the excess steel, particularly in south East Asia.”