Australia could get caught up in Trump’s $1.4tr trade war

Imports to the US will soon face tougher tariffs, Donald Trump has declared, potentially embroiling Australian products as the President kickstarts a trade war.

Steel and aluminium imported to the US will soon face tougher tariffs, Donald Trump has declared, potentially embroiling Australian products as the President kickstarts a trade war.

From this weekend, the President said he would implement tariffs of 25 per cent on all Mexican and Canadian imports and 10 per cent on all Chinese imports, impacting up to $US1.4 trillion worth of goods and likely sparking fierce retaliatory action.

As Mr Trump prepared to whack America’s three biggest trading partners, he also revealed new details about his plans for broader duties on imports, having vowed during the election campaign to introduce universal tariffs.

Among the products he said would be targeted were steel and aluminium, increasing the tariffs he imposed during his first term in the White House in 2019.

From this weekend, the President said he would implement tariffs of 25 per cent on all Mexican and Canadian imports and 10 per cent on all Chinese imports. Picture: Getty

Australian steel and aluminium exports to the US were narrowly spared back then, as Mr Trump’s senior advisers cautioned against alienating one of America’s closest allies.

But the President’s sweeping warning on Friday (local time) suggested Prime Minister Anthony Albanese could have to follow Malcolm Turnbull in fighting to protect our exports.

“We’re going to put a lot of tariffs on steel. We already have tariffs on steel and we’ve saved our steel industry, but that was relatively small compared to what it’ll be,” Mr Trump said.

“We’re going to be putting tariffs on steel and aluminium and ultimately copper. That’ll happen pretty quickly.”

He also promised tariffs on semiconductors, pharmaceuticals, oil and gas “fairly soon”.

Mexico's economy suffered its first contraction in three years in the fourth quarter of 2024, official figures showed on January 30, as the country braces for US President Donald Trump's threatened tariffs. (Photo by Guillermo Arias / AFP)

“I think there could be some temporary, short-term disruption and people will understand that,” the President told reporters in the Oval Office.

“The tariffs are going to make us very rich and very strong.”

US HAS ‘TWO-TO-ONE’ TRADE SURPLUS V AUSTRALIA

At an event at Australia’s Washington DC embassy this week, attended by Mr Trump’s National Economic Council director Kevin Hassett, Australia’s ambassador to the US Kevin Rudd made the case for Australian exports to be spared from any new tariffs.

He pointed out that the US had a two-to-one trade surplus against Australia, a surplus that continued unbroken for decades, and that Australia had not imposed tariffs against the US since a free-trade agreement was sealed two decades ago.

NFL fans could be hit in the hip pocket. Picture: AFP

“Please pass that on to President Trump,” the former prime minister said.

Canada, Mexico and China are already preparing retaliatory measures to Mr Trump’s tariffs, with outgoing Canadian Prime Minister Justin Trudeau saying: “No one – on either side of the border – wants to see American tariffs on Canadian goods.”

“If the United States moves ahead, Canada’s ready with a forceful and immediate response,” he warned.

Australian could get caught up in Trump’s trade war. Picture: NewsWire/ David Crosling

RSM chief economist Joe Brusuelas told CNN the Trump administration was “playing with fire”, given the risk tariffs would drive up inflation almost as soon as it had been brought back under control.

For instance, he said the price of avocados – sourced mostly from Mexico – would likely soar in a blow to Americans wanting to make guacamole for the Super Bowl.