Australia’s best next move in Donald Trump’s global tariff war
As Australian steel and aluminium is being hit by US President Donald Trump’s new global tariff war — and more pain on the horizon — experts have weighed in on what our next steps should be.
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Donald Trump’s heavy-handed tariffs should act as a bruising wake-up call but Australia should not engage in “self-harming” acts of retaliation that risk fracturing the alliance or damaging our economy long term, experts say.
One billion dollars worth of Australian steel and aluminium exports to the US will be slugged with 25 per cent levies as part of the Trump administration’s America First policy that has sent shockwaves through the global economy.
And more pain is on the horizon, with the President promising further reciprocal tariffs from next month that could hit Australia’s crucial beef, lamb and pharmaceutical exports.
The White House this week confirmed Mr Trump had “considered against” granting Prime Minister Anthony Albanese’s request for an Australian exemption to the tariffs.
Ambassador Kevin Rudd said Australia had since thrown enormous resources at the negotiations but it was dealing with a “vastly different America” than in 2018 when tariff carve outs were agreed upon.
“This administration is more nationalist on questions of foreign policy, more protectionist on trade policy, and much more transactional in its overall approach to international negotiations,” he told 7.30.
“But this is a very hard fought set of negotiations which have already been had, and there’s more hard fought negotiations that lie ahead.”
That will include a pitch by Trade Minister Don Farrell to Washington in the coming days in which he will spruik the trade surplus the US runs with Australia.
“It makes absolutely no economic sense to impose tariffs on Australia in those circumstances,” he said.
Canada and the European Union have made moves to retaliate but have been threatened with disproportionate reprisals by the US.
In response to retaliatory tariffs from the EU on American whiskey, Mr Trump threatened to impose 200 per cent levies on European wine and champagne.
He also vowed to double Canada’s steel tariffs and shut down its automotive industry when it attempted to retaliate with tariffs on electricity exports to the US.
During Irish PM Michael Martin’s visit to the White House this week, Mr Trump accused Ireland of taking advantage of the US, but expressed admiration for its business savvy in luring US pharmaceutical companies to its shores through favourable tax policies.
German Marshall Fund of the United States non-resident fellow Robert McKinnon said Australia following suit with the likes of Canada by taking countermeasures would be “self harming”.
“The US wanted universal tariffs to apply globally so it was always going to be tough to get an exemption,” he said.
Mr McKinnon said the Australian-US relationships would be “bruised” by the tariffs but that he did not foresee any lasting damage to the alliance or “mutually beneficial” AUKUS arrangement.
“Not unless we make it so with ill-disciplined responses,” he said
“We’ve seen economic nationalism in the past in the US but nothing quite like this.
“It’s certainly a wake up call about avoiding a complacent and lazy attitude to how things can play but it’s not necessarily a permanent reset.”
Mr Albanese has urged Australians to buy local in the wake of the tariffs coming into effect but stopped short of calling for a boycott of American products.
United States Studies Centre CEO Michael Green said the tariffs on Australia were “not smart politically, strategically or economically”, noting they were also not popular among the American public and would hurt downstream US manufacturers.
Dr Green said while the tariffs were “clearly an irritant in US-Australia alliance relations”, it was not a wider indicator the defence partnership was in jeopardy.
“But it is a big leap to conclude that the tariffs somehow imply a change in US support for the alliance or AUKUS,” he said.
“Both enjoy overwhelming support in Congress and every move the administration has made on defence thus far has been to increase US commitments and capabilities in the Indo-Pacific as well as submarine production funding needed for AUKUS.”
Mr Trump has continued to justify his argument for tariffs in the wake of international criticism and spooked financial markets, saying the US did not have free trade but “stupid trade”.
“The entire world is ripping us off,” he said.
While the US only counts for a small portion of Australia’s steel exports, economists have warned America’s levies would ricochet onto other Australian businesses and ordinary families.
ANU College of Business and Economics lecturer David Leaney said the biggest losers would be Australia’s iron ore and bauxite exporters due to the decreased demand from countries like China as it responded to the tariffs.
Mr Leaney said the Australian families would also feel the pinch as steel prices increased in response to the global trade upset.
“Indirectly the cost of things like transport is going to go up, then the cost of groceries is going to go up, the cost of cars is going to go up, so that’s going to be the impact for us,” he said.
Mr Trump has warned further reciprocal tariffs will come into play from April 2.
Australian economist Saul Eslake said it was unclear whether the US would consider GST as a tariff that it would reciprocate with as part of those measures.
“While our steel and aluminium are relatively unimportant exports to the US, should Trump’s actions against them make us worry about some much more important exports to the US?,” Mr Eslake said.
“In particular beef and lamb which account for more than one quarter of our exports to the US.”
He warned other major exports like pharmaceuticals and machinery and parts could also be heavily impacted: “So is this the beginning of something bigger – that would be a worry.”
TRUMP ORDERS YOU MIGHT HAVE MISSED
STRAW POLL – STRAWS ARE OUT
In one of Donald Trump’s more left-field moves, he declared war on paper straws, signing an executive order to stop them being ordered and distributed within federal buildings.
The order called for the creation of a national strategy to end the use of paper straws and “alleviate the forced use of paper straws nationwide”.
“The irrational campaign against plastic straws has forced Americans to use non-functional paper straws. This ends under President Trump,” the order stated.
WAR ON ‘WOKE-ISM’
Mr Trump’s promised culture war on “woke-ism” has been swift and relentless.
The President has taken a wrecking ball to government diversity, equity and inclusion policies which he has described as “nonsense” – even blaming DEI for a tragic air crash that claimed the lives of almost 70 people in Washington DC.
“We have ended the tyranny of so-called diversity, equity and inclusion policies all across the entire federal government and, indeed, the private sector and our military,” he told a joint session of Congress.
“And our country will be woke no longer.”
He made moves banning those born male from competing in female sporting competitions and signed an executive order excluding transgender troops from serving in the military.
“A man’s assertion that he is a woman, and his requirement that others honour this falsehood, is not consistent with the humility and selflessness required of a service member,” the order stated.
DEFENCE STRATEGY
Inspired by Israel’s “iron dome” missile defence system, the President wants American soil protected by a superior “golden dome”.
Mr Trump has ordered moves toward an American-made defence shield to protect against the “catastrophic” risk of ballistic, hypersonic and advanced cruise missile attacks.
He has also expressed his desire to acquire Greenland and take back the Panama Canal in the interests of “national security”.
“I think we’re going to get it. One way or the other, we’re going to get it,” he said of Greenland.
GROWING AMERICAN FAMILIES
American families could have cheaper access to in vitro fertilisation under an executive order designed to combat plummeting fertility rates.
It calls for policy recommendations to protect IVF access and reduce out-of-pocket expenses for the procedures.
“Because we want more babies, to put it very nicely,” Mr Trump said.
“But the IVF treatments are expensive.
“It’s very hard for many people to do it and to get it, but I’ve been in favour of IVF, right from the beginning.”
More than 85,00 children were born as a result of IVF in the US in 2021 and the cost ranges from $12,000 to $25,000 per cycle.
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