‘Mayhem’: Trump tariff threat forces Australia to pause big tech levy

Plans to threaten US tech giants such as Meta with hundreds of millions of dollars in Australian charges have been paused as ambassador to the US, Kevin Rudd, works to stave off trade retaliation from the Trump administration.

In the first shift in Australian policymaking following Donald Trump’s election, the Albanese government has decided to go slow on a scheme to penalise digital platforms if they refuse to pay local media outlets for news articles.

Labor still wants to proceed with a model to compensate media, but the delay has spooked media executives who fear the levy will be shelved.Credit: Alex Ellinghausen

Publishers and tech firms had been told Labor would begin a public process to design the policy, dubbed the news bargaining incentive, in late January, but two Australian officials said the government would not move forward with the proposal until the debate on US tariffs died down.

Trump last week threatened reciprocal tariffs on “friend and foe” from April for domestic taxes placed on US goods, potentially ensnaring Australia and its GST just days after Prime Minister Anthony Albanese secured a promise from Trump to consider an exemption for steel and aluminium duties.

One media executive, who like the other sources, could not speak publicly about confidential talks, said Labor had indicated in private the delay was driven by caution on any pronouncement that could be seen as punishing US firms, exposing tension between Australia’s big tech agenda and Trump’s relationships with X owner Elon Musk and Meta’s Mark Zuckerberg.

One Australian official described dealings with the new US administration as characterised by “mayhem”, in part because of the overhaul of personnel within US officialdom. The US runs a trade surplus with Australia, and there are no tariffs on goods moving between the two nations.

Several sources said Rudd was playing a central role in calming the US about the effect of the news levy and advising Australian ministers on how to proceed without provoking US fury.

Google has labelled the Australian move a “targeted tax”, and Meta has claimed it would amount to a profitable US company needlessly subsidising Australian media, underscoring the potential for Australia’s stance to be perceived as an attack on the US tech sector, which has gravitated towards Trump since his election last year.

Meta pulled out of a Morrison-era code, the first of its kind globally, to compensate news outlets to the tune of $70 million because it regarded the code as having set a precedent to slug US firms.

Labor still wants to proceed with the model to compensate media, sources said, but the delay had spooked media executives who feared the levy would be shelved if the tariff threat persisted over time. If the Coalition wins the election, it is unclear if Opposition Leader Peter Dutton will carry on the policy.

This masthead can also reveal the federal cabinet last year landed on the news bargaining incentive instead of a more ambitious “tech tax”. This was, in part, due to the prospect of US retaliation. The news incentive does not collect revenue for government coffers. Instead, it slaps charges on platforms if they decline to do deals with media outlets to pay for news, giving Australia greater room to say it would not punitively target US firms.

A government spokesman said: “The government is continuing to work constructively with stakeholders on the news bargaining incentive.”

Major publishers, including Nine Entertainment, which owns this masthead, are expected to be briefed by the government soon on the difficulty of immediately pushing ahead with the levy scheme against the backdrop of a volatile trade scrap.

The news incentive will apply to Meta, owner of Instagram and Facebook, Google, TikTok’s owner ByteDance and potentially Microsoft, owner of LinkedIn, and Apple, which runs Apple News, if the latter two meet a revenue threshold.

The new policy is seen as critical to plugging a $200 million funding gap created by Meta’s refusal to pay Australian media outlets, some of which have been shedding jobs. The amount at which the proposed levy would charge tech firms has not been decided, although it is intended to reflect the size of previous deals.

On February 11, Communications Minister Michelle Rowland said the proposed framework was designed to encourage agreements between digital platforms and media companies rather than raising revenue for the government.

“The government has made it very clear that this is not targeted at any specific country,” she said. “This is important for ensuring that Australian publishers are properly recompensed for the work that they undertake. That principle remains true.”

Meta said very few people used its platforms to read news, an assertion media companies disputed.

Opposition Leader Peter Dutton criticised Trump’s approach to trade this month as the US administration’s tariff spree spooked global markets and upended domestic political debate.

“The tariffs shouldn’t have been introduced and the Albanese government should have been lobbying the Trump administration pre- and post-inauguration. But as it turns out, that hasn’t happened,” Dutton said on Sunday.

“I just think we’ve got a different president with a different style from most of his predecessors, and he wants to do deals.”

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