Australia had one trump card to shield it from the tariff war. It just disappeared

The Albanese government’s bid to secure a last-minute exemption from Donald Trump’s steel and aluminium tariffs has been hit by the revelation Australia has run its first monthly trade surplus with the United States, undermining a key argument used to try to convince the US president to grant a carve-out.

With the clock ticking until the 25 per cent metal tariffs are due to come into effect on Wednesday afternoon Australian time, government officials said they were locked in intense discussions with their US counterparts but had not secured a prized exemption from the White House.

US President Donald Trump and former prime minister Malcolm Turnbull.Credit: Bloomberg; Alex Ellinghausen

Former prime minister Malcolm Turnbull, who has been feuding with Trump after criticising the president in a television interview, said he thought it “very, very unlikely” that Australia would be spared.

Declaring he will not self-censor from harsh criticism of Trump, Turnbull writes in an opinion piece for this masthead: “It has always been most unlikely that Australia will secure an exemption this time. It was hard enough in 2018 and all the signals from the administration are that the tariffs will be applied across the board.”

Labor frontbencher Patrick Gorman accused Turnbull of “immature” language for calling Trump an erratic bully, raising the possibility the government will seek to blame him, at least in part, if the exemption push fails.

While he said he did not believe Turnbull’s remarks would make a huge difference to the US-Australia relationship, Gorman, the assistant minister to Prime Minister Anthony Albanese, said: “I wouldn’t use language like that when it comes to an elected official of any of our trading or security partners, least of which the United States.

“I don’t think that’s appropriate or helpful language.”

Australia has run its first trade surplus with the United States, undermining one of its key debating points with the Trump administration.Credit: Trevor Collens

The Coalition is preparing to blame Albanese and US ambassador Kevin Rudd rather than Turnbull if the exemption push fails, including by attacking the prime minister for not travelling to Washington to lobby Trump ahead of the deadline.

The ASX200 plunged to a seven-month low, losing another $25 billion on Tuesday, because of the widespread expectation that Trump would push ahead with across-the-board tariffs.

Figures from the Australian Bureau of Statistics show that in January, America imported more than $6 billion worth of goods from Australia. The previous monthly record, of almost $3 billion, was set in December.

Offsetting the exports were $4.3 billion of imports, leaving Australia with a $1.7 billion trade surplus. It is the first time since the bureau started collating monthly trade data in January 1988 that Australia has run a surplus with the United States, due almost entirely to a 92-fold increase in the amount of gold US importers bought between November and January.

Australian officials have tried to use increased American access to Australia’s plentiful supply of critical minerals as a bargaining chip in the tariff negotiations, but there were no public signs this had proved decisive with the White House.

Trump has regularly argued that one of the reasons for his tariff agenda is America’s large trade deficits with nations such as China. In its bid to avoid planned steel and aluminium tariffs, due to start on Wednesday, the federal government has repeatedly pointed out the US runs a rare trade surplus with Australia.

Illustration by Matt Golding

As recently as Monday, Albanese noted the traditional trade imbalance between the two nations.

“The United States enjoys a trade surplus with Australia, and has done so since the Truman presidency,” he said.

JP Morgan senior economist Tom Kennedy said the most recent data did not help Australia’s cause.

“The timing of this sudden shift is interesting given the global mood music, with the Trump administration’s tariff policies targeted towards trading partners that maintain structural surpluses versus the US,” he said.

Traditionally, Australia’s trade deficit with the US is built on imports of American planes, heavy construction equipment and computers. They are partly offset by Australian exports of beef and pharmaceuticals.

Trump cited the US trade surplus with Australia last month when he said he was considering an exemption. “We have a surplus with Australia, one of the few,” Trump said in the White House following a phone call with Albanese.

The January surplus was driven by a surge of gold and silver imports.

In Australian dollar terms, the gold price has climbed by 10 per cent to more than $4613 an ounce since the start of the year, with most of that jump occurring in January.

American imports of gold have soared since the start of the year. The average monthly value in 2022 and 2023 was about $US1.7 billion. In January, it soared to $US30.8 billion.

The price surge is driven by concerns over the state of the US economy under Trump’s tariff agenda. Investors traditionally consider gold a haven from inflation.

Australian gold exports to the US have soared to record levels.Credit: Getty

Kennedy cautioned the January surplus was likely to return to a trade deficit in coming months.

The revelation came as Opposition Leader Peter Dutton accused Albanese of not doing enough to secure an exemption, telling reporters on the Gold Coast: “It’s important for the prime minister to pick the phone up and speak to the president ... This is an incredibly important issue for our country, and the priority for me is to make sure that we protect Australian jobs and that we protect Australian industry.”

Other nations have been lobbying for an exemption from the tariffs with no success. Japanese Trade Minister Yoji Muto said he had emerged from meetings with Trump’s key economic advisers in Washington on Tuesday without any assurance of a carve-out.

The federal government is investigating ways to strengthen anti-dumping measures to aid local industries such as steel and aluminium after Trump’s tariffs kick in globally.

Large exporters such as China could seek new markets for their products, undercutting Australian producers by shipping low-cost or heavily subsidised goods.

Local suppliers are keen to extend an anti-dumping measure in place until the end of 2025 for Chinese extruded aluminium.

Treasurer Jim Chalmers said in February the government was considering quotas for local steel to be used in major projects.

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