What we know so far about Trump’s tariffs on Australian steel and aluminium

President Donald Trump’s decision not to grant Australia an exemption to tariffs on steel and aluminium exports to the US came after he “considered it and he considered against it”, his press secretary Karoline Leavitt told this masthead.

Asked why Trump had decided against the carve-out, she said: “America-first steel. If they want to move their steel manufacturers here, they’re welcome to do so.”

Despite a 40-minute phone call with Trump, Anthony Albanese’s request for a tariff exemption has seemingly failed.Credit: Alex Ellinghausen

Australia exported $640 million worth of steel and $440 million of aluminium last year to the United States. The cumulative $1 billion trade is a small amount compared to the nation’s total exports of $660 billion in the past financial year.

On February 11, Trump and Albanese had a 40-minute phone call in which the US president agreed to consider exemptions for Australia.

Trump confirmed the agreement soon afterwards, saying he would give “great consideration” to Australia’s case without mentioning the aluminium dispute in a press conference.

But formal White House documents published after the press conference revealed the Trump administration’s claim that Australia had broken a promise during the president’s first term to limit aluminium exports and that this was a reason for imposing the new sanctions.

“The volume of US imports of primary aluminium from Australia has also surged and in 2024 was approximately 103 per cent higher than the average volume for 2015 through 2017,” the proclamation said.

“Australia has disregarded its verbal commitment to voluntarily restrain its aluminium exports to a reasonable level.”

How has Australia reacted?

Prime Minister Anthony Albanese said the US tariffs were “entirely unjustified” but confirmed the government would not impose reciprocal tariffs on the US, which he said would raise costs for Australian consumers and be an act of economic “self-harm.”

“We will continue to engage constructively with the United States and to make the case for Australian trade and the benefits that it gives to people in the United States of America,” Albanese said.

The Prime Minister confirmed in a press conference in Sydney that he would continue to request a phone conversation with Trump, but would not fly to the United States.

Local steel and aluminium industries are working with government to beef up anti-dumping protections to stop other countries flooding Australia with product otherwise bound for the US, and the union movement is asking the government to force Australian builders to use locally-made products here.

“Australia’s purist free market approach on procurement was naive a decade ago, sticking to it now would be sheer idiocy,” said Australian Workers Union national secretary Paul Farrow. “If government money is being used to build, say, a wind turbine then the towers should be made from Australian steel.”

What are tariffs?

Tariffs are taxes imposed by a country’s government on foreign imports, payable by the companies that bring in goods.

They are usually charged as a percentage of a product’s value. For example, a 25 per cent tariff on a $10 bottle of Australian wine would impose a charge of $2.50.

Economists agree that these extra charges are usually passed on to consumers in the form of higher prices by the importing companies.

Are they inflationary?

The fact that tariffs are passed on to consumers means they are considered inflationary, driving up prices.

During his first term in office, Trump imposed a raft of tariffs, including imports of steel, aluminium, washing machines, and solar panels, as well as goods from China.

The US Tax Foundation think tank found that the previous round of Trump tariffs imposed $79 billion of additional taxes.

This, it said, amounted to an annual tax increase on US households of $625 a year, without accounting for consumer behaviour, such as choosing to forgo purchases or buy local products.

Why does Trump want to put US tariffs on Australia?

Trump issued exemptions for many countries during his first term, including Australia’s steel and aluminium, though they took months to negotiate.

But he has taken a harder line this time, claiming tariffs will revive American manufacturing.

“The tariffs are going to be the greatest thing we’ve ever done as a country. It’s going to make our country rich again,” Trump said this week.

To secure an exemption from previous tariffs in 2018, the Australian government agreed to place a “ceiling” on the volume of aluminium it would send to the US.

A top trade advisor to the president, Peter Navarro, has repeatedly accused Australia of breaching this deal and accused companies of flooding the US with steel and aluminium.

However, this masthead revealed that the Biden White House had asked Australian suppliers to boost exports after Vladimir Putin’s invasion of Ukraine in 2022 cut off supplies from Russia.

Rio Tinto boss Jakob Stausholm said on February 20 that while the government had agreed to limit imports, “suddenly, when the Ukraine war happened, and the US stopped importing aluminium from Russia, they were lacking aluminium, and they wanted more”.

When does this start?

The US will start imposing tariffs on steel and aluminium from around the world at midnight on 12 March, which is 3pm on Wednesday, AEDT.

The tariffs will be imposed on steel and aluminium from around the world. This morning, Trump announced an extra 25 per cent tariff for Canada as the North American feud escalated.

What would US tariffs do to Australia?

Australia exports about 10 per cent of its aluminium and steel to the US, but the impact on local producers is expected to be negligible.

The real fear is that the global tariffs on steel and aluminium would prompt large exporters, such as China, hit by US tariffs to export low-cost or heavily subsidised steel and aluminium to Australia, undercutting local manufacturers.

The federal government is investigating ways to strengthen anti-dumping measures to aid local industries.

There is already an anti-dumping measure in place until the end of the year for extruded aluminium from China, and local suppliers are keen for this to be extended.

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

How will Australia react?

Essentially, Australian steel and aluminium exporters will either continue to seek other markets or continue to sell to the US and cop the tariffs.

Analysts have forecast that Australian producers will find new tariff-free buyers in Asia.

AMP Capital deputy chief economist Diana Mousina, speaking before the tariffs were announced, said they are unlikely to impose significant impacts on the Australian economy, given aluminium and steel exports comprise only 0.2 per cent of the country’s total exports.

Pointing to China’s restrictions on coal and agricultural exports in recent years, Mousina said exporters should be able to find alternative markets.

“We actually managed to redirect those exports to other parts of South-East Asia extremely well,” Mousina said.

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