BlueScope fears inflation whiplash amid tariff standoff with Donald Trump’s White House

Australia’s largest steelmaker is among the businesses expecting the emboldened Albanese government to fight for an exemption to Donald Trump’s tariff measures as inflation fears bite.

WOLLONGONG, AUSTRALIA. NewsWire Photos. FEBRUARY 14, 2025. The Prime Minister, Anthony Albanese, was in Wollongong today and will tour the BlueScope Steelworks at Port Kembla. Picture: PMO via NewsWire

Australia’s largest steelmaker, BlueScope, expects the Albanese government will send a trade delegation to Washington to resolve a tariff stoush with Donald Trump amid fears among executives that the trade war will revive the world’s inflation problem.

Anthony Albanese spoke with the US President following Labor’s electoral win, and pressure is now growing for a face-to-face meeting between the leaders.

“I think now that you’ve got the election resolved here, you’ll most likely see a delegation from the Australian government going to engage with the US administration,” BlueScope chief financial officer David Fallu told the Macquarie Australia Conference on Thursday.

Questions have been asked about the government’s delay in pushing for an exemption from blanket US tariffs.

“A lot of people criticised the government and I’d say, in some cases, justifiably so. But in this area, they work really hard,” Mr Fallu said.

Trade Minister Don Farrell this week said it had laid the groundwork for an exemption to the 10 per cent impost on Australia and it was now up to the Trump administration to “accept”.

The US and UK are expected to announce a pact to reduce tariffs this week, while India may also agree to such a deal.

BlueScope predicted the US President’s trade war would trigger a jump in inflation that was likely to spread across the globe, adding to fears over ructions in the economy. “The tariff environment in the US does create an inflationary challenge that people will have universally, and that’ll be creating escalation risks,” Mr Fallu said. “People will need to continue to manage that.”

The tariff stoush could take the best part of a year to be resolved and it was highly uncertain how any exemptions would be concluded. “We had an economist come in and had set out his view as to what is going to happen, and he was incredibly certain about the scenario and how you should ­optimise for it,” Mr Fallu said. “I think if someone’s giving you that degree of certainty, I think they’re lying or delusional.”

Qantas chief executive Vanessa Hudson also weighed in on the trade war and said the airline was watching for any potential fallout, as she predicted US manufacturer Boeing may face challenges over the short term.

China has ordered its airlines not to take any further Boeing ­orders amid the tariff stoush with Washington, and the Qantas chief said the airline was keeping a close watch on the situation.

“I think that there are going to be challenges in the way in which Boeing manages in the new environment,” Ms Hudson told the Macquarie conference.

“I think it’s pretty early in the Trump presidency for us to really actually say we’ve seen anything material yet.”

Ms Hudson said Saudi’s Riyadh Air was rumoured to be looking to take planes that China had originally ordered. “I’m sure they’re paying a premium to do that,” she added.

Qantas has orders with Boeing and its main rival, France’s Airbus.

“We’re just going to watch this space, and we’re going to hold our suppliers accountable for the commitments that we’ve got under most of our engineering parts,” Ms Hudson said. “We’ve got contracts in place that have very clear price performance commitments, and so we’re going to hold them accountable to that.”

Ms Hudson expects the Australian dollar to continue staging a recovery after trading at five-year lows and briefly beliw US60c in the Liberation Day sell-off.

The Australian dollar has gained ground against the greenback this week to its highest level in five months and Ms Hudson said she was hopeful that momentum would continue.

Qantas will also benefit from a depressed oil price, triggered by global instability following trade imposts. “We’ve seen fuel prices fall and we’ve seen fuel prices almost normalise back to where it was pre all of this geopolitical stress that’s been in the system. So we actually are seeing the benefits flow in this half,” Ms Hudson said.

“That’s obviously tempered for us given that we buy our fuel in US dollars. This fuel reduction has occurred at the same time that we’re seeing a lower Aussie dollar. And so the net-net though is still a benefit.”