Australia making hay from US metals exemptions

Australia’s exemption from Don­ald Trump’s steel and aluminium tariffs has seen our exports of the metals to the US almost double.

The Port Kembla Steelworks, the home of Bluescope Steel. Picture: AAP

Australia’s exemption from Don­ald Trump’s “America First” steel and aluminium tariffs has seen our exports of the metals to the US almost double since the trade barriers were put in place for other nations.

Amid rumblings in the US that Australia is taking advantage of its national security exemption from the tariffs, the budget update on Thursday confirmed steel and aluminium exports to the US rose to $999m in 2019, compared with $530m in 2017.

Australia secured the exemption from the 25 per cent steel tariff and 10 per aluminium tariff in 2018, amid heavy lobbying by the Turnbull government.

Jeffrey Wilson, from the Perth USAsia Centre, said he expected Australia to do well out of the exemption but was surprised by the extent of the windfall.

“(The US) intention was that half a billion dollars would go to domestic producers, but we’ve managed to take it,” Dr Wilson said.

He said some in Washington were questioning whether the exemption should be rescinded. “The view is that Australia is diluting the effect of the tariffs, which were aimed at bringing steel jobs home, because a significant portion of the market has been shifted to Australia instead,” he said.

It’s believed the extra revenue has largely gone to Australian steel producer Bluescope.

The stark numbers come ahead of hotly anticipated ­AUSMIN talks next week, in which the US is likely to put pressure on Australia to take a tougher stance on China and its behaviour in the South China Sea.

Some observers think the US could use tariff exemptions as leverage in the talks. Dr Wilson said it was unclear whether the tariffs would be ­discussed at ­AUSMIN, but it was unlikely they would be at the top of the agenda.

The Trump administration considered removing Australia’s exemption from the tariffs in June last year, but decided against the move at the urging of Pentagon and State Department officials.

Some of Mr Trump’s top trade advisers reportedly called for Australia to face the tariffs in response to a surge of Australian aluminium flowing o to the American market, but military and foreign affairs officials told the President the move would alienate a top ally at significant cost to the US.