How will Trump’s steel, aluminium tariffs hit Australia?
The US imported about $US400m worth of Australian steel and $439m of aluminium in 2024. So what effect will Donald Trump’s latest move have on business and the Albanese government?
All steel and aluminium imports to the United States are set to be slapped with 25 per cent tariffs, Donald Trump has announced, marking a major escalation of his administration’s move to up-end trade policy.
What did Trump say?
Speaking to reporters on Sunday (Monday AEDT) aboard Air Force One, the President said the tariffs would apply to the metal imports from all countries, however, he did not say when the levy would take effect.
“Any steel coming into the United States is going to have a 25 per cent tariff,” Mr Trump declared, saying he would have more to say on the matter in coming days.
Asked if aluminium imports would similarly be levied, he replied: “Aluminum too … 25 per cent.”
How much does Australia export to the US?
The US imported about $638m ($US400m) worth of Australian steel and $439m ($US275m) of aluminium in 2024, according to the UN’s Comtrade database.
Australia’s largest steel manufacturer BlueScope, which predominantly exports steel to the US market, could be a net beneficiary from the Trump administration’s proposed tariff.
Industry sources were hopeful Australia would be able to secure an exemption given BlueScope’s footprint in the US, where it employs 4000 people and recently completed an expansion of its Ohio-based North Star steel mill.
The firm is also considering further expansion into the US market and plans to introduce its popular Colorbond corrugated steel roofing products. The proposal would involve constructing a new plant, likely near the existing Ohio facility, at a cost of $1.9bn ($US1.2bn).
Shares in BlueScope rallied after the opening bell on Monday, adding more than 3.5 per cent to $22.26.
Australia’s second largest-steel producer GFG Alliance, which runs several manufacturing plants in the US, could similarly benefit from the fresh trade sanctions.
However, other producers without US manufacturing plants risk suffering under the planned tariffs.
Shares in local manufacturer Bisalloy Steel – which has production centres in Australia and China – fell 5 per cent to $3.57 following Mr Trump’s announcement.
Similarly, major aluminium producer South32, which does not have US manufacturing operations, fell 0.7 per cent to $3.48 a share.
Furthermore, there is considerable risk that the tariffs could put downward pressure on steel prices, as manufacturers look to offload their products into the Australian market, squeezing margins.
How will the Australian government respond?
The proposed tariffs are set to be a key diplomatic test for the Albanese government and Trade Minister Don Farrell, who is yet to make contact with Donald Trump’s choice of commerce secretary, Howard Lutnick.
“We’ve indicated that we are very keen to talk (to Mr Lutnick),” he said. “Under their system, until you get approved by the Senate, you’re not in a position to discuss with other countries.
“There is no reason for the American government to impose tariffs on Australia.”
With Mr Trump raising concerns of the US’s $1.5 trillion ($US918.4bn) trade deficit, Mr Farrell will highlight the $27.2bn trade surplus which the US runs with Australia as a reason for Australia’s exemption.
Didn’t Australia win an exemption from Trump’s tariffs before?
During the first Trump administration, Australia was one of several trade partners, including Canada, Mexico, the EU and the UK, that secured an exemption from US tariffs on steel and aluminium exports, at 25 per cent and 10 per cent, respectively.
Australia’s exclusion from the tariffs followed a frantic lobbying effort by then-prime minister Malcolm Turnbull and Australia’s ambassador to the United States Joe Hockey, who successfully promoted the US’ trade surplus with Australia to secure an exemption.
It is understood the exemption was secured following an unwritten undertaking that Australia would not take advantage of its low-tariff status and subsequently ramp up exports of steel and aluminium to the US market.
The proposed tariffs are unlikely to have a major impact on Australia’s exports of iron ore, a key steelmaking ingredient.
While Beijing takes approximately 85 per cent of Australia’s iron ore exports, less than 1 per cent of China’s direct steel exports are shipped to the US.
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