John Howard and Peter Costello challenge Anthony Albanese on Donald Trump’s ‘possibly illegal’ tariffs

The former prime minister and treasurer urge Anthony Albanese to stand up to Donald Trump on tariffs.

Former prime minister John Howard, US president-elect Donald Trump and former treasurer Peter Costello.

John Howard and Peter Costello have attacked Donald Trump’s plan to levy a tariff of 10 to 20 per cent on goods imports to the US, including from Australia, and questioned whether it might be ­illegal under international law given the free-trade agreement signed in 2004.

In exclusive interviews with The Australian ahead of the release of the 2004 cabinet papers from the National Archives of Australia on Wednesday, the former prime minister and treasurer urged the Albanese government to argue strongly that Australia should be exempt.

The inauguration of Mr Trump as president on January 20 will present a significant challenge for both Anthony Albanese and Peter Dutton, with the imposition of tariffs and the future of the AUKUS nuclear submarine agreement key policy matters to discuss with the incoming US administration.

Mr Howard, who negotiated the Australia-US Free Trade Agreement 20 years ago, labelled Mr Trump’s tariff proposals as “ridiculous” and “crazy” and said they would damage the international economy.

“I am concerned to put it mildly, very concerned, about Trump’s talk about tariffs,” Mr Howard said. “Trade has delivered millions of people out of poverty. Unilaterally imposing tariffs of that order of magnitude on countries willy-nilly is just bad for world trade and it’s bad for the world economy.”

Mr Costello added that Australia would also be collateral damage from the president-elect’s proposed 60 per cent tariff on Chinese imports to the US given Australia’s $200bn annual exports to China, including iron ore, natural gas and gold. “A lot of our raw materials end up being put into manufactured goods by the Chinese and exported to the US,” the former treasurer said. “So, I am not in favour of tariffs. That would not be good for Australia. It’s certainly, in my view, not in the spirit, if not the letter, of the free-trade agreement, and we should be doing everything we can to try and convince the Americans of that.”

Mr Howard and Mr Costello questioned whether it might be ­illegal under international law for the US to slap tariffs on Australia given the FTA signed by their government in 2004 and entered into force in January 2005. The ­Department of Foreign Affairs and Trade notes that 96.1 per cent of Australian exports to the US are tariff-free.

John Howard and Peter Costello at Kevin Andrews’s funeral last week. Picture: NewsWire / Ian Currie

“Is it legal for Trump to put a tariff on Australia under our free trade agreement?” Mr Costello asked. “We went to great lengths to negotiate this FTA and, as far as I know, it is binding in international law. I would have thought that a universal tariff would be a breach of the FTA, right? So what is the status of the FTA? Is he going to unilaterally repudiate it?”

Last month, Mr Trump announced that he would impose 25 per cent tariffs on Canada and Mexico. These and other proposed tariffs are likely to lead to retaliatory tariffs on the US as occurred in Mr Trump’s first term.

Leading economists warn that levying tariffs would represent a significant risk for the global economy with no benefit to the US while consumers will end up paying more for important goods. The Smoot-Hawley Tariff Act (1930), which increased tariffs by about 20 per cent, resulted in global trade declining by about two-thirds.

The former prime minister and treasurer cautioned that it was not yet known what tariffs Mr Trump would levy and if Australia would be granted an exemption from steel and aluminium exports as it was during his first term. The US has a trade surplus with Australia.

US president-elect Donald Trump. Picture: AFP

Mr Costello emphasised that the Albanese government needed to put the case to Mr Trump that Australia should be exempted from the imposition of new tariffs under international law. “I don’t know what the Americans are intending to do,” he said. “I would be arguing, ‘Hang on, we have an FTA. You entered into it. We entered it. It is effective in international law. You have no right to do it’ …

“A tariff is not good for Australia. I would be arguing that a tariff is not good for America either. That’s the thing I would try and convince Trump of.”

Mr Howard said he was on a “unity ticket” with Mr Costello and also encouraged the Albanese government to make a strong case to the US not to impose tariffs which he agreed “could be” illegal.

The former prime minister also reaffirmed that he would not have voted for Mr Trump at last month’s election if he were a US citizen. He would not have voted for Democratic candidate Kamala Harris either.