Labor carbon levy ‘risks trade wrath of Donald Trump’, Coalition warns

Anthony Albanese should not be considering carbon tariffs while he is leaning on Donald Trump to exempt Australian steel and aluminium exports from new duties, according to the Coalition.

Opposition climate change and energy spokesman Ted O’Brien. Picture: NewsWire / Martin Ollman

Anthony Albanese should not be considering carbon tariffs while he is leaning on Donald Trump to exempt Australian steel and aluminium exports from being hit with new duties when entering the United States, the Coalition has warned.

Opposition climate change and energy spokesman Ted O’Brien urged the Prime Minister to rule out implementing a carbon border adjustment mechanism ahead of the election if he cannot immediately release ­details on how it will work.

“With the government now seeking to negotiate an exemption from new tariffs of the United States, the timing couldn’t be worse for the Albanese government to be considering introducing a new carbon tariff of its own,” Mr O’Brien said.

“Labor needs to explain itself as a matter of urgency.”

The debate over carbon tariffs comes as the Business Council of Australia is using the change in direction of the US under the Trump administration to call for a “new pro-business approach” in the budget slated for March 25.

The BCA is calling for the budget to include company tax-breaks through a 20 per cent investment allowance, more flexible workplace reforms, a deregulation agenda and stronger fiscal rules capping annual spending growth at 2 per cent.

“The need for a new pro-business approach has been sharply clarified by the new US administration, with President Trump intending to dramatically lift US competitiveness with policy aspirations around further company tax cuts and a broad program of deregulation,” BCA chief executive Bran Black said.

“At a time of significant geopolitical uncertainty, we should focus on the things that are within our power to control – that means establishing the most competitive regulatory and investment settings we can in Australia to attract investment and drive growth.”

Climate Change and Energy Minister Chris Bowen launched a review into “carbon leakage” in 2023 and flagged the potential for adopting a CBAM, which would apply a special tax to some products imported from nations that have inadequate climate policies.

Mr Bowen in 2023 said final ­advice from the review – chaired by environmental economist Frank Jotzo – would be provided to the government by the end of 2024. But a government spokeswoman on Wednesday said the review was not yet complete.

“The government is committed to strengthening the competitiveness of Australian industry,” the spokesman said. “The government hasn’t received the final report of the review into policy options.”

A preliminary finding by the review into carbon leakage, released in November, said a CBAM should be considered by the government for products competing with domestic companies that fall under the safeguard mechanism.

“A border carbon adjustment applied to imports could be an ­appropriate policy measure for selected safeguard-covered commodities with high carbon leakage risk from imports,” the preliminary findings say.

“A border carbon adjustment applied to imports could be an ­appropriate policy measure for ­selected safeguard-covered commodities with high carbon leakage risk from imports

“A border carbon adjustment mechanism could be used to equalise the effective carbon reduction efforts between Australia and foreign jurisdictions.”

Mr Trump has pulled the US out of the Paris Agreement, raising the prospect that imports from the world’s biggest economy could be impacted by a CBAM.

Mr O’Brien said Labor needed to “stop hiding its secret CBAM plan and let the Australian people know what they have in mind”.

“It’s untenable for them to refuse to release their plan while simultaneously leaving open the prospect of implementing it on the other side of the election,” he said.

“A CBAM is effectively a carbon tariff and it wouldn’t even be considered had Labor not reformed the safeguard mechanism into a punitive penalty on Australian businesses.”

The Coalition is yet to detail its final position on several aspects of climate and energy policy, including the safeguard mechanism, gas and the timeline for the retirement of coal.

Despite accusing Labor of having a “secret” 2035 emissions reduction target, the Coalition has ruled out releasing its 2030 or 2035 targets before the election.

The Prime Minister won a commitment from Mr Trump in a 40-minute phone call on Tuesday that he would consider exempting Australia from his new 25 per cent tariffs on steel and aluminium.

He and Australia’s ambassador to the US Kevin Rudd have one month to convince the President to grant Australia a carve-out, with the new trade levies set to kick in on March 12.

But Australia’s hopes for an exemption suffered a blow on Wednesday AEDT, with the President’s senior counsellor for trade and manufacturing accusing Australia of flooding the American market with aluminium and being too close to China.

Peter Navarro told CNN the White House was primarily concerned about aluminium rather than steel being imported into the US from Australia.

“The major companies in Australia are majority held by … China,” Mr Navarro said. “And what they do is they just flood our markets.”

Mr Navarro said that aluminium and steel went into “everything” and “we have to defend ourselves”.