Donald Trump’s 10 per cent reciprocal tariffs against Australian goods are a sham. And the justification provided for them by the White House lacks credibility.
This is not about reciprocal trade. If it was, Australia would be exempt. Nearly all US goods have tariff-free access to the Australian market under the terms of the free-trade agreement that came into force 20 years ago.
Trade is already reciprocal – a point former chief US negotiator of the FTA Ralph Ives made to The Australian earlier this week.
He said there was no good reason to impose tariffs on Australia.
The White House can’t get its story straight.
The table it produced setting out the new tariff rates suggested that – once non-tariff trade barriers and currency manipulation were accounted for – Australia had effectively been charging the US a 10 per cent tariff.
But the executive order signed by Trump stated it was simply the “policy of the US to rebalance global trade flows by imposing an additional ad valorem duty on all imports from all trading partners”.
It said the “additional ad valorem duty on all imports from all trading partners shall start at 10 per cent”.
In other words, this wasn’t a serious process. It wasn’t about ensuring reciprocity on a country-by-country basis. No one seriously believes Australia has been charging the US an effective tariff rate of 10 per cent.
The executive order makes it crystal clear that the US is simply charging a baseline 10 per cent rate across the board regardless of merit – exactly the opposite of what Trump says he stands for.
His political narrative is that America is the victim.
Perhaps the administration was confused by Australia’s 10 per cent GST, but this applies not only to imports but to domestic goods and services. Imported goods are no worse off.
Australian officials are deeply concerned by suggestions Australia has been effectively charging the US a 10 per cent tariff rate, with one saying “the 10 per cent figure is a made-up number” and “plucked out of the air”.
“We impose zero tariffs. We do not manipulate the currency because it’s one of the most traded currencies in the world … Any US claim there are Australian non-tariff barriers equivalent to a tariff of 10 per cent had zero underlying mathematics. It’s just plucked out of the air.”
Former Australian ambassador to the US Arthur Sinodinos noted that America had its own trade barriers in place.
He said the FTA with Washington was “negotiated in the full knowledge there were some policy areas … off the table and this was … accepted by both sides”.
“Both sides had areas they didn’t want to touch. In the case of the US, sugar in Florida was an example,” he said. “My recollection was the US drove a very hard bargain in that free-trade agreement. We didn’t feel like we were getting a sweet deal. We certainly didn’t feel like we were pulling the wool over the Americans.”
This was an unwarranted action against Australia taken in the guise of fairness that will damage the alliance and public perception of the US in Australia. It will overturn the global trading system and ignite a genuine global trade war.
US international trade analyst and research fellow at the Cato Institute Clark Packard, said Trump’s announcement “completely up-ends the post-war international trading system. It will impose significant costs on American consumers, firms and families, and alienate close allies we need to confront China’s legitimately problematic trading practices.”
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