Australia exports under threat as Donald Trump imposes sweeping tariffs

Trade Minister Steven Ciobo says US steel and aluminium import tariffs will cost Australian jobs, could trigger recession.

Donald Trump speaks on steel and aluminium tariffs at the White House. Picture: AFP.

Trade Minister Steve Ciobo has warned sweeping United States’ tariffs on steel and aluminium imports will cost Australian jobs and potentially set off retaliatory trade bans that could push the global economy into recession.

Mr Ciobo said he had already reached out to US Commerce Secretary Wilbur Ross and Australian Ambassador Joe Hockey to determine whether Australian companies would be exempt from the tariffs, which the US previously indicated would be the case.

“The imposition of a tariff like this will do nothing other than distort trade and ultimately we believe will lead to a loss of jobs,” Mr Ciobo said today.

More than $US400 million in Australian steel and aluminium exports to the US are under threat after Donald Trump said he will impose sweeping tariffs on steel and aluminium imports next week. Australian steel exports to the US are worth roughly $US210m a year while aluminium exports are worth around $US213m a year.

The move is aimed at limiting Chinese steel imports into the US but the president did not say if other countries would be excluded.

Trade Minister Steve Ciobo says the Trump tariff will distort trade. Picture: AAP

Mr Ciobo said Bluescope Steel, which employed 3000 people in California and Washington State, would be affected if the tariffs were applied across the board.

But he said the impacts would not be confined to steel and aluminium producers.

“My concern remains, on the back of actions like this, we could see retaliatory measures that are put in place by other major economies,” he said.

“That is in no-one’s interest. Let’s be clear. (We) have said over and over again, if we see a breakout of action and reaction from major economies, the only thing that will arise from that will be a slowdown in economic growth and over time, if that got bad enough, we could see a recession and we know the consequent impact of that.

The Australian Industry Group slammed the tariff decision as a risk to domestic producers and to global trade stability. “The decision by the US to raise tariffs on aluminium and steel products is a clear step in the wrong direction that risks further escalating global trade tensions,” Ai Group chief executive Innes Willox said.

“There will be a complex mix of winners and losers among Australian producers and their employees from the particular measures. For example, cheaper Chinese steel destined for the US may end up in Australia.”

He said the move could set off retaliatory moves and escalate protectionist policies around the globe. “These are risks that are particularly relevant to Australia which, as a medium-sized trading nation, relies on open trade opportunities for our prosperity,” Mr Willox said.

“The uncertainty that protectionist measures and countermeasures will generate dampens investment in growth and innovation in a variety of industries.”

Oz exports at risk in sweeping US tariffs

Mr Trump said today: “We’ll be signing it next week and you’ll have protection for a long time in a while. You’ll have to regrow your industries, that’s all I’m asking,” .

“There won’t be dumping on our country. What they do is they dump massive amounts of product in our country and it just kills — it destroys our companies and our jobs.”

Melbourne-based company BlueScope Steel is the sole exporter of Australian steel to the US with exports employing around 3000 people in the US.

The US had indicated to Australia at last year’s G20 summit that it would be exempted from any tariffs imposed on steel and aluminium, but the White House appears to have cooled on the idea of exemptions.

The issue has been decided by Mr Trump alone after a fierce internal debate in the White House between those supporting free trade and those calling for protectionist measures against foreign imports.

The debate pitted the National Economic Council director Gary Cohn, Treasury Secretary Steve Mnuchin, national security adviser H.R. McMaster and Defence Secretary James Mattis against the proponents of protectionist trade policies, namely Wilbur Ross, US Trade Representative Robert Lighthizer and trade adviser Peter Navarro.

A US Department of Commerce report released last month made a raft of recommendations, including a global tariff of at least 24 per cent on all steel imports and 7.7 per cent on aluminium imports from all countries.

“Each of these remedies is intended to increase domestic steel production from its present 73 per cent of capacity to approximately an 80 per cent operating rate, the minimum rate needed for the long-term viability of the industry. Each remedy applies measures to all countries and all steel products to prevent circumvention,” an Office of Public Affairs statement said.

Alternatively, the department recommended higher tariffs on imports from specific countries (that did not include Australia) or a quota on imports.

In Washington last weekend Malcolm Turnbull said Australia had made a “compelling case” to be exempted from the tariffs during his three-day visit to Washington, but he did not reveal if there had been any assurances.

“We’ve made a very strong case for the Australian exports of steel and aluminium,” the Prime Minister said. “The BlueScope business alone employs 3,000 people in the United States. The President and I have discussed that.”

Mr Trump’s announcement sparked a sell-off on Wall Street, with US stocks tumbling as money managers warned the tariffs have the potential to spark a trade war.

Australian mining giant Rio Tinto said it would continue to talk with US officials on proposed aluminium tariffs and would stress the benefits of freer North American trade.