Bittersweet day for Australia, with 15 days until Trump tariff exemptions announced

Last-minute outbreak of common sense gives us 15 days to secure exemptions to Donald Trump’s steel and aluminium tariffs.

US President Donald Trump speaks before signing Section 232 proclamations on steel and aluminium imports. Photo: AFP

Australia is not across the line yet on evading Donald Trump’s tariffs but it is looking good.

A last-minute outbreak of common sense in the Trump White House has seen Australia’s arguments heard at the highest level as the administration decides to consider exemptions on a case-by-case basis.

Mr Trump’s decision earlier today to single out Australia as a close ally when discussing exemptions is a hugely positive sign.

Yet this is a bittersweet day for Australia. Sweet because Australia has a genuine chance at being cut out of Trump’s putative tariffs on steel and aluminium. Bitter because Trump has tilted the world away from free trade in his announcement today by embracing protectionism, which is the natural enemy of middle-sized open economies like Australia.

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The US administration says it will decide within 15 days whether countries like Australia will be exempted. This means the intensive lobbying campaign from Malcolm Turnbull, Foreign Minister Julie Bishop, Trade Minister Steve Ciobo, by Australia’s ambassador in Washington Joe Hockey and by senior Australian business figures will be stepped up.

What impact this Australian campaign has had and will have may never be fully known — the decision-making process in the Trump White House is a law unto itself — but it has been a comprehensive campaign that cannot have hurt Australia’s chances.

Australia has lobbied the Trump administration using both military and economic arguments.

On the military side it has emphasised that no two nations have closer military and intelligence relationships and that no other country has fought side-by-side with the Americans in every major war of the past century.

These were themes that Turnbull pushed in his meetings in Washington last month.

The other key argument is that Australia has a sizeable trade surplus with the US and if Trump’s tariffs are aimed at penalising countries like China - which run huge trade deficits with the US - then Australia should be exempted.

As of early this week, these arguments received little traction inside the Trump administration. The President hinted there would be no exemptions and his trade adviser Peter Navarro said openly that exemptions were not planned at that point.

But amid a furious outcry internationally and even from within the Republican Party, the White House has backed away from its early hardline stance.

It will now consider exemptions for countries like Australia and has already granted conditional exceptions to Canada — the largest source of US steel imports — and Mexico. Trump wants to renegotiate NAFTA with those two countries.

Trump and his administration have bungled the tariff issue from the start. The President introduced it impulsively, surprising even his own aides. As an angry reaction gathered pace around the world, he then dug in his heels and refused to budge.

It was too much for the President’s respected economic adviser and pro-free trader Gary Cohn, who quit.

But at the last minute, the administration cracked, leaving the door open for selected exemptions.

It has been the only outbreak of common sense we have seen from this White House on the issue of tariffs.

Cameron Stewart is also US Contributor for Sky News Australia