‘We have to stand up to him’: Trump tariffs could hit Australia

Australia may be unable to escape crushing tariffs on its exports to America for a second time, former US ambassador Arthur Sinodinos has warned, as President Donald Trump’s efforts to revive his country’s manufacturing base sent the ASX into a slide.

While Canada and Mexico reel from Trump’s move to impose a 25 per cent tariff on all non-energy exports to the US, the president has said he will go further by applying extra tariffs on aluminium, steel and copper imports to encourage producers to manufacture on American soil.

President Donald Trump has imposed tariffs on Canadian, Mexican and Chinese goods.Credit: AP

Malcolm Turnbull, who was prime minister when Trump first came to office in 2017, urged Albanese to show “the courage to stand up to” Trump on tariffs rather than seek to flatter and placate the new administration.

The Australian sharemarket fell close to 2 per cent in a dour session on Monday, while the Australian dollar dived to a five-year low against the US dollar, dipping below 61 cents on fears Trump’s tariffs on Canada, Mexico and a 10 per cent impost on Chinese goods would ricochet onto Australia.

NSW Premier Chris Minns warned that aluminium and steel exports were “hugely important” to the Hunter Valley, Illawarra and western Sydney, saying “jobs could be on the line if we get this wrong”.

Mining and manufacturing companies have been alarmed by Trump’s initial tariffs and threats of a wider trade war, with mining giant Rio Tinto’s alumina operation in Canada and a planned BHP potash facility in the country heavily exposed to the US market and any knock-on effects from a trade war.

Trade Minister Don Farrell is planning to speak to his US counterpart, incoming Commerce Secretary Howard Lutnick, as soon as possible to make the case that Australia should be spared from tariffs because the United States exports more goods here than vice versa, unlike the situation with Canada, Mexico and China.

Australia secured rare exemptions to Trump’s steel and aluminium tariffs in 2018 after a lobbying campaign led by Turnbull and then-US ambassador Joe Hockey.

Arthur Sinodinos, who served as Australia’s ambassador to the United States during the end of Trump’s previous term, said it would take “direct and persistent efforts” to achieve an Australian tariff exemption given Trump has returned to power with renewed determination to wield tariffs as an economic weapon.

“Trump sees this as a legacy issue and may decide not to have any exemptions – we have to be prepared to take him at face value,” Sinodinos said.

The fact Australia has a sweeping free trade agreement with the US and has a positive reputation in Washington will not necessarily spare the country from being hit with tariffs, Sinodinos warned.

Turnbull said: “Trump has always believed that the US is ripped off in unfair trade deals by other countries whether they be adversaries or allies.

“He does not believe in globalism, free trade or the international rules-based order.”

Turnbull said that Trump was more focused on boosting American manufacturing jobs than in his first term, when his priority was making trade fairer and more reciprocal for US interests.

This will make it important to not only rely on an argument about Australia’s trade deficit with the US.

“There are no Australian exports to the US which undermine American jobs,” Turnbull said.

“But this is an exercise in advocacy, and it will require our Prime Minister to make the case coherently to Trump and have the courage to stand up to him. ”

Turnbull said he had to make the case to Trump personally because most of his trade advisers were against granting Australia an exemption.

Assistant Trade Minister Tim Ayres said Trump’s tariff moves did not catch the government by surprise.

“We have been prepared for all of this,” Ayres said.

As the government seeks to quickly build ties with the Trump administration, Defence Minister Richard Marles is set to visit the US later this week to meet with his counterpart, Defence Secretary Pete Hegseth.

US ambassador Kevin Rudd, who has been energetically courting Trump’s Republican allies after previously being critical of the president, said Trump’s approach to China could avert a third world war.

“The Chinese system is deeply respectful of him because president Trump’s signature message to the body politic at home and the body politic abroad can be summarised in a single word – strength,” Rudd told the London Daily Telegraph.

Among exposed industries are potash, the agricultural fertiliser BHP is planning to produce in the Western Canadian province of Saskatchewan. Canada is the largest supplier of potash to the US and tariffs on the crop-enhancing product may strike discord in Trump’s base, particularly the country’s Midwest farm belt, which will be hit by higher prices.

The New Zealand-listed medical device manufacturer Fisher & Paykel Healthcare was the first company to disclose the impact of the tariffs to its business to a stock exchange, noting on Monday that its costs were likely to increase in the 2026 financial year as a result.

In the first half of this financial year, about 45 per cent of the company’s revenue came from the US and about 60 per cent of its products crossing the US border come out of its Mexican factories.

Australian technology start-ups are bracing themselves for potential economic fallout from the tariffs.

Anish Sinha, a former equities analyst at Goldman Sachs and co-founder of start-up UpCover, said many Australian start-ups were already struggling to raise capital amid a difficult macroeconomic environment.

“Trump’s sudden tariffs... could drive capital away from riskier assets, including those indexed or exposed to tech or AI,” Sinha told this masthead.

Mena Theodorou, co-founder of crypto exchange Coinstash, said that cryptocurrencies have already been rattled by the tariffs.

“In the past 24 hours, over $US188 billion has been wiped out from the crypto market, reflecting investor unease, and this volatility is now spilling into traditional market,” he said.

With David Swan

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