We’re about to be hit by Trump’s tariffs. Here’s what we know about ‘liberation day’

“They’re wonderful people, wonderful everything – but they ban American beef.”

Despite singling Australia out for its ban on imports of uncooked beef from the United States, Donald Trump’s “Liberation Day” left the country relatively unscathed when compared to Lesotho and Saint Pierre and Miquelon – both of which were hit with 50 per cent tariffs – and Cambodia, which was hit with 49 per cent.

Although Australia’s 10 per cent tariff is the lowest rate of those unveiled at the White House’s Rose Garden on Wednesday (Thursday AEDT) – Trump described this as the “baseline” rate, and it matches that of the United Kingdom, Singapore, Chile, Turkey, Brazil and more – business groups are warning it’s not just Australian farmers who will be impacted by Trump’s blitz.

Australia has been hit with a 10 per cent tariff on all exports to the United States but Donald Trump described it as a “baseline” rate when compared to that enforced on other countries’ exports.Credit: AP

“Australia has been presenting our case to the United States very strongly across the board,” Prime Minister Anthony Albanese said in Melbourne while on the campaign trail on Thursday morning, noting no country has received a better outcome on “Liberation Day” than Australia while also acknowledging Trump’s tariffs are “not the act of a friend.”

“President Trump referred to reciprocal tariffs. A reciprocal tariff would be zero, not 10 per cent,” Albanese said. “The administration’s tariffs have no basis in logic and they go against the basis of our two nation’s partnership.”

There is also the matter of Norfolk Island, with the tiny Australian territory being whacked with a 29 per cent tariff rate.

“I’m not quite sure that Norfolk Island, with respect to it, is a trade competitor with the giant economy of the United States but that just shows and exemplifies the fact that nowhere on Earth is exempt from this,” Albanese said. “We will continue to argue Australia’s case.”

Opposition Leader Peter Dutton, meanwhile, said from the campaign trail: “We have a special relationship with the United States and it hasn’t been treated with respect by the administration or by the president.”

So why is Trump imposing these tariffs, and how has it affected Australia so far? Will Australia retaliate, if it should? Here’s everything you need to know about Trump’s tariffs.

Trump tariff winners and losers

Winners

• Australia in general: Minus Norfolk Island, only when compared to other countries.

Losers

• Australia in general: Business groups warn the economy could take a hit from global trade disruption and dumping of cheap goods into Australia from other countries seeking to sell them outside the US. The Australian Financial Review is reporting $50 billion was wiped from the Australian Stock Exchange within 50 minutes after Trump’s announcement, which equates to $1 billion a minute gone.
• Australian beef farmers: A 10 per cent tariff will apply to Australian beef exports to the US. Brazil, another major beef exporter, is subject to the same tariff, so the current competitive position was “maintained”, Albanese has said.
• Americans who like eating Australian beef: Burger meat in the US is a mix of quality Australian beef and beef sourced in America. It’s likely the 10 per cent tariff imposed on Australian exports will cause burger prices to go up in the US, as they can’t meet demand with their domestic supply alone.
• Treasury Wine Estates: Although the Australian winemaker says because about 85 per cent of the wine it sells in the US is produced there, the 10 per cent tariff will unlikely have a big impact on its business. Nevertheless, shares fell on opening this morning by 1.6 per cent.
• Cettire: About 41 per cent of the Melbourne-based luxury fashion online retailer’s sales are goods made in the EU and sold to US-based customers. Early trading saw Cettire down by 5.7 per cent.
• Cochlear: The medical device manufacturer is still trying to determine the impact of the tariffs, but was down 3.3 per cent in early trading.
• Nike, Adidas footwear fans: Vietnam, which produces roughly half of all Nike shoes and 39 per cent of Adidas shoes, was hit with a 46 per cent tariff on all exports to the US. This means sneaker prices will likely go up.
• Foreign car-lovers: Trump name-checked India, Thailand and Vietman for their motorcycles and Japan, South Korea and India (again) for their cars and other vehicles. All automobile exports to the US have been hit with a 25 per cent tariff.
• American parents: Most of Basic Fun’s toys, which include Tonka trucks and Care Bears, are made in China. Owner Jay Foreman said “there is no other way” to account for the 34 per cent increase in tariffs on Chinese imports but raise the price of his products in the US.

What is ‘Liberation Day’?

“Liberation Day” is Trump’s name for Wednesday, April 2 (Thursday, April 3 AEDT), when he announced a series of tariffs on countries around the world, a move the prime minister has poured scorn on every chance he’s gotten.

“There is a debate – that frankly, I thought had gone away – from my year seven economics class at school,” Albanese said this morning of the idea of tariffs.

In a press conference held at 7am AEDT titled “Make America Wealthy Again”, Trump released details of every tariff he’s imposing on countries big and small, including China (34 per cent), India (20 per cent), Australia (10 per cent) and New Zealand (10 per cent).

Complete with a prop board and the American flag at his back, Trump said it’s the US’ “turn to prosper” and claimed his “reciprocal tariffs” on allies and otherwise will bring in “trillions and trillions of dollars to reduce our taxes and pay down our national debt, and it will all happen very quickly. With today’s action, we are finally going to be able to make America great again, greater than ever before.”

This is not the first time Trump has given this name to a day, repeating several times in his last presidential campaign that election day, November 5, would be “Liberation Day” for his supporters.

What is a tariff?

A tariff is a tax or duty collected by the government on goods or services being imported into the country. Tariffs are paid by the business doing the importing and are often passed onto domestic customers. This means tariffs effectively raise the price of overseas goods for domestic consumers.

Tariffs are often used as a way to protect domestic producers by encouraging consumers to buy domestic goods over foreign-made goods, which may otherwise be cheaper or of better value.

They can also be used as a punishment or “stick” to negotiate with other countries that are likely to see demand for their exports fall when hit with a tariff, or as a way to encourage more domestic production of a good or service in the interests of national security.

Why is Trump imposing these tariffs?

In February, Trump imposed sweeping 25 per cent tariffs on all steel and aluminium imported into the US. He said it would protect America’s critical steel and aluminium industries from “excess” production overseas, with the metals increasingly being imported to the US and hurting American steel and aluminium producers.

This morning, it was announced Australian exports – including $7 billion in farm produce such as beef – will be hit with tariffs of 10 per cent. Trump said global tariffs will come into effect “from midnight”, which, assuming he means midnight in Washington, D.C., would be 3pm AEDT.

It comes after the Australian government pushed back against demands from Trump to overhaul pharmaceutical subsidies and weaken biosecurity rules, which he argues disadvantage American producers.

Albanese has confirmed Australia will not weaken biosecurity laws to allow uncooked US beef, which has been banned due to risk of mad cow disease, into the country.

For Trump, tariffs are also seen as a money-making opportunity. He believes slapping tariffs on imports will make the country richer – although this is questionable given tariffs are largely paid by domestic consumers, tend to worsen productivity and slow down economic activity.

How will tariffs affect Australia?

The direct effect of US tariffs on Australian goods is unlikely to be significant. This is because most Australian exports do not get sent to the US. In 2023-24, about $38 billion of Australian exports were sold to the US, compared to $210 billion to China, $81 billion to Japan and $42 billion to South Korea.

Australia’s biggest exports are resources such as iron ore, coal and liquefied natural gas (LNG), which in 2023, comprised nearly half of the country’s total exports at a total value of more than $330 billion. Very few of these resources were sent to the US; most were shipped to countries such as China and Japan.

That means the biggest hit will come from any flow-on effects of tariffs on Australia’s largest trading partners, who are more exposed to the US.

Tariffs on China, for example, could slow its economy down, dramatically reducing demand for Australia’s major exports such as iron ore, and hitting the Australian economy.

Agricultural products – mainly meat – comprise the biggest part of Australian exports to the US, but Westpac senior economist Mantas Vanagas says these products could probably be sold to other countries. Australian farmers exported $7.1 billion in agricultural produce to the US in 2023-24.

There are also costs which are more difficult to quantify, such as uncertainty around the details and the effects of the tariffs, which can discourage businesses from making investment decisions.

Will Australia retaliate with its own tariffs?

It’s widely accepted by economists that tariffs do more harm than good. That’s because trade is a crucial way for countries to lift living standards, allowing them to make more of what they are good at in exchange for things other countries can make at a lower cost.

For example, making cars or iPhones in Australia would be far more costly than it is in China, meaning it makes more sense for Australia to import these goods with money earned from activities such as mining and farming – areas in which we have a relative advantage.

Tariffs make goods and services more expensive – both for domestic consumers and businesses importing them. Retaliating with more tariffs can lead to a tit-for-tat situation in which countries keep raising or adding tariffs on each other, worsening barriers to trade and making imports more expensive for consumers.

Prime Minister Anthony Albanese and Opposition Leader Peter Dutton have both said Australia would not impose retaliatory tariffs, saying tariffs and escalating trade tensions are a form of “economic self-harm” for the US.

“We will stand up for Australia. We will continue to make the strongest case for these unjustified tariffs to be removed from our exporters,” Albanese said this morning.

“Our existing free trade agreement with the United States contains dispute resolution mechanisms.

“We want to resolve these – this issue without resorting to using [reciprocal tariffs]. As we do support continued constructive engagement with our friends in the United States.”

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