US announces 25% tariffs on steel and aluminium
The Australian government is scrambling to secure exemptions from the tariffs, as it did during Trump’s previous term under Malcolm Turnbull.
US President Donald Trump has announced 25 per cent tariffs on all steel and aluminium imports, a move which would weigh on Australia’s commodity-heavy economy.
"The Albanese Labor Government has been working hard from day one, standing up for Australia’s interests. We have shown how effective we are in dealing with our major international partners,” Minister for Trade and Tourism Don Farrell told the ABC.
"We have consistently made the case for free and fair trade, including access into the US market for Australian steel and aluminium.
"Our bilateral economic relationship is mutually beneficial - Australian steel and aluminium is creating thousands of good paying American jobs, and are key for our shared defence interests too."
Australia has previously highlighted its two-to-one trade deficit with the US and will likely leverage this to garner exemptions from the tariffs.
“The very close partnership between Australia and the US, and particularly the close economic partnership, benefits both sides,” Treasurer Jim Chalmers said in a speech in January.
“When it comes to matters of trade, it’s important to remember that the US maintains a very substantial 2‑to‑one trade surplus with Australia.”
An escalating trade war would stoke inflation globally, experts have warned. This is set to complicate the RBA’s interest rate decision at its February meeting, with some economists doubting that the central bank will have the confidence to cut rates amid global uncertainty.
"The new Trump administration's tariff policies could lead to increased import costs and supply chain disruptions, and there are fears these factors could offset positive developments in Australia’s economy,” BDO Economics partner Anders Magnusson said on last month’s CPI data.
“Australia's dependence on resource exports and crucial trade relationships, especially with China, heightens the stakes.
“As we stand at this crossroads, the RBA might consider these uncertainties in its latest forecasts and take a more cautious approach. While there are positive indicators domestically, the broader international landscape presents significant inflationary risks to monetary policy.”
Global trade uncertainties have also incentivised countries to engage in protectionist policies and bolster their manufacturing sectors.
On Monday, the Labor government pushed its Future Made in Australia plan to revitalise Australia’s manufacturing sector, emphasising its importance in global uncertainty.
“The Albanese Government's intention, unambiguously, is to re-industrialize our regions and our outer suburbs, refining value-added Australian metals here and making more complex manufacturing products in Australia,” Tim Ayres told the senate on Monday.
“Recent events demonstrate that the world is becoming a more turbulent place where violence, trade coercion and protectionism mean Australia's interest in our progress cannot be taken for granted. Complacency is our enemy. Does anyone sensibly think that Australia and Australians can be secure and prosper if we don't seek to re-industrialise and diversify our economy?”
