Trump’s tariffs set to hit regional NSW SMEs hard: Business NSW

Small businesses in regional NSW are likely to struggle with the newly enforced 10 per cent tariff policy announced by US President Donald Trump last week.

Daniel Hunter, chief executive of Business NSW, said regional businesses selling direct to the US and those trading with China were set to be hit the hardest.

Additionally, most businesses in NSW were likely to be impacted as many traded with Asian countries, which were slapped with much higher tariffs.

“While some NSW businesses engage directly with the US market, the ripple effects will extend throughout the entire business community. The uncertainty alone is enough to cause widespread concern,” he said.

“The indirect effects of tariffs imposed on Australia’s key trading partners, such as China, are likely to reverberate back to NSW businesses, amplifying the challenges faced.”

Hunter linked these “amplified challenges” specifically with regional NSW, as regional exporters were already operating on tight margins, and any tariff increases would mean that producers would adapt and rework business models.

Based on statistics from DFAT, the US accounted for $4.85 billion (5.6 per cent) of NSW’s exports, while China accounted for 14.2 per cent and Japan at 23.23 per cent.

In terms of NSW imports, 27.3 per cent came from China and 10.7 per cent came from the US.

Based on heavy reliance on China and the fact that it had a significantly higher tariff than the 10 per cent imposed on Australia, this highlighted the interconnectedness of global trade and the potential for cascading effects on NSW businesses, according to Hunter.

“Even businesses not directly exporting to the US will feel the strain through disrupted supply chains and increased operation costs,” Hunter said.

“The need to reassess supply chain management and explore alternative export markets is now more critical than ever. The strength of the US dollar may offer some cushion, as Australian goods remain attractively priced for American buyers.”

However, Hunter added that despite challenges likely to come from the tariff changes, NSW businesses had an opportunity to diversify and strengthen trade relations with other countries.

The Australian Chamber of Commerce and Industry (ACCI) said Trump’s decision to impose 10 per cent tariffs on Australia and its small businesses was a “clear breach” of the Australia-US Free Trade Agreement.

Andrew McKellar, chief executive of ACCI, said the tariffs were a breach based on the understandings and outline of the Free Trade Agreement between Australia and the US signed in 2005.

Based on the agreement, the two countries have shared and enjoyed a mutually beneficial two-way trade and investment relationship and US tariffs have not been imposed on Australia since 1952.

“The administration’s decision will reduce trade and increase costs for businesses and consumers,” McKellar said.

“This is an act of self-harm which has the potential to create a trade war and inflict significant damage to the global economy. There is no benefit to Australian consumers, businesses and producers by retaliatory tariffs and we agree with the decision of the Australian government to rule them out.”

Business NSW and ACCI pledged to continue to advocate for, support and protect Australian small businesses in the increasingly challenging and uncertain economic and political environment.