Australia fails to secure exemption from US tariffs on steel and aluminium
Despite hopes of an exemption, Australia has not been spared from US tariffs on steel and aluminium, set to take effect from March 12th.
Earlier this week, Donald Trump imposed 25 per cent tariffs on steel and aluminium imports, with no exceptions.
“President Trump is taking action to protect America’s critical steel and aluminum industries, which have been harmed by unfair trade practices and global excess capacity,” claimed a White House press release.
“By granting exemptions to certain countries, the United States inadvertently created loopholes that were exploited by China and others with excess steel and aluminum capacity, undermining the purpose of these exemptions.”
Fortunately for Australia, the US comprises a relatively small share of the Australian export market, so economic impacts stemming from the tariffs are likely to be muted.
“Even if Australian exports are not exempted from US tariffs the direct economic impact on Australia will be minor,” said AMP’s chief economist, Dr Shane Oliver.
“Steel and aluminium exports to the US are just 0.03 per cent of Australian GDP and total goods exports to the US are just 0.8 per cent of GDP.
“The main threat to Australia would come via Trump’s tariffs leading to less global trade and a hit to Chinese and global GDP, weighing on demand for our exports and hence our GDP.”
Earlier this week, Prime Minister Anthony Albanese attempted to negotiate an exemption from the tariffs, spruiking Australia’s trade deficit with the US.
“We will continue to make the case to the United States for Australia to be given an exemption to any steel and aluminium tariffs,” Albanese said at Question Time on Monday.
“We regard this as also being in the US's national interests because tariffs, of course, don't tax us; they tax the purchasers of our products,” said Albanese.
“It's also a fact that the US has had a trade surplus with Australia since the Truman presidency.”
Australian politicians warned that the incoming tariffs could damage the long-standing relationship between the United States and Australia.
“I want there to be a very clear message to the Trump Administration that we don’t believe that this tariff should be put in place,” opposition leader Peter Dutton said at a press conference in Canberra on Tuesday.
“If it remains in place, then I believe it will damage the relationship between the United States and Australia.”
Former Prime Minister Malcolm Turnbull expressed that negotiating with Trump would be a difficult task for any leader, on ABC’s 7:30 program on Monday.
“It may be that … Trump is determined to impose this tariff on every country, no matter what, and you know, and in which case, it won't be possible to secure an exemption,” Turnbull said.
“You cannot have a fairer trade deal than you have with Australia, because you have a big surplus, no tariffs, no quotas,” he added, regarding US trade relations with Australia.
“So if you impose a tariff on us, you're only doing it because you can, because you're powerful, and that is not the message you want to be sending to the rest of the world.”
He also slammed Trump’s understanding of economic theory.
“He doesn't believe in comparative advantage. He believes if a country has a deficit, it's a trade deficit, it's a loser. If it has a trade surplus, it's a winner,” Turnbull told 7:30
“I mean, it's, it's economic nonsense, obviously, and that's, but he's believed it, and he's believed it for decades. So, you know, and he's now surrounded by people who will support him.”
