Janice R. Andrews
Prime Minister Anthony Albanese has confirmed he will hold a crisis phone call with former US President Donald Trump following the announcement of a 25% tariff on all steel and aluminium imports to the United States. The move, which has sent shockwaves through global markets, threatens to strain the longstanding US-Australia trade relationship and could have significant repercussions for Australian industries.
Trump’s Tariff Announcement Sparks Global Concern
Donald Trump revealed the sweeping tariffs during a media briefing aboard Air Force One en route to the Super Bowl in New Orleans. “Any steel coming into the United States is going to have a 25% tariff,” Trump declared, emphasizing that the measures would apply broadly without exemptions. The announcement, made on Monday morning AEDT, immediately rattled global markets, including Australia, where the S&P/ASX200 index initially dropped by 0.5%, wiping an estimated $15 billion off the market before recovering later in the day.
The tariffs have raised alarm bells for Australian exporters, particularly in the steel and aluminium sectors. Australia exported $US237.5 million worth of iron and steel and $US316.9 million worth of aluminium to the US in 2023, according to the United Nations COMTRADE database. A 25% tariff on these exports could deal a significant blow to Australian producers and workers, particularly in regions like Port Kembla near Wollongong, Whyalla in South Australia, and Newcastle.
Albanese Vows to Protect Australian Interests
During parliamentary Question Time on Monday, Prime Minister Albanese was pressed on whether he had been informed of the tariffs in advance. While he did not confirm prior knowledge, Albanese assured Australians that he would vigorously defend the nation’s interests. “The Australian people know I will always stand up for them, and I will always stand up for Australia’s national interests,” he said. “We will continue to make the case to the United States for Australia to be given an exemption for any steel and aluminium tariffs.”
Albanese’s commitment to securing an exemption echoes the success of former Prime Minister Malcolm Turnbull in 2018, when Australia was granted an exemption from similar tariffs imposed by the Trump administration. At the time, Turnbull highlighted the US trade surplus with Australia, a point Albanese has reiterated. Since 1952, the US has consistently run a trade surplus with Australia, which stood at $US17.7 billion in 2023.
Industry Leaders Call for Urgent Government Action
The Australian Industry Group (Ai Group) has urged the federal government to act swiftly to protect local industries from the fallout of the tariffs. Ai Group Chief Executive Innes Willox described the move as a “slap in the face” for Australian industry and the US-Australia alliance. “It is now up to the federal government to quickly step in and protect Australian industry and producers from being caught up in a rapidly escalating global trade war,” Willox said. “Reversing these tariffs must be a national priority.”
Opposition leaders have also weighed in, criticizing the Albanese government’s approach. Nationals leader David Littleproud contrasted the current administration’s efforts with the Coalition’s success in 2018, when then-Ambassador Joe Hockey successfully negotiated an exemption. “We were able to send Joe Hockey there to put a cogent argument about carving Australia out,” Littleproud told Sky News. He also took aim at Australia’s current Ambassador to the US, Kevin Rudd, suggesting that Rudd’s past criticisms of Trump could hinder negotiations.
Economic Implications for Australia
The tariffs come at a delicate time for the Australian economy. CommSec Chief Economist Ryan Felsman warned that the tariffs could weaken the Australian dollar, which is already trading at 62 US cents, and lead to higher costs for consumers. “You’ve got those underlying cost increases which potentially affect consumers,” Felsman told Daily Mail Australia. However, Pepperstone Head of Research Chris Weston noted that Australia’s exposure to the US market is relatively limited, suggesting the overall impact may be manageable.
For some Australian companies, the tariffs could even present opportunities. BlueScope Steel, which manufactures steel in both Australia and the US, saw its shares rise by more than 2% following the announcement. “BlueScope is fairly well insulated from the tariffs,” Felsman noted. In a statement, BlueScope emphasized its significant investments in the US and its contribution to American employment, signaling its intention to work closely with both the Trump administration and the Australian government.
Broader Geopolitical Context
The tariff announcement comes just a day after Australia’s Deputy Prime Minister and Defence Minister Richard Marles met with US Defence Secretary Pete Hegseth to finalize details of the AUKUS submarine deal. The timing has raised concerns about the broader implications for the US-Australia alliance. “That this advice has been given the day after our Deputy Prime Minister was in Washington to hand over billions of dollars to secure the AUKUS submarine deal is particularly troubling,” Willox said.
Trump’s decision to impose tariffs more broadly this time around marks a significant shift from his previous approach. In 2018, exemptions were granted to key allies, including Canada, Mexico, the European Union, and the UK. However, the current administration appears to be using tariffs as a negotiating tool, not only on trade but also on issues like border security and immigration. During his first term, Trump frequently expressed concerns about countries running trade surpluses with the US, a stance that has clearly not softened.
What’s Next for Australia?
As Prime Minister Albanese prepares for his phone call with Trump, the stakes could not be higher. The outcome of these discussions will have far-reaching implications for Australian industries, workers, and the broader economy. Treasurer Jim Chalmers has expressed confidence in Australia’s ability to navigate the challenges, citing the strong and mutually beneficial relationship between the two nations. “We are confident that we can navigate these changes coming out of DC. We are well placed, we are well prepared,” Chalmers said.
However, with Trump’s 2024 campaign promising a return to protectionist policies, the Albanese government faces an uphill battle to secure an exemption. The coming days will be critical as Australia seeks to protect its interests and maintain its strong trade relationship with the United States.
In the meantime, Australian businesses and consumers are bracing for potential price hikes and market disruptions. As the global trade landscape becomes increasingly uncertain, the Albanese government’s ability to negotiate effectively with the Trump administration will be put to the test. For now, all eyes are on Canberra and Washington as this high-stakes diplomatic drama unfolds.
