The global economy is no stranger to turbulence, but recent developments have sent shockwaves through Australian markets and industries. Former US President Donald Trump, now back in the White House, has announced a sweeping 25 per cent tariff on steel and aluminium imports, and this time, Australia is not exempt. The move has left Australian businesses, politicians, and consumers bracing for significant economic repercussions.
A blow to Australian exports
The United States is a key trading partner for Australia, particularly when it comes to steel and aluminium. In 2024 alone, the US imported approximately $638 million worth of Australian steel, according to the UN’s COMTRADE database. The newly announced tariffs will make Australian exports of these materials significantly more expensive for American buyers, likely reducing demand and putting pressure on Australian industries.
The Australian sharemarket felt the impact almost immediately. The ASX200 benchmark index tumbled 0.5 per cent at the opening bell, wiping an estimated $15 billion in value within the first hour of trading. Major companies such as Rio Tinto, which are heavily involved in the export of these materials, are expected to bear the brunt of the new duties.
A return to ‘America First’
President Trump’s announcement marks a return to his ‘America First’ trade policies, which aim to prioritise domestic production and reduce reliance on foreign imports. Speaking to reporters, he confirmed that the tariffs would apply universally, stating, ‘Steel. Any steel coming into the United States is going to have a 25 per cent tariff.’ Aluminium imports will face the same levy.
This is a stark contrast to Trump’s first term in office, during which Australia was exempted from similar tariffs, along with Canada, Mexico, the EU, and the UK. At the time, the focus of his trade policies was largely on China. The decision to include Australia in this round of tariffs has come as a shock to many, including market analysts and business leaders.
The ripple effect on Australian businesses
The tariffs are not just a concern for large corporations; they also pose a significant challenge for smaller businesses trying to break into the US market. Crusader Caravans, an Australian company that recently secured an order for 50 caravans bound for Florida, is one such example. The company’s director, Michael Paidoussis, expressed concerns about the increased costs associated with the tariffs.
‘If a tariff is imposed, the cost of getting those caravans across to the US increases,’ Mr Paidoussis said. ‘We’ve got to either absorb the cost or pass it on to customers. In an environment where cost of living and discretionary items are not necessarily top of mind, it’s more about absorbing than passing it on, and that, obviously, is an issue.’
The uncertainty surrounding the tariffs has also raised questions about the viability of Crusader’s expansion into the US market. ‘If the tariff was significant and substantial, we may reconsider our potential entry,’ Mr Paidoussis added.
Political and diplomatic challenges
The announcement has also sparked a flurry of activity in Australia’s political circles. Nationals Leader David Littleproud has called on the Albanese government to petition the Trump administration for an exemption, as was successfully negotiated during Trump’s first term. However, he cautioned against retaliatory tariffs, emphasising the importance of a ‘rules-based order of trade’.
‘We’re a trading nation, and I can tell you that tariffs not even imposed on us, but imposed on other parts of the world, still have inflationary impacts for us in what we consume,’ Mr Littleproud said. ‘A tariff war will not benefit anybody, and Australia will not be immune from that.’
The Coalition’s trade spokesperson, Kevin Hogan, echoed these sentiments, highlighting the critical role of Australia’s ambassador to the US, Kevin Rudd, in brokering a favourable outcome. ‘The Ambassador to the US is one of the most critical diplomatic roles Australia has. Albanese and Rudd have a big job to do here,’ Mr Hogan said.
The broader implications
Economists and market analysts are warning that the tariffs could have far-reaching consequences beyond the immediate impact on Australian exports. Stephen Innes, an economist, described the move as an escalation of Trump’s trade doctrine, stating, ‘This high-stakes gamble could disrupt global supply chains.’
Indeed, the interconnected nature of modern supply chains means that the effects of the tariffs could ripple across multiple industries and countries. For businesses like Crusader Caravans, which rely on global supply chains for parts and materials, the increased complexity and cost could pose significant challenges.
What’s next?
While the tariffs have already caused a stir, some analysts believe there is a possibility that they could be reversed. eToro market analyst Josh Gilbert noted that Trump has a history of making bold announcements that are later walked back, particularly if they lead to negative market reactions.
‘When he had his term last time, he was very market-focused,’ Mr Gilbert said. ‘That was a big thing that stood out for him. I think he uses that as one of his key elements of being a good President. So these do come as a bit of a shock, but we know he puts threats out there and they can be reversed.’
What can Australians do?
For now, the Australian government is working to advocate for the nation’s interests. Emergency Services Minister Jenny McAllister pointed to ongoing discussions between senior Australian ministers and members of the Trump administration as a sign of the government’s commitment to resolving the issue.
‘I think in these situations, we’re always focused on what is best for Australians, and communicating that really clearly,’ Ms McAllister said.
As the situation unfolds, it’s clear that the stakes are high. The tariffs have the potential to disrupt industries, strain diplomatic relations, and impact everyday Australians through higher prices and reduced economic growth.
What are your thoughts on Trump’s latest move? Should Australia focus on diplomatic negotiations or consider implementing its own tariffs? How do you think this will affect Australian businesses and consumers in the long run? Let us know your thoughts in the comments below!
Also read: What a second Trump presidency might mean for Australia
maybe we could put a 50% tariff on Tesla’s ?
Might be an idea to replace Kevin Rudd with someone who has not called President Trump a moron?????
Trump wants people to bow to him and he’s like a peacock spreading his plumage under flattery.
It’s repugnant to see spineless senators without integrity allowing all his whims and destroying everything previous governments have built.
Seeing what both Trump and Musk are doing in the US, we should join Canada to boycott american imports.
Not happy enough to destroy America, they also want to impose their whimps to the whole world; we shouldn’t bow to dictators like that, hopefully Australia will not follow the same kind of government.
If you want to know more what is really happening overthere, subscribe to New York Times; it’s one of the newspapers with most integrity.