Australia is pushing for exemptions from newly announced U.S. tariffs on steel and aluminum, emphasizing the significance of its exports for creating jobs and supporting defense needs.
On February 10, 2023, Australian Trade Minister Don Farrell stated the importance of Australian steel and aluminum exports to the U.S., highlighting their role in generating "good paying American jobs" and their relevance to mutual defense interests between the two countries. Farrell’s remarks came as President Donald Trump floated the idea of imposing additional 25% tariffs on all steel and aluminum imports to the U.S.
According to Reuters, Farrell pointed out, "Australian steel and aluminum are creating thousands of good paying American jobs, and are key for our shared defense interests." He reiterated Australia's commitment to advocating for “free and fair trade,” aiming to secure access to the U.S. market for these materials.
Prime Minister Anthony Albanese echoed these sentiments, stating he had scheduled discussions with Trump to seek tariff exemptions and would keep Parliament and the Australian public informed on the outcomes. Albanese remarked, "We will continue to make the case to the United States for Australia to be exempt from any steel and aluminum tariffs." This discussion is part of broader talks aimed at reinforcing Australia’s relationship with the U.S. as key partners, particularly under the AUKUS defense pact, which includes plans for substantial U.S. submarine and military assets procurement.
Reports estimate Australia exported about $237 million worth of steel and iron products to the U.S. in 2023, along with $275 million worth of aluminum. This volume of trade is pivotal for both economies—supporting Australian jobs and American defense contracts.
Trump indicated he was likely to extend tariffs, recalling his previous 2018 tariffs of 25% on steel and 10% on aluminum. During discussions aboard Air Force One, when asked if these new tariffs would apply to Australian imports, Trump stated unequivocally, "Any steel coming to the United States is going to have a 25% tariff," adding, "Aluminum too." This blanket approach to tariffs hints at the complexity and potential repercussions for trading partners, including Australia.
Importantly, past experiences with tariffs show their far-reaching effects. Economists warn these tariffs may lead to increased costs for U.S. consumers who rely on imported goods, complicate trade dynamics, and impact Australian exporters significantly. According to Dr. Scott French from the University of New South Wales Business School, any imposed tariffs could directly raise the retail prices of goods.
Australia has been proactive, seeking to uphold trade agreements and solidify its exports. Richard Holden, professor of economics at the same university, emphasized, "Australia's prosperity is built on international trade; anything reducing this is not good news for us." Meanwhile, Shiro Armstrong, from the Crawford School of Public Policy, raised concerns about Australia having to redirect its steel and aluminum sales to other markets if tariffs are imposed.
The stakes remain high as Australia navigates its trading relationship with the U.S. Of note, 2023 figures reveal Australia exported $800 million of these materials to the U.S., but its reliance on the American market is tempered; U.S. imports only reflect about 5% of total Australian exports
Current analyses reveal Australia’s main beneficiaries of U.S. tariffs could include companies like BlueScope Steel, which has operations within the U.S. market. Shares of BlueScope have reportedly risen by nearly 2% amid expectations of increased business from their U.S. operations, which employ around 4,000 people.
Yet, looming tariff discussions have created uncertainty. Past experiences highlight how tariffs enacted abruptly can dramatically shift market dynamics and decrease trade flow, affecting both the U.S. and Australian economies. Australia's previous exemption from similar tariffs under Trump indicates its capability of negotiating favorable terms; whether this will occur again remains uncertain.
Reports indicate the Trump administration is widely expected to formalize the tariffs, which would encompass goods from various countries. If implemented, these tariffs could escalate the trade tensions already brewing globally and compel Australia to reconsider its strategies within the U.S. market.
While Australia holds strong exports to the U.S., it must also strengthen its local industries to withstand shifts from foreign markets—reassessing its trading dependencies.