Key Points
- Anthony Albanese to discuss steel and aluminium tariff exemption with Donald Trump.
- Trump hinted at announcing 25 per cent tariffs on aluminium and steel.
- During his first term as president, Trump imposed tariffs of 25 per cent on steel and 10 per cent on aluminium.
Prime Minister Anthony Albanese has said he will speak to United States President Donald Trump to discuss an exemption from planned tariffs on steel and aluminium.
Trump appeared set to announce new tariffs this week, hinting at the policy while onboard the presidential plane, Air Force One.
“Any steel coming into the United States is going to have a 25 per cent tariff,” he told reporters on Sunday local time.
Albanese was asked by Opposition trade minister Kevin Hogan if Trump had spoken to him about the tariffs beforehand.
“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 during Question Time.
“I have a discussion with President Trump scheduled, and I will certainly keep the house and the Australian people informed.”
The prime minister’s office later said Albanese will speak with President Trump within the next 24 hours in what was a previously-scheduled call.
During his first term as president, Trump imposed tariffs of 25 per cent on steel and 10 per cent on aluminium.
Australia previously secured tariff exemptions for exports to the US. However, Trump said the proposed tariffs would affect all countries.
The tariffs would generate revenue for the US government but also increase the cost for consumers buying things produced overseas.
Dr Scott French, from the University of New South Wales Business School, explained how the tariffs could work.
“Imagine Australia decided to impose a 10 per cent tariff on all imported washing machines from South Korea,” he said.
“If an Australian consumer or a business wanted to import a $1,200 washing machine from South Korea, they would have to pay the Australian government $120 when it entered the country.
“So, everything else being equal, the final price an Australian consumer would end up paying for this washing machine is $1,320.”
What could the effect be on Australian exports?
Australia has a free trade agreement with the US and is charged no tax for imports on aluminium, iron and steel.
While not named specifically in Trump’s list of tariffs, iron is a key component in creating steel and would likely be impacted by the taxes.
A table showing how the proposed US tariffs could impact the cost of Australian exports. Source: SBS News
Figures from the Trading Economics website show Australia exported $1 billion of aluminium, iron and steel to the US in 2023.
This was equal to about 5 per cent of the total value of Australian exports to the US, which sat at around $19 billion in 2023.
After implementing tariffs of 25 per cent on steel and 10 per cent on aluminium in 2018, Trump later granted duty-free quotas to several trading partners, including Canada, Mexico, and Brazil.
Richard Holden, professor of economics at the University of New South Wales Business School, said as a country, Australia relies on global trading.
“Australia’s prosperity is built in no small part on international trade. So anything that reduces that is not good news for us.”
Shiro Armstrong, an economist and associate professor at the Australian National University’s Crawford School of Public Policy, said Australia would have to sell its steel and aluminium elsewhere.
— Additional reporting by Reuters.
