WHILE Donald Trump’s 10% tariffs on Australian imports will draw a sigh of relief in most political and commercial quarters, it doesn’t come without a downside.
As the president’s aggressive trade policies kick in, designed to protect US industries, other countries are returning fire with retaliatory measures from affected countries including China, the European Union, Canada, Mexico and India.
Australian prime minister Anthony Albanese has said Australia won’t retaliate with tariffs of its own but will continue to advocate to the US for Australia to be excluded from the imposts.
The erratic nature of the Trump tariffs rollout and shifting rationale behind them has created significant uncertainty in global markets with stock exchanges in Europe and Asia experiencing declines.
Andrew Hudson, partner at Rigby Cooke Lawyers said it was too early to identify and advise on consequences for those exporting to the US, including who will be responsible for payment of the new tariffs.
“Much of that will depend on contractual arrangements and whether the increased tariffs need to be borne by the Australian exporters or the US importers,” Mr Hudson said.
“There is also the possibility that the imposition of these new tariffs may form the basis for termination of those contracts, perhaps in reliance on ‘force majeure’ provisions.
“Further, we will need details of whether duty–free entry will still be available under a ‘tariff concession order’ arrangement for exports of goods to the US which are not manufactured in the US.”
In Australia the economic impact of the 10% tariff will be felt on exports to the US by key industries like beef, precious metals, pharmaceuticals, and machinery. The beef industry is particularly vulnerable due to existing biosecurity restrictions on US beef.
There will also be indirect effects as China’s economy slows down because of high tariffs on its exports to the US. Because Australia is heavily reliant on trade with China, Australia could experience economic ripple effects.
The imposition of tariffs on imports from countries like China, Mexico, and Canada has led to increased costs for raw materials and finished goods. This affects industries that rely heavily on these imports, such as electronics, automotive, and manufacturing.
Political response from the Albanese government has been to criticise the tariffs as unjustified and harmful to both economies but said Australia should take a calm and diplomatic approach to the US.
Opposition leader Peter Dutton has distanced himself from previous praise of Trump as the US president’s policies have become more controversial.
The Red Meat Advisory Council (RMAC) expressed disappointment but remains optimistic about finding alternative markets and is investigating opportunities in other major markets like China, Japan, and Korea.
Australian businesses with supply chains involving the US, China, Canada, or Mexico are facing higher costs and logistical challenges as uncertainty around future tariffs adds to the complexity of international trade.
Companies are being forced to reconsider their supply chain strategies. Some are shifting production to countries not affected by the tariffs, while others are looking to source materials locally to avoid the additional costs.
The unpredictability of trade policies has introduced significant uncertainty into the supply chain. Businesses are facing delays and disruptions as they navigate the changing landscape.
Overall, while the direct impact of the tariffs on Australia’s economy is manageable, the broader implications for global trade and economic stability pose significant challenges. The situation continues to evolve, and both political and industry leaders are closely monitoring developments.
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