Five ways Trump's tariffs will impact you

Perth Now

4 days ago

Australia may have avoided the worst of the US tariffs, but it is still likely to impact every household in a few key ways.
Starting August 1, US trading partners faced a wave of fresh levies.
US President Donald Trump signed in higher rates for many countries under a new executive order, but so far has left the original baseline tariffs at 10 per cent.
Australia does not have an additional 'reciprocal tariff' and only faces the base rate.
Australia's tariff rate will remain at the baseline of 10% as US President Donald Trump announced an increase for dozens of economies around the world.
AMP chief economist Shane Oliver said while Australia would not be directly impacted, there would be second order impacts.
'It is good news for Australian companies but the threat to global growth remains significant,' Dr Oliver said.
'The average tariff rate is 20 per cent …. well up from the two to three per cent tariff going to the US at the start of the year.
'There is going to be a hit to the US economic growth and global growth as there is a big increase compared to last year.'
This slowdown is the biggest threat to the Australian economy.
Interest rate
In a win for mortgage holders and a loss for savers, the fallout from Trump's tariffs could see interest rates cut further than previously anticipated.
Dr Oliver said on the back of slowing economic growth households with a mortgage could benefit from lower rates.
'It won't push prices up in Australia …. if anything, the weaker economic growth environment that might unfold could mean less inflation,' he told NewsWire.
'But there is this perverse thing because of the uncertainty imposed on global growth.
'It could mean lower than otherwise interest rates and households with mortgages will benefit from that.' The cash rate could fall due to the tariffs impact. NewsWire / Nicholas Eagar Credit: NewsWire
The RBA minutes from July showed while interest rates were kept on hold, the board was already debating the impact of Trump's tariffs.
The minority in favour of a cut argued that US tariff policy would be a drag on future global economic growth, Australia's economy is subdued, household spending was weak and the economy lost momentum.
'Uncertainty in the world economy remained pronounced and the material increase in US tariffs – even if not as extreme as had been announced in early April – would be a drag on future growth abroad, and thereby domestic economic activity and inflation,' the minutes of the RBA's monetary policy meeting said.
Jobs market
While interest rate falls could help mortgage holders, the same economic fallout could smash the Australian jobs market.
In its latest release of jobs data, the ABS revealed Australia's unemployment rate jumped to 4.3 per cent — its highest level since the post pandemic recovery.
Still, it remains lower than the long term average. The second order impacts could see Australians lose jobs. NewsWire / David Crosling Credit: News Corp Australia
Dr Oliver also said Australians might find the overall economic market tougher in the foreseeable future, which would impact jobs.
'If global growth is weaker that means less demand for our exports, less national income which could adversely affect economic growth in Australia, which could mean the jobs market may not be as strong as it has been,' he said.
'It might be a tougher economic environment generally for Australians meaning it's a little bit harder to get a job.'
Superannuation
Investments in shares and superannuation are tipped to be more volatile, although it is unlikely to see the same dramatic drop as the post 'Liberation day falls'.
When the tariffs were first announced on April 7, the ASX 200 wiped almost $110bn off as it fell by 4.2 per cent.
The market eventually fell to a low point of 7169 points before rallying 22 per cent to the end of July.
IG market analyst Tony Sycamore said currently the market reaction was 'subdued' to the tariffs, with investors learning tariffs could be negotiated.
'The combination of these factors has kept market volatility low at this point of time,' Mr Sycamore said.
'What could change this situation, is retaliatory tariffs from impacted countries, which in turn could lead to higher tariffs from the US than the ones announced this morning.' Australia's meat has so far been the surprising winner from the tariff fallout. NewsWire / Nikki Short Credit: News Corp Australia
Meat and livestock
Australian beef producers are so far the surprising winner out of Mr Trump's crackdown on imports, as limited stock and a lack of supply sees Australia emerge as the last man standing.
Commonwealth Bank sustainable and agricultural economist Dennis Voznesenski previously told NewsWire strong demand out of the US would continue to support new all-time highs.
'The US has largely four sources to import beef from abroad, being Mexico, Canada, Brazil and Australia,' Mr Voznesenski said.
'Mexico has a flesh eating bacteria called new age screw worm with the US closing the border to Mexico … Canada exports to the US are down 25 per cent from last year as they rebuild stock and as of August 1 President Trump plans to put a 50 per cent tariff on Brazil.'
The economist said US farmers currently had a multiple-decade low supply of beef, meaning they will need to continue to export from other countries.
'Typically with tariffs the objective is to the onshore industry. With some products you can restart quickly, but with cattle it's just not how it works, ' Mr Voznesenski said.
Buying medicines
Australians as a whole could be paying more for medicines as the US President took aim at 'foreign freeloading nations.'
In a group, which alluded to Australia's pharmaceutical benefit schemes, Mr Trump issued a letter to the bosses of 17 drug firms on Thursday demanding they extend 'most favoured nation' pricing to the US. The price of drugs could increase. NewsWire / Martin Ollman Credit: NCA NewsWire
'Domestic MFN pricing will require you, and all manufacturers, to negotiate harder with foreign freeloading nations,' Mr Trump wrote in the letters.
'US trade policy will endeavour to support this. However, increased revenues abroad must be repatriated to lower drug prices for American patients and taxpayers through an explicit agreement with the United States.'
While pointing out the full impact was currently unknown, Dr Oliver said it was conceivable individual Australians or the government would have to pay more for medicines.