Hope for tariff carve-out wanes as US President Donald Trump strikes deals
Since pushing his tariff deadline to August 1, the US president has struck trade agreements with Japan, and on Monday, the European Union.
While the deals landed on tariffs lower than Mr Trump's initial threats, both were higher than the 10 per cent baseline levy imposed on Australian goods.
No US trading partner has managed to completely dodge tariffs on their items.
Prime Minister Anthony Albanese and Trade Minister Don Farrell have maintained that Australian products should not be hit with any tariffs, but the latest deals show an exemption could be off the table.
Overnight, Mr Trump implied the 10 per cent base rate, which applies to the goods of many countries including Australia, could rise to 15-20 per cent.
Mr Trump said in Scotland that his administration will notify about 200 countries soon of their new 'world tariff' rate.
'I would say it'll be somewhere in the 15 to 20 per cent range,' he said. 'Probably one of those two numbers.'
University of Sydney US politics expert David Smith told AAP it's proving hard for countries to talk their way out of tariffs on their exports to the US.
'Trump really does see tariffs as something that is good in themselves,' University of Sydney US politics expert David Smith told AAP.
'Even though there were a lot of hopes at the beginning of this process that countries could negotiate their way out of tariffs altogether - that's not really happening.'
Australia, like other nations, might instead have to pivot approaches and try to strategically position its industries within these deals.
For example, the US pharmaceutical sector has long taken issue with Australia's drug subsidy scheme and urged the president to act.
In early July, Mr Trump threatened a 200 per cent tariff on pharmaceuticals, which could be seen as a way for the US to chip away at the Pharmaceutical Benefits Scheme in exchange for a trade deal.
Both of Australia's major parties have maintained the program is not up for negotiation.
Instead, the federal government revealed it would lift restrictions on certain US beef imports.
'Australia is thinking about other areas where we would be prepared to make concessions, because we were not going to be making concessions on (the PBS),' Associate Professor Smith said.
Mr Albanese says the government is engaging in Australia's national interest.
While the government said its decision to lift restrictions followed a decade-long scientific review and noted the measure would not compromise biosecurity, the opposition and figures within the cattle industry have called for an independent examination of the issue.
'If we have created a brand new threat, we should be very clear about that,' Liberal senator Jane Hume told parliament.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Age
34 minutes ago
- The Age
Trump takes aim at ‘foreign freeloading nations' over drug prices in new threat to PBS
Washington: US President Donald Trump has blamed 'foreign freeloading nations' for the high drug prices faced by Americans and told pharmaceutical firms to negotiate harder with other countries, in a new threat to programs such as Australia's Pharmaceutical Benefits Scheme. Trump issued letters to the bosses of 17 drug firms on Thursday (Friday AEST) demanding they extend 'most favoured nation' pricing to the US Medicaid scheme, and guarantee such pricing for new drugs. It means other comparable, high-income nations could not be offered cheaper prices than the US. 'Domestic MFN pricing will require you, and all manufacturers, to negotiate harder with foreign freeloading nations,' 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.' The letters were sent to major drugmakers including Pfizer, Eli Lilly, AstraZeneca and Johnson & Johnson, and published on Trump's social media. They did not mention Australia but referred to putting 'an end to the free ride of American innovation by European and other developed nations'. Under the PBS, Australians can buy life-saving drugs worth thousands of dollars for as little as $31.60 a script after the government negotiates with the drug company to secure a lower price based on buying in bulk. Trump's letter makes explicit instructions to drug firms to 'negotiate harder' and return those extra profits to American patients and taxpayers.
Sydney Morning Herald
38 minutes ago
- Sydney Morning Herald
You can't quit America: It's too big to fail as the global leviathan
This week, the European Union agreed to a trade deal with the United States that amounts to a capitulation to President Donald Trump. Yes, Trump had already made concessions in advance by pre-emptively walking back his outrageous opening gambit in the tariff war when markets rebelled. But the US president has since enjoyed a run of victories, establishing a new baseline for US tariff revenue with minimal retaliation from its trading partners. The deal that European Commission president Ursula von der Leyen sealed with Trump is part of this new normal, in which most countries appear willing to pay extra for access to American markets. It's not America but the rest of the world that seems to be chickening out. There is a hard lesson here for anyone who imagines that a populist-governed US might somehow end up isolated on the world stage. This fantasy has been a source of both comfort and schadenfreude for anti-Trump liberals, since it offers a vision of potential political escape from populism, with liberal culture reconstituted in Toronto or Oxford or Scandinavia, and a vision of a Trumpian America suffering economic punishment as its walls rise higher and the rest of the world prospers through mutual exchange – without the US. Both conceits are fundamental misreadings of the global situation, which the foreign leaders who have bowed to Trump's demands seem to understand clearly. The first thing they understand is that American economic power is just too big to escape or isolate or ignore. Before Trump's 2024 victory, the economic story was one in which American growth was clearly pulling away from our peer economies in Europe and East Asia. Since Trump's return to power, even protectionist policy that almost every economist deplores hasn't prevented the American sharemarket from rising and the American growth machine from churning onwards. Loading Even if Trump reverts to deeper folly and causes a recession, the forces favouring the US over Germany or Britain or South Korea or Japan will still be present in the next administration and beyond. Almost all of America's liberal-democratic peers are poorer than it is and too sclerotic to suddenly surge past it. There is just no booming, youthful, dynamic, entrepreneurial zone capable of taking the place of America in a network of free economies, and therefore no substitute for trade with its companies and access to its markets, even at a Trumpian price. There is, of course, China, which is strong enough to stand up to Trump's bullying and dynamic enough to stand as a counterweight to American economic might. But unless your country is already authoritarian – and not necessarily even then – the risks of throwing yourself fully into China's orbit are still much more extreme than the costs of managing a populist administration in Washington. This doesn't mean other countries won't end up trading more with China because of American protectionism. But there is no plausible world where China simply replaces the US as a trusted partner and pillar of globalisation. Here the economic story links up with the political one. If it's implausible to imagine a network of European and Asian economies prospering without the American leviathan, it's even less plausible to imagine some kind of liberal world order reconstituting itself separately from the US.
The Age
38 minutes ago
- The Age
You can't quit America: It's too big to fail as the global leviathan
This week, the European Union agreed to a trade deal with the United States that amounts to a capitulation to President Donald Trump. Yes, Trump had already made concessions in advance by pre-emptively walking back his outrageous opening gambit in the tariff war when markets rebelled. But the US president has since enjoyed a run of victories, establishing a new baseline for US tariff revenue with minimal retaliation from its trading partners. The deal that European Commission president Ursula von der Leyen sealed with Trump is part of this new normal, in which most countries appear willing to pay extra for access to American markets. It's not America but the rest of the world that seems to be chickening out. There is a hard lesson here for anyone who imagines that a populist-governed US might somehow end up isolated on the world stage. This fantasy has been a source of both comfort and schadenfreude for anti-Trump liberals, since it offers a vision of potential political escape from populism, with liberal culture reconstituted in Toronto or Oxford or Scandinavia, and a vision of a Trumpian America suffering economic punishment as its walls rise higher and the rest of the world prospers through mutual exchange – without the US. Both conceits are fundamental misreadings of the global situation, which the foreign leaders who have bowed to Trump's demands seem to understand clearly. The first thing they understand is that American economic power is just too big to escape or isolate or ignore. Before Trump's 2024 victory, the economic story was one in which American growth was clearly pulling away from our peer economies in Europe and East Asia. Since Trump's return to power, even protectionist policy that almost every economist deplores hasn't prevented the American sharemarket from rising and the American growth machine from churning onwards. Loading Even if Trump reverts to deeper folly and causes a recession, the forces favouring the US over Germany or Britain or South Korea or Japan will still be present in the next administration and beyond. Almost all of America's liberal-democratic peers are poorer than it is and too sclerotic to suddenly surge past it. There is just no booming, youthful, dynamic, entrepreneurial zone capable of taking the place of America in a network of free economies, and therefore no substitute for trade with its companies and access to its markets, even at a Trumpian price. There is, of course, China, which is strong enough to stand up to Trump's bullying and dynamic enough to stand as a counterweight to American economic might. But unless your country is already authoritarian – and not necessarily even then – the risks of throwing yourself fully into China's orbit are still much more extreme than the costs of managing a populist administration in Washington. This doesn't mean other countries won't end up trading more with China because of American protectionism. But there is no plausible world where China simply replaces the US as a trusted partner and pillar of globalisation. Here the economic story links up with the political one. If it's implausible to imagine a network of European and Asian economies prospering without the American leviathan, it's even less plausible to imagine some kind of liberal world order reconstituting itself separately from the US.
