New trade war looms as Trump's disruptive tariffs become reality
Should Trump have made good on his ultimatums to hike the levy to 15 or 20 per cent, it would not have been the action of a special friend, especially given the US already enjoys a trade surplus with Australia.
Displaying his patented bluster and blunder, Trump announced his tariff regime last April on what he called Liberation Day. It barely discriminated between friend or foe, tanked stock markets, caused the gold price to soar, and imposed a universal 10 per cent tariff on all imports, with Asian nations hit with even steeper tariffs.
Four months later, some clarity has emerged. Trump's battery of new tariffs on more than 60 countries starts on August 7. He kept Australia on the same 10 per cent rate as another close ally, the United Kingdom. However, he was not so disposed to other allies: although the US imports more to Canada, he lifted the tariff from 25 per cent to 35 per cent. Trump hit New Zealand too, with a surprise 5 per cent rise to a 15 per cent tariff.
None of this is set in stone and Trade Minister Don Farrell has confirmed Canberra will continue to lobby for the removal of all tariffs on Australian goods. But if Australia has dodged a bullet for the moment, there is no getting away from the harsh reality that the tariffs imposed by Trump on other major economies are likely to slow global economic activity and eventually could hurt our relatively small, export-driven economy.
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Trump is attempting to put America First by scrapping the world trading system with his own scheme, which presumes nations must jump through his hoop. In an inconsiderate slight, the US did not even bother to confirm Australia was exempt from higher tariffs, but left it to a White House fact sheet to confirm any countries not on the new list would remain on 10 per cent.
Last April, when the US tariffs were first announced, Opposition Leader Peter Dutton slammed Prime Minister Anthony Albanese as a leader of a bad government who could not get a phone call with Trump to discuss tariffs.
Little appears to have changed.
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