Donald Trump’s return to the White House, should he win the 2024 election, could once again shake global trade policies. One of the biggest concerns for Australia is his recent stance on steel and aluminium tariffs. The United States imported around $400 million worth of Australian steel and $439 million worth of aluminium in 2024, making Australia one of its key suppliers.
So what does this mean for Australian businesses and the Albanese government? Could it strain the long-standing economic and diplomatic relationship between Australia and the US? Let’s break it down.
A Look at Trump’s Steel and Aluminium Tariffs
Trump has long maintained that American industries, particularly manufacturing and mining, have suffered due to foreign competition. During his first presidency (2017-2021), he imposed tariffs on steel (25%) and aluminium (10%) under Section 232 of the Trade Expansion Act, citing national security concerns.
Australia was initially exempted from these tariffs in 2018, thanks to strong diplomatic negotiations. However, with Trump hinting at bringing back such policies, Australia may not be as fortunate this time around.
If reinstated, these tariffs could make Australian steel and aluminium less competitive in the US market, leading to economic setbacks for key exporters and businesses.
How Will This Impact Australian Business?
1. Australian Steel and Aluminium Producers Face Higher Costs
The Australian steel and aluminium industries rely on the US market for a significant portion of exports. If the US imposes tariffs, Australian exporters will either have to absorb the additional costs or pass them on to consumers. Either way, it could reduce demand for Australian metals, making US buyers look elsewhere.
Companies like BlueScope Steel, which has a plant in the US but still exports steel from Australia, could feel the pressure. If forced to pay tariffs, they may have to either cut back on exports or find alternative buyers.
2. Jobs in Australia Could Be Affected
The steel and aluminium industries employ thousands of Australians, especially in manufacturing hubs like Port Kembla and Gladstone. Any reduction in exports could force companies to downsize, leading to job losses. Given that the Albanese government has focused on job creation and economic stability, this could be a politically sensitive issue.
3. The Mining Sector Could Suffer Indirectly
Australia is a global powerhouse in mining, and much of its iron ore and bauxite go into steel and aluminium production. If tariffs reduce demand for Australian exports, miners supplying raw materials to steelmakers could also feel the pinch. This could have ripple effects across Australia’s economy, particularly in Western Australia and Queensland, where mining is a major industry.
4. Potential for Retaliatory Trade Measures
While Australia is unlikely to engage in a full-scale trade war with the US, it may have to reconsider its approach to American imports. Australia’s trade policies have traditionally been aligned with free trade principles, but if Trump’s tariffs create significant losses, Australia may have to explore reciprocal measures or strengthen partnerships with other major steel and aluminium importers.
The Albanese Government’s Challenge
Navigating Diplomatic Relations with the US
Prime Minister Anthony Albanese has maintained strong ties with the Biden administration, emphasizing cooperation on economic and security fronts, including AUKUS. However, if Trump returns and enforces tariffs, Australia’s diplomatic strategy will need a shift.
Negotiating another exemption will be high on the agenda, but given Trump’s America-first approach, it might be more difficult this time. The government may have to rely on lobbying efforts, trade agreements, or even making security concessions to protect Australia’s trade interests.
Exploring Alternative Markets
While the US is a valuable market, Australia may have to pivot towards other buyers. The Asian market, particularly China, Japan, and South Korea, could become even more crucial. However, China’s history of imposing its own tariffs on Australian goods makes this a tricky path to navigate.
Impact on Free Trade Agreements (FTAs)
Australia has multiple FTAs, including the Australia-US Free Trade Agreement (AUSFTA), which has facilitated smoother trade relations. If Trump reinstates tariffs, it could undermine the spirit of such agreements, forcing Australia to reassess its trade strategy with the US and its other global partners.
Could This Strengthen Australia’s Manufacturing Sector?
Interestingly, while tariffs could be a setback for exporters, they could push Australia to boost its domestic steel and aluminium manufacturing capabilities. If the US becomes less reliable as a trading partner, Australia may prioritize its local industries, reducing reliance on exports.
However, this would require significant investment in infrastructure, government support, and ensuring that Australian companies can remain competitive against global players.
The Bigger Picture: Global Trade Tensions
Trump’s potential return to the White House isn’t just about Australia—it could disrupt global trade. If the US imposes tariffs on Australian steel and aluminium, other countries like Canada, the EU, and Japan may face similar restrictions. This could lead to broader trade disputes and economic uncertainty worldwide.
Australia will need to navigate these shifts carefully, ensuring its industries remain resilient while maintaining diplomatic and economic ties with the US.
Conclusion
If Donald Trump reinstates steel and aluminium tariffs, Australia could face significant economic and political challenges. From higher export costs and job losses to strained US-Australia relations, the impact could be substantial.
The Albanese government will have to act quickly, whether through diplomacy, trade diversification, or strengthening local industries. While Australia has weathered trade storms before, this will be a major test of its economic resilience and strategic foresight in an increasingly uncertain global market.
For Australian businesses and policymakers, the key question isn’t just if Trump’s tariffs will hit—but how they will respond.
