Donald Trump has hit countries around the world with significant tariffs, throwing the world economy and markets into turmoil. The most impacted territories include the European Union with a hefty 20% on all imports, South Korea facing a 25% tariff, China hit with a whopping 54% tariff, and Vietnam with a 46% tariff. Despite friendly relations between the two countries, Australia was not spared, receiving the baseline 10% tariffs. Here’s how the government has responded and what that might mean for Australia.
Australia and Trump’s Tariffs
Following the United States President’s announcement, Anthony Albanese said the decision to impose this 10% tariff on Australia, long considered an ally to the US, was “not the act of a friend,” but ruled out reciprocal tariffs against the United States, contrary to what many other countries have threatened to do.
The US only buys about 5% of Australian products sold overseas and, notably, pharmaceuticals and critical minerals not mined in the US — some of Australia’s top exports to the US — were excluded from the tariffs, meaning Australia escaped the worst of it and will face a less direct impact than other countries. However, economists are still concerned about the domino effect this may have, as the possibility of a global trade war looms large.
As an open economy that does rely on world trade for prosperity, Australia’s GDP is likely to suffer a bit of a blow, and consumers may also face a lift in prices, though economists hope it will be brief as affected economies adjust. Australia’s biggest potential concern is what this all means for China, as they buy the lion’s share of our export and have been hit with the biggest tariffs. The Asian country has devised retaliatory packages, as a show of economic strength.
Additionally, Trump had initially suggested that Australian beef would be banned, and although did not come to fruition, there is beef about beef between the two countries. Since Australia banned U.S. fresh beef products in 2003 due to the detection of mad cow disease, this has been a source of contention, and although US Commerce Secretary Howard Lutnick was asked if a tariff exemption could be reached by allowing the resumption of American beef imports, he indicated it was unlikely.
Not even remote territories were spared, as Heard Island and McDonald Islands, which form an external territory of Australia, and are also uninhabited — at least, by humans; resident penguins may now be suffering economic anxiety — were listed as “countries” that would have 10% tariffs imposed on them. Anthony Albanese’s tongue-in-cheek response to this was, “Nowhere on Earth is safe.”