Prime Minister Anthony Albanese insists that tariffs on Australian goods should be eliminated. As the U.S. considers new tariffs, Albanese highlighted Australia’s strong trade ties with the U.S. and promised to push for zero tariffs. He remains committed to this goal, even as the current 90-day suspension of a minimum 10 percent duty is about to end.
Background: Trump’s “Liberation Day” Tariffs
In March 2025, former US President Donald Trump unveiled “Liberation Day” tariffs, targeting imports from allies like Australia. These measures included a 10% tariff on Australian pharmaceuticals, meat, fruit, and technology, plus a 25% surcharge on steel and aluminum. Trump aimed to pressure NATO and security partners to boost defense spending. This abrupt move disrupted long-standing trade relations. Australia, benefiting from the 2004 US-Australia Free Trade Agreement, had mostly tariff-free access for industrial and agricultural goods. The new tariffs threatened to increase consumer prices and hurt exporters’ competitiveness.
90-Day Pause Offers Breathing Space
In January 2025, President Joe Biden paused the 10% minimum tariffs for 90 days to allow negotiations. This pause, ending soon, has been a chance for both sides to discuss concessions. Australian industries appreciated the break but are cautious about tariffs returning, which could increase costs for exporters and lead to job losses in important sectors.
Albanese stated that while they valued the break, their stance is clear: any tariffs with the U.S. should be zero, aligning with their free-trade agreement and shared goal of open markets.
Albanese’s Four-Point Case for Zero Tariffs
In his Monday remarks, the Prime Minister outlined four key arguments in favour of full exemption:
- Existing Free-Trade Framework
Australia and the United States have benefited from AUSFTA for over 20 years, enjoying minimal tariffs on most products. Reintroducing trade barriers contradicts the agreement’s purpose and principles. - Economic Interdependence
Australia exports $65 billion annually to the US, its second-largest trading partner. Tariffs could disrupt supply chains and increase costs for US manufacturers dependent on Australian materials. - Strategic Alliance
The US and Australia are allied in security through ANZUS and AUKUS. Albanese stated, “We are united in defending our shared values.” He warned that trade issues among allies weaken our joint strength. - Consumer Impact
Increased taxes on medicines, fresh produce, and olive oil will directly impact Australian families already struggling with living costs. “We refuse to let our producers be punished and our consumers bear the cost,” he stated.
Industry Reactions and Concerns
Australian industries are alarmed by potential tariff reinstatements. Meat and livestock producers warn that a 10% levy on beef and lamb could harm $8 billion in exports. Horticulturists fear duties on citrus, grapes, and avocados would advantage US competitors.
The Pharmaceutical Society of Australia is worried about tariffs on subsidized medicines, fearing they could hinder hospital and pharmacy supplies. CEO Julian Heel stated that even minor tariffs on essential drugs might disrupt supply and increase patient costs. On the other hand, steel and aluminium exporters, already facing 25% US tariffs, are alarmed by potential increases to 50% as suggested by Trump. This could severely impact an industry employing 10,000 Australians. Australian Steel Alliance spokesperson Maria Thompson emphasized that the US market accounts for nearly 30% of their production. Such harsh measures could lead to plant closures and harm community livelihoods.
Defence-Spending Demands and AUKUS Review
The US is increasing pressure on Australia, not just through trade tensions. Recently, the Biden administration has pushed allies to raise defense spending to 3% of GDP, exceeding Australia’s current 2%. Additionally, the US Department of Defense initiated a 30-day review of the AUKUS security pact, announced in 2021, due to worries about costs, timelines, and alignment with the “America First” strategy.
Australia stands firm on AUKUS, boosting defense for itself, the UK, and the US, while promoting global stability. AUKUS deters threats and supports international rules. Albanese highlighted defense spending growth from $53 billion to $100 billion by 2033–34, dismissing immediate increases to 3 percent.
Diplomatic Engagements: Quad and Aukmin
Australia’s Foreign Minister, Penny Wong, traveled to Washington, DC, to engage in the Quadrilateral Security Dialogue (Quad) with leaders from the US, Japan, and India. Discussions will focus on strengthening supply chains, collaborating on critical minerals, and aligning on economic and security matters.
Albanese and UK Prime Minister Rishi Sunak will meet in London next week for the Aukmin strategic dialogue. Australian officials see this as a chance to align on AUKUS, defense spending, and mutual economic interests.
Looking Ahead: Tariff Negotiations and Possible Outcomes
Australia is preparing for the end of the pause on minimum tariffs by focusing on strong communication with US trade officials and using top diplomatic routes. They are considering various strategies to navigate this transition effectively:
- Bilateral Exemption Agreement: Securing a formal carve-out within the AUSFTA framework to permanently shield Australian goods from any “Liberation Day” duties.
- Strategic Sector Deals: Negotiating sector-specific exemptions, such as pharmaceuticals and agriculturals, in exchange for Australian concessions in services or environmental commitments.
- Multilateral Engagement: Rallying support from other affected allies—such as Canada and the European Union—to present a united front at the World Trade Organization (WTO) and challenge unilateral duties.
If no deal is made, Australia might take the issue to the WTO, claiming that the “Liberation Day” tariffs breach AUSFTA and international trade rules. Trade Minister Don Farrell stated, “We reserve all our rights under the agreement,” but emphasized that they prefer to settle the issue through direct talks.
Domestic Political Implications
The trade dispute is central in Australian politics. Opposition Leader Peter Dutton criticizes the government’s economic management, demanding stronger representation in Washington to safeguard Australian jobs. He blames Labor for not foreseeing the risk. Labor backbenchers highlight their ongoing diplomatic efforts, arguing that swift US punitive actions are beyond Canberra’s control.
Consumer advocates and business councils support Albanese’s push for zero tariffs, warning that ongoing uncertainty may hinder investment and weaken business confidence. “Australian exporters need clarity on their cost structures,” stated Council of Small Business Organisations Chair Rebecca Young.
Conclusion
Prime Minister Anthony Albanese is balancing trade and security as the 90-day tariff suspension ends soon. He demands zero US tariffs to protect Australia’s trade and economy. With negotiations heating up, attention is on Washington and Canberra to see if the tariffs, known as “Liberation Day” duties, will be removed or continue to strain the US-Australia relationship.
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